Make clear that you want people to be candid but respectful, and that the idea is to forge consensus. As a rule, Wesley suggests, don’t talk about numbers for the first meeting or two. Instead, start by sharing your thoughts about what the assets you’ve accumulated over the years have meant to you and your family. “From there, you can talk about the impact you hope your money can have as you transfer it to the next generation,” he says. (See “How to Host a Successful Family Money Meeting,” above, for more ideas.)
Finally, Wesley adds, discuss what principles should govern the distribution of the estate. For example, how will you handle the division of personal property that can’t be easily split? Emphasize a “we’re all in this together” approach. Estate planning is a collective responsibility requiring a collective solution, he notes.
Seek compromises that suit everyone’s goals
“Parents can’t assume that their plans will align with their children’s desires,” says Kevin Hindman, managing director, Retirement and Personal Wealth Solutions for Bank of America. He recalls the founders of one family business who believed their eldest son should inherit their company, not realizing their younger son was the one interested in running the business. “Had the parents not discussed the plan with their sons ahead of time, they could have created a situation in which one child would be saddled with an inheritance he didn’t want, while denying the other the chance to realize his dream.”
Luckily for everyone, the brothers aired their wishes in a family meeting, and the parents revised their estate plan. They passed the business on to the younger son and purchased a life insurance policy for themselves, naming the older son as beneficiary, in order to make the inheritances equitable.
Merrill Financial Advisor Mary Mullin tells the story of another couple who intended to pass on some of their legacy by paying for their three children’s educations. When their daughter announced that she would rather continue working at her low-paying but emotionally satisfying job, they listened, and both sides found common ground. “The couple decided to help support her financially while she stayed at the job she loved and took college classes at night,” says Mullin. “They came to derive great joy from watching their daughter pursue work that gave her a profound sense of purpose.”
Set up an action plan
As you work together to create an estate plan designed around your family’s needs, your advisor can help with practical strategies for many complex situations. These may involve a range of financial documents such as wills, trusts and life insurance policies. For example, say you’re considering passing on part of your estate while you’re alive, as Mullin’s clients did, but wonder whether your children are prepared to handle it. Your advisor can help you implement a “test drive” approach in which you periodically give financial gifts during your heirs’ lifetime through a trust.
Then there’s the question of estate taxes. During your family meeting, your advisor can help make sure everyone understands the implications of their inheritances and can also work with your estate attorney or tax professional to see whether there might be ways to lessen their potential tax burden.
Even after all the paperwork is done, think of this as an ongoing conversation, says Mullin. “Your family meeting may be the first time you’ve broached the topic of inheritance, but chances are it won’t be the last. As your family’s needs change—through divorce, marriage or a new grandchild, for instance—you’ll want to revisit your plan over and over again.” And each time you do, it should come closer to capturing your vision for empowering the next generation.