When it comes to estate planning, I have found that many wealthy families don’t worry whether there will be enough money for the kids but whether the kids will be responsible enough to handle the money. Research shows that each year approximately over 7,000 estates worth more than $20 million transition from one generation to the next. However even though most of these estates are effective at preparing these assets to be passed on, many are not.
“Post-transition” family problems arise because while parents, advisors, estate lawyers and accountants spend a lot of time preparing the assets for the heirs, too often no one is preparing the heirs for assets. The parent’s estate plan gets taken care of but no one is preparing the heirs to handle the assets that are passed down for the long-term.
The key is to involve the whole family in the estate planning process. Here are 3 recommended steps:
1) Awareness, making the parents aware of the risks to their plans;
2) Assessment, determining if their particular plan/family is at risk; and
3) Action, addressing issues of trust and communication among family members, defining the roles of the heirs often through a family mission statement and creating a post-transition strategy for the heirs.
Have you planned your estate? I always recommend consulting with an estate planning attorney the sooner the better. Again, we don’t “plan to fail – we just fail to plan.”