Family Legacy Wealth Plan: Conversations With Adult Children

Family Legacy Wealth Plan: 3 Must-Have Conversations With Adult Children

Family Legacy Wealth Plan: 3 Must-Have Conversations With Adult Children
Preparation is the key component for creating a successful family legacy wealth plan. One of the most overlooked planning steps, however, is involving your adult children in the planning process.

It’s likely you have an estate plan, i.e., legal documents ensuring your heirs receive your wealth, yet it’s common for aging parents to leave their children unprepared to receive their inheritance.

We’re often good at giving the money, but fail to express to our adult children our values and how to manage the money—two critical components for lasting legacies.

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Key Element for Cohesive Family Legacy Wealth Plans

Transferring wealth tax-efficiently and creating a lasting legacy requires clear communication with your heirs. However, before this can happen, you must first be in agreement with your significant other.

What sometimes adds to decision-making complexity and paralysis among couples is shifting family dynamics, like blended families.

Today’s high-net-worth families are diverse. Some are in long-term marriages and others are cohabiting in committed relationships.

For a successful family legacy wealth plan, you must start with a clear picture of your family dynamics. Who are your heirs and are you and your life partner in agreement with your wishes? You must also agree on your approach—specifically, will you leave each heir an equal share or a fair share?

For couples who can’t reach agreement, seek advice from a qualified estate attorney. Before you do, read our complimentary special report, 10 Essential Questions To Ask an Estate Planning Attorney.

Tip: Understand the key difference between estate planning and legacy planning. Read our post, Estate Legacy Planning Resources & Strategies.

3 Must-Have Conversations With Adult Children

For successful wealth transfer, it’s critical to understand that family legacy wealth plans have two sides—passing money on and inheriting money. These are two separate events requiring detailed financial planning to sustain long-term wealth.

An efficient way to account for both events is to have intentional conversations with your adult children. Your goal is to provide answers while you’re alive, rather than force your children to make decisions after you’re gone.

It’s important to speak openly with your children about your family’s home and plans for it after you’ve moved into a retirement community or passed away.

One of your children could surprise you during this conversation, expressing deep sentiment for the home. In many instances, family homes are sold and the proceeds are split evenly among heirs. This isn’t always the case, however, particularly if one child wants to live in the home. If this happens, you’ll need to decide how to make an equitable and fair split.

For example, does one child buy the other(s) out? If so, what’s the financial process, impact on all heirs and timing of this event? None of this happens smoothly and tax-efficiently without proactive conversations.

Also, if you own a high-value vacation property and want to keep it in the family, then planning for a qualified personal residence trust (QPRT) allows you to pass a home to the next generation in a tax-friendly manner.

Tip: Understand the key difference between estate planning and legacy planning. Read our post, Estate Legacy Planning Resources & Strategies.

It’s important your adult children understand the composition of your assets, where and how your assets are held, who receives them after your passing and why.

Answering the “why” while you’re able to is critical for maintaining family harmony after your passing. Today, you have the ability to provide clarity in regards to your legacy wishes. Tomorrow, maybe not.

Many adult children are not familiar with nontraditional financial assets and business structures, like:

  • Business Income
  • Executive Compensation Benefits
  • Financial Trusts
  • Life Insurance
  • Private Investments
  • Real Estate Holdings

The more complex your assets, the more critical conversations are with your children, so they understand how the asset structure works and the most tax-efficient way to manage and receive them.

Wealth isn’t just your investment returns—it also encompasses your values. You can’t transfer either successfully without an inclusive communication approach.

By openly sharing your values with your adult children today, you’ll increase the chances of enriching their lives after you’re gone.

Have you expressed the following clearly to your children?

  • How you want inheritances used
  • Causes important to you
  • Career knowledge you want preserved
  • Memories from your past to share with future generations
  • Lessons you’ve learned from mistakes you’ve made
  • And much more

Tip: Get answers to your estate and legacy planning questions. Explore our estate planning information center.

Next Steps

Rather than leave your adult children with countless decisions to make, a family legacy wealth plan removes uncertainty and enriches your children’s lives after you’re no longer here.

Without intentional conversations with your heirs, you increase the chances of their inheritance being lost to taxes and other risks.

Creating a legacy wealth plan can be complex, with many steps and stipulations. Before finalizing yours, speak with your wealth adviser to make sure the strategies you’re pursing effectively support your goals.

Contact Adviser Investments anytime for assistance. We pride ourselves on being The Planner You Can Talk To.

Additional Family Legacy Wealth Planning Resources


Tax and legal information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice. Always consult a licensed attorney or tax professional regarding your specific legal or tax situation.
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