How to Preserve Family Bonds by Discussing Inheritance with Your Heirs

April 7, 2022

Families often struggle to initiate discussions about inheritance because of the darkness it can represent. Yet as much as inheritance reminds us of our mortality, it also symbolizes the continuation of the family legacy. When we pass down our assets, we not only pass down material wealth – we also share a wealth of family values.

When we consider inheritance to be a beginning rather than an end, the light of our wisdom comes streaming in. By openly discussing inheritance with your heirs, you illuminate your legacy for generations to come.

In this blog, you’ll find:

  • Why it’s important to discuss inheritance now
  • How to share the values behind your wealth
  • The 12 essential questions to start the inheritance conversation
  • Why you need a clean estate plan  

Why it’s important to discuss inheritance now

Imagine a family that completely avoids discussing money. On the surface, it may seem like the wealth creator is taking care of the family by managing complex finances. But what happens when the family wealth creator is no longer able to lead the charge? 

More often than not, an uninformed transfer of wealth leads to family tension and dwindling assets. A 20-year study conducted by The Williams Group found that 70% of affluent families failed to preserve assets and family relationships after the transfer of wealth. This mostly stemmed from a lack of:

  • open dialogue around the impact and purpose of money
  • financial education for heirs, like basic personal finance and how to approach their inheritance
  • a shared understanding of the family’s mission for their wealth

Having discussions early and often avoids family distress and squandered money. Whether you’ve provided your heirs with a robust financial education, or it’s your first time discussing financial matters with your family, take the time to discuss the future of your wealth with your loved ones.

How to share the values behind your wealth

Instead of leaving your inheritors questioning, use this opportunity to share the values behind the wealth you have built

For example, you may value generosity. When telling your heirs the story behind your wealth, you may highlight your charitable giving plan. What types of organizations do you support? How does your charitable giving plan elevate other values you may have, like high-quality education or good health? How would you like to extend these values into your heir’s lifetime?

Consider this an excellent opportunity to share stories from your lifetime, and perhaps even exchange ideas with your heirs. Once you’ve shared your piece, ask them about their visions for the future – how might they carry out these values in a changing world? Offering your heirs an opportunity to share their perspectives can encourage curiosity and instill a sense of responsibility. 

The 12 essential questions to start the inheritance conversation

So where to start? Consider engaging in this exercise while all of your family members can share their viewpoints.

Begin by conveying to your family members that you want to have an open discussion about your family legacy. Plan a time to gather with a trusted wealth advisor who will mediate the discussion and provide insight. Then, ask yourself these questions to prepare for your family discussion:

  1. What is our family’s mission statement, or what is the overall purpose of our family wealth?
  2. How does the entire family participate in the most important decisions, such as defining a mission for family wealth?
  3. What is the vision for the management of the family’s assets?
  4. Have the heirs reviewed the family’s estate plans and documents which outline this vision? 
  5. What is the desired objective for the heirs who inherit the family assets? How best can they perform this role?
  6. Does everyone understand their roles in the transfer of wealth? 
  7. Does everyone understand the difference between the medical power of attorney and the financial power of attorney?
  8. Are these important roles delegated based on readiness to perform the task, rather than age or gender? 
  9. Does everyone understand the end-of-life goals and desires behind the current wills, trusts, and other documents?
  10. Does the family mission include creating incentives and opportunities for the heirs?
  11. Are the younger children encouraged to participate in the family philanthropic grant-making decisions?
  12. Does our family consider family unity to be just as important as family financial strength, and what steps are being taken to preserve our family structure with the migration of wealth?

By regularly communicating about the philosophical and logistical aspects of inheritance, wealth creators are more likely to achieve their desired outcomes and preserve family ties.

Why you need a clean estate plan

When designed well, an estate plan will instruct and inspire heirs to fulfill the wishes of their loved ones. To fulfill instructions, a plan must include enough safeguards to prevent major missteps. To provide inspiration, a plan requires enough flexibility for heirs to achieve their own goals without feeling as though they are being “controlled from the grave.” 

Achieving the balance between protection and encouragement requires time, but when done correctly, a well-crafted estate plan will allow the light of your legacy to shine through your heirs.

Schedule an Estate Plan Consultation with SWM

Singer Wealth Management