Every parent worries about creating fair estate distributions for their heirs. The American Dream is as iconic as it is commonplace: you retire after years of hard work. You carefully plan to pass the fruits of your labor to the next generation. Unfortunately, transferring wealth is rarely easy, especially if you have more than one child.
By 2030, baby boomer women will be stewards of the most significant wealth transfer in human history. For many of these women, child-rearing takes center stage in their adult lives. Later on, they worry about squabbles and resentment over fair estate distributions. Mothers may want to manage dividing their assets so the distribution seems fair from their perspective.
A 2022 survey by IBB Law found that inheritance disputes are common and most likely to occur among siblings. Transferring wealth between generations is nuanced and confusing when an estate has multiple benefactors. Women want to avoid strife between family members already stressed by losing a loved one. Open, honest dialogue sets expectations for the future.
The most effective way to reduce potential rivalries is to make solid decisions before the transfer. Talk about those choices.
It may be appropriate to invite children to meetings with the financial advisor. This can help build a relationship and trust before the transfer of wealth takes place – allowing the children to feel more comfortable and confident in the advisor’s role, regardless of if the funds stay at the firm. Yes, conversation about mortality is difficult, but it ensures a seamless transfer of assets.
A note to advisors: Approach financial transactions professionally and impartially when planning or executing an estate. Your clients already trust you, and your credibility underscores a calming, authoritative direction. Listen to your clients and show them the best strategies to meet their wants and needs.
Keep in mind that every family dynamic is unique, and siblings respond differently to different situations. Still, there are contentious issues that hamper fair estate distribution.
When it comes to fair estate distribution, the best way to head off potential setbacks is to face them head-on. Explain your motivation and thoughts clearly to your advisor and your children. Consider what kinds of assets you have. Seddons indicated that, among 1500 respondents, more than half disputed land and property assets, which are more difficult to divide than money. Jewelry accounted for 21% of disputes. Jewelry, family heirlooms, and other tangible assets hold sentimental value; therefore, think about how your heirs can help decide those distributions. Some families encourage adult children to talk with each other, well in advance, about tangible treasures. You might choose to write a letter or record a video to accompany your will. An oral will may not be legally binding, but it can reassure heirs about your reasoning and intent — it’s a friendly reminder, reinforcing your last wishes.
Sibling squabbles over inheritance can damage family dynamics. Careful planning and constructive communication about asset allocation eases the transfer of wealth and eases the minds of aging women with as much invested in their families as in the bank.
[Editors’ Note: To learn more about this and related topics, you may want to attend the following on-demand webinars (which you can listen to at your leisure, and each includes a comprehensive customer PowerPoint about the topic):
This is an updated version of an article originally published on October 4, 2017. It has been updated by Nora Willi]
©2022. DailyDACTM, LLC d/b/a/ Financial PoiseTM. This article is subject to the disclaimers found here.
Rhonda Ducote is President/Principal at Apriem Advisors, a wealth management firm in Irvine, CA.
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