Fears When Talking about Money
Studies have shown (https://www.thewilliamsgroup.org/our-history) that the largest contributing factors to the depletion of family wealth are lack of trust, lack of communication, and lack of preparation (https://www.thewilliamsgroup.org/about-us). Underneath it all–FEAR!
Fear of Treating Heirs Unequally and Fostering Sibling Rivalry
Fear and money. Each family situation is different. And, depending on your personal view about parenting, you will need to carefully think through how you treat your children in your estate plan. You may initially decide to treat all kids the same. Perhaps that is not the best way to approach things. Treating each of your kids equally means they will receive equal shares—the same amount. On the other hand, fair as opposed to equal treatment means they receive your assets based on their personal situation.
The path you choose will depend on several factors. It will depend on each child’s situation, your circumstances, and your intentions. Regardless, the direction you choose will require much inner soul-searching on your part. You may have a child who is well off and doesn’t need your money. You may a child who needs a little more help to get on their feet. You may have a child not good with handling money, in a bad marriage, with a substance abuse problem, or with special needs. Should all be treated the same? If so, what are the consequences of treating them equally? What are the consequences of not? Fear of creating rivalry among your children can cause you to do nothing or make a choice you will regret.
Fear That Disclosure Now Might Limit Choices and Changes in the Future
Fear and money. If you have a revocable trust, you can always change your mind about anything in the trust if you are not incapacitated (unable to make decisions for yourself) or you die. So even if you appoint a trustee or executor, you are free to change your mind if you are competent. However, if you execute an irrevocable trust, you will generally not be able to make changes. While these trusts offer increased asset protection and potential tax benefits, the downside is you cannot change them without significant consequences.
Having an initial conversation with your loved ones about your estate planning needs may be difficult. That said, taking an action without thinking through the consequences may create more problems later. This is why I often recommend holding a family retreat or meeting to get everything out into the open.
Fear about Running Out of Money
For many people, acquiring assets offers financial security. The idea of running out of money creates a sense of vulnerability. Anyone who has spent a lifetime earning, saving, and investing wants to wake up with a few good years left with no money to comfortably live on. While there are no guarantees in life, working with an experienced estate planning lawyer and financial advisor can help reduce your fear.
How Can You Overcome Your Fear?
- Have an honest and open conversation with your loved ones.
- Work with competent advisors in creating a comprehensive financial and estate plan.
Below are some questions to get you thinking about your views on money:
- What does money mean to you?
- Are you comfortable telling your family about your plans for your wealth?
- What do you want to teach future generations about money?
- How can you help future generations develop financial competency?
- Are you concerned that you are going to run out of money?
- Do you worry about creating an entitlement mentality among your children, grandchildren?
- If you leave a large sum of money, do you think future generations will squander it?
- Do you think outside influences will take advantage of your children and grandchildren if you leave them a large sum of money?
- Do you want to treat your children and grandchildren equally or fairly?