Congratulations! You have a will and power of attorney. You are finished with estate planning … or are you? Even beyond the fact that wills and other estate documents need to be reviewed as your circumstances change, they might be missing the mark or falling short of being a true legacy plan.
When you think about passing along your wealth, there are pitfalls to avoid. We have all heard stories about estates that get mired in hurt feelings and even worse: expensive estate litigation. So why do these problems continue to occur?
Here are three significant dangers that we help our clients try to avoid.
1. Lack of Meaning in Your Estate Planning
At Evolution Strategies, we recognize that your wealth is much more than the balance in your investment accounts. We focus on health and fitness, education, life wisdom, family, friends, business connections, and spiritual beliefs as the key ways to define your wealth. We concern ourselves with the successful transfer of wealth in all these aspects as the core objective of your legacy planning.
When you pass along financial wealth and financial wealth alone, it can suffer from a lack of meaning. While I doubt that anyone receiving an inheritance will be disappointed, only focusing on the financial can mean little more than black ink on white paper. If you do this, you miss a chance to ensure that these same values that underpin your success can be continued for generations to come. You can be more actively engaged with the people and causes that are most important to you. You can make more use of everything you have, both financial and human capital, to keep what is essential sustained in the long term.
2. Misplaced Inheritances Dilute Your Legacy
Money is a magnifier. Whatever qualities are present in your family will grow with the presence of money. That can be both good and bad. Some of our clients are concerned about the impact an inheritance can have on their beneficiaries, while others are confident that their children have the tools to set them up for further success. We want to help you recognize and identify the areas of concern in your own family to prepare them to benefit from your successes.
We often focus on how to use wealth to support your children to grow into their own future. That can mean a focus on supporting their development through smaller, earlier gestures. We often think about setting a family focus on education and personal growth and even initial support getting started in life through assistance in starting a business or helping with a down-payment on a home. Ultimately, we want to help create a plan to help your family benefit from your hard work but not without maintaining the connection with those very values that got you here.
3. Poor Communication
We recognize that these can be sensitive conversations, but that is why they are so important to have so long as they can be in a safe environment. What's the alternative? Many people don't disclose anything to their children in terms of the nature of their inheritance. This sort of lawyer's office reading of the wills we see in films & TV can be entertaining to see on screen but have the potential to be a disaster for family unity. It can even result in costly estate litigation with your legacy being diminished by legal fees. That is not the way anyone wishes to be remembered.
But beyond wanting to avoid causing this stress, it would be a missed opportunity to have an open and productive dialogue that will deepen your relationships. Many of the concerns you had can be relieved once everyone understands each other's position. Wouldn't it be amazing to come together with your loved ones and work together to discuss what you have in common, your differences and chart a course forward as a family? This way, your family will help create a meaningful legacy that moves beyond just estate planning.
Does this sound like a discussion you'd like to start having? Or are you there already? Click here to see the State of Your Estate and see how you are doing.
This article also appeared at Evolution Strategies.