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How to Start a Conversation About Estate Planning

July 2, 2020

Legacy planning is often an uncomfortable conversation to have, but it’s one of the most important conversations you’ll ever strike up with your friends, your family, your business partners, and your financial planners.

It’s easy to get caught up in the nuts-and-bolts conversations about how to plan your financial legacy — how to leave your money to your family and your business, which trusts to set up, how to structure the accounts, naming beneficiaries, tax planning, and so on.

But there’s another aspect of legacy planning that’s harder to get into — the emotional conversations that you’ll want to have with family and business partners about your ethics, values, and hopes for the future of your wealth. Here’s how to get started.

Have the Legacy Conversation First

Before you make any permanent arrangements for your money after you die, you should start having the important conversations with the people whom the money might benefit. Of course, you don’t have to — you can leave your spouse, children, or grandchildren a simple lump sum of money for them to do with as they please.

But chances are, there are some values that you hold dear, and you’d like to see your hard-earned wealth used to further those values. Maybe you want to make sure that all your children and grandchildren have an education. Maybe you want them to be able to start a business. Maybe you’d like them to carry on your focus on philanthropy.

If that’s the case, you can’t simply assume that your descendants will share the same priorities as you do. You need to sit down and talk with them about how they intend to use the money you leave them, and you should probably go one step further and set some restrictions on your estate.

Leaving Money to Your Family

When you start drawing up a plan for your estate, you’re allowed to do pretty much whatever you want with your funds. You can leave an equal amount to every child and grandchild, you can leave all of your money to one child, or you can give it all to the local animal shelter.

But for many people, their wealth represents a lifetime of making important decisions, founded on the values they hold dear, and they want those values to be considered after they die. If you’re concerned that your family might not share those values, you should talk to them before the time comes.

You can also safeguard your legacy by structuring your wealth carefully. Trusts are a popular option that you can use to make sure your money is distributed in the time and manner of your choosing. Depending on the type of trust you set up, you can earmark funds for tuition, buying a house, a brokerage account that pays out slowly over the course of many years, or anything else you want to prioritize.

Handing Off Your Business

A substantial number of high-net-worth individuals own their own businesses, and a major part of their legacy planning is deciding what will happen to the business after they’re gone. IF you have a business partner who’s likely to succeed you, it’s a perfectly good option to let the business pass out of the family entirely. But many business owners want their family to retain some control and influence over the business, and that’s where the tricky part starts.

The first problem is the most obvious: your family might not want to take over your business. They might live far away, they might have careers of their own, or they might simply not be passionate about your business. Before you sign off your ownership share to your children, make sure they’re on the same page as you.

Even if they do want to take over the business, people who inherit a business often feel that the money and the business aren’t “theirs” because they didn’t earn it. They might struggle to make hard decisions about the business, feeling that those decisions aren’t theirs to make.

There are even cases of businesses failing because the new ownership are too scared to make major changes or adapt to a changing business climate, simply because they don’t want to depart too much from their parents’ legacy. Conversations ahead of time about the future of the business can prevent these shortcomings.

Bequeathing Other Property

The same concerns are true of any other property that you might leave to your descendants. You might have a collection of classic cars, a family house that you’ve owned for generations, or a room full of precious artwork that you hold very dear. You don’t want to leave those assets to a child, only for that child to sell them to pay off credit card debt.

By structuring your will with certain conditions or transferring those assets to a living trust, you will ensure that your descendants can enjoy the full benefit of the wealth you’ve acquired without undoing everything you’ve built.

Leave No Surprises

We’ve all seen the movies where the family gathers in some stately manor for the reading of the patriarch’s will, only to fill the room with gasps of surprise when the entire estate is left to the housekeeper instead! In real life, the execution of your will should be much less dramatic. If you’re having all the right conversations with your family and business partners before you make estate planning decisions, there won’t be any surprises when that day comes.

Once you’ve made decisions about how your money should be distributed, come talk to the experienced financial planners at First Western Trust Bank about how to set everything up. We can tell you how to keep your money safe from creditors, reduce your tax burden, and distribute your funds in order to meet your financial goals and keep your priorities going long after you’re gone.

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