Personal Finance Essentials
The Importance of Family Communication
The Most Powerful Estate Planning Tool
Doesn’t Cost a Penny
The most important estate planning strategy is one that doesn’t require a lawyer: talk with your family. Never keep your plans a secret.
Research consistently shows that the most financially successful families are those in which parents talk openly with their children about wills, trusts and inheritances. Yet money remains one of the least discussed topics at the family table. That silence carries a cost.
When family members don’t know the desires, intentions and motivations behind an estate plan, conflict almost inevitably follows. We have seen brothers argue for years over the handling of a parent’s estate. We have seen nieces demand that an aunt sign over the deed to a family beach house shared since childhood. We have seen children sue their stepmother over assets they felt they were owed. We have seen a young man receive half a million dollars upon his parents’ deaths and spend every dollar within a year on parties, cars and friends.
In none of these cases did the deceased intend to create conflict. In every case, poor or nonexistent communication and insufficient planning were at the root of the problem. A will is a terrible place to keep secrets.
Talk with your spouse, children, parents and siblings about your plans. If you intend to leave your assets unequally, explain your reasoning while you are still alive. If you plan to disinherit someone, consider having that conversation directly rather than leaving them to find out after your death. The one asset you must pass on is peace.
Giving Money Now Rather Than Later
People are living longer than ever. A 65-year‑old can expect to live to 83; an 85 year old can expect to live to 91. By the time parents pass on, their children may be well into their 60s or 70s – past their years of greatest financial need.
If you are in your 80s or beyond, have money you will never use and plan to leave it to your adult children and grandchildren anyway, consider giving some of it to them now. You will witness the joy of helping them pay off college loans, buy a home or build a foundation for their own families. That is a gift that compound interest cannot replicate.
Of course, do this only if it does not compromise your own financial security. Your own retirement income, health care needs and long‑term care costs must come first.
Treating Inherited Investments as Financial Assets
When heirs receive investments as part of an inheritance – stocks, bonds, mutual funds or other securities – they sometimes treat those assets as heirlooms rather than financial instruments. The result is a portfolio built on sentiment rather than sound strategy.
Before you bequeath investments to your children, tell them clearly that they are free to sell anything they inherit and manage it as they see fit. And when you receive investments through an inheritance, remember: they are financial assets. Manage them accordingly. Your parent’s intentions in accumulating those assets were financial. Honor that by putting them to their best use.