Myth: My estate plan is just for me, so I don’t need to tell anyone about it.
False. How much you divulge is up to you, and being honest with your loved ones can help alleviate misunderstandings that could arise after your passing. Sharing this information is especially helpful if:
- You have chosen to treat individuals in the same generation differently.
- You have placed additional requirements or restrictions on how your money and property are to be used.
- You have skipped an entire generation or group or individual that would typically inherit from you (spouse, children, or grandchildren).
Also, if you want your estate plan to benefit multiple generations, it can be helpful to have your loved ones understand what money and property they will have access to and your intentions regarding access for future generations.
Myth: The reason there is no money left at the end of the third generation is because of bad investments.
False. While this may seem like the likely answer, a study by The Williams Group, a family wealth coaching company, revealed that unprepared beneficiaries are one of the major reasons why much of a family’s wealth is lost by the third generation, not bad investment strategies.[1] If you want to leave money for multiple generations, it is essential to prepare your beneficiaries. They need to understand what they are receiving and what the ultimate intention is for the money and property you are leaving. You can also prepare your beneficiaries by teaching them proper money management. If a beneficiary does not learn how to manage their money, it shouldn’t be a shock when they spend their inheritance in a short period of time.
Question: Is it better to treat loved ones fairly or equally?
The answer to this question will depend on your unique situation and may take some soul-searching on your part. For some clients it’s important to treat everyone equally to avoid family conflict after the client is gone.
Other clients believe that because everyone is different, the money and property left to their beneficiaries should be used to make sure that everyone has the same access to opportunities and advantages in life. One child may make more money than a sibling, or one grandchild may have special needs while the other grandchildren do not. The client may determine that someone who is successful on their own doesn’t need as much as someone who is financially struggling. It’s important to remember that there is no right or wrong answer to this question.
We can help!
Our attorneys can help you with your multigenerational planning. For assistance with these and other business law, tax planning, or estate planning matters, contact our office today!
Legal Disclaimer – The information provided is designed for general information only and is not intended to be legal advice, nor does it create an attorney client relationship. Consult an attorney before making any legal decisions based on your individual circumstances.
[1] The Williams Group, Our History, https://www.thewilliamsgroup.org/our-history (last visited May 20, 2021).
