The uncertainty that was brought on during the COVID-19 pandemic has pushed many to take care of practical matters that may have been long ignored or neglected in the past. Estate planning attorneys have been busy completing advance healthcare directives, creating powers of attorney, helping clients write a will for the first time and reviewing reams of existing trust documents. But managing our wealth is not just about practical matters; we are in a new day when it comes to talking to loved ones about the future and about our hopes for those futures.
Legal documents are the practical means of addressing our eventual demise. They articulate our wishes about how our assets will flow. They define who will handle our affairs when we are not able to do it ourselves. They delineate who gets what and under what conditions. These prepared documents contain explanations of the who, the what, the where and the when.
But despite providing answers and solutions for all these end-of-life concerns, the “why” of it all often seems to be neglected. The “why” is a critical component and might just be where true legacy lies.
- What drove us to decide on the provisions in our trust documents?
- What do we want to see happen in the future with our loved ones?
- How do we think and feel about money?
- What lessons have we learned in our lifetime?
If we stop at completing the documents, are we missing an opportunity to truly empower our loved ones to deal with our illness or departure in a meaningful way?
In his famous “Wealth and Families,” the late Charles W. Collier, the former senior philanthropic adviser at Harvard University, said, “These hard questions surrounding family and the wise use of money across the generations are the most important ones, and yet they are rarely asked. The questions about the meaning and purpose of wealth should drive the thinking of individuals and families, and the resulting estate planning… Think about values first, product second.”
John and Sarah (see Case Study below) felt they had valid reasoning for making the decisions they made. They chose the family friend because of geographical proximity as the children lived out of state. Valuing their own autonomy, they did not want to burden their children with their care. Being knowledgeable about tax and estate laws, they chose a trust structure for its tax benefits in an attempt to optimize the inheritance they were leaving. But in the end, the lack of discussion about money and failure to make their plans at least clear to the children if not agreeable with them throughout the decades led to an unintended legacy of unanswered questions and, ultimately, painful second-guessing and hurt emotions.
Consider John and Sarah. John spent many years as an executive at a Fortune 100 Company and retired in his early 60s. Sarah raised two children and took care of everything while John traveled globally. Sarah and John were true partners and enjoyed a good lifestyle. The spoke about money between themselves, but never with their children. When crafting their estate plan, Sarah and John felt it was necessary to draft trusts that would provide financial support to the kids because they did not think their children were interested in or capable of handling assets on their own. They also named a close family friend as power of attorney and health care proxy, not their children. All documents were executed, and the couple believed nothing else needed to be done. The children knew nothing of their parents’ plans.
John’s health began to decline, and his memory was failing. Sarah fell and broke her hip, facing months in a rehabilitation facility. The planning documents had been triggered, calling on the family friend to coordinate John and Sarah’s financial and health needs. The children flew in to help mom and dad and were shocked to learn that their parents had not entrusted them with responsibility for their care. Did John and Sarah feel there children were incapable of handling their well-being? Why? When John and Sarah passed away a few years later, the children learned that all assets would pass in trust with little involvement of the children. Again, why?
Committing to communication about the specifics involved in your estate will not only impart your financial know-how and help your heirs be more proactive in the management of their own financial affairs, but it can also provide the family with the clarity of your reasoning, allowing for input from your loved ones. Why restrict funding until a beneficiary reaches a certain age? Why is there a provision that requires a prenuptial agreement? Are these stipulations results of legitimate concerns or could they be reflecting your unexpressed fears?
Money conversations of any depth are never easy, and in some families, it is just not done. Death and money are among the most difficult, if not the most difficult topics to discuss with people who are close to us. Honest conversations about money in the context of a finite life makes us face our failures, our regrets and our deepest fears. We feel vulnerable and exposed. But remember: These are our loved ones. As such, they deserve the trust of love, and these discussions will raise greater awareness of hopes and aspirations that extend well past one’s lifetime toward our dreams, the stuff of one’s true legacy.
Stepping outside our comfort zone and opening ourselves up to the hard questions about family and the role of money across generations may very well initiate a conversation about meaning and purpose ahead of the search for practical solutions. Spending time on the “why” before we tackle the “how” will help structure a plan that is authentic, protecting against dissension, strife and what might be the unnecessary costs for professional intervention.
As the familiar song goes, “teach your children well” and children, “teach your parents well,” “and know they love you.”1 Include your loved ones in the specifics of the process for your estate planning and decision-making. Discuss with them the experiences that have helped shape your views and your values.
Overall, the best starting point for this would be to keep the end in mind. Ask yourself: what does it mean to prepare your loved ones for your departure? It could be in years, but it could be much sooner. So be specific. You may need to tailor your conversations to address specific relationship dynamics, emphasizing different aspects of your planning with different members of the family. And because it can often be hard to start this monumental task, one must first simply begin.
- Talk about your earliest memories about money and your earliest memories about death. Ask your children about theirs. Who were your and their early influencers? These types of questions can stimulate a productive conversation about relationships and about deep-seated beliefs concerning money and wealth.
- No one likes to be lectured, but everyone loves a good story. Weave in memories of your experiences to convey practical lessons.
- Get out the old photos and the old movies.
- Live ‘till you die.
This is not a pleasant topic to talk about, but the sooner you do, the more time you will have to “get living!” We are here to help you better your financial future – call 800-658-9474 or fill out the brief contact us form to get started.
1 “Teach Your Children” by Crosby, Stills, Nash & Young