By Eric Reich
Clearly the most difficult (and rewarding) part of my job is helping people with their estate plan. As a planner, it’s my job to help guide you through your financial life including college planning, investments, retirement and lastly estate planning. The challenge of estate planning is unique because it’s the one area that clients don’t get to see through to the end. This is why there is a breakdown in many plans. The ideas that I have in my head don’t always translate well once I’m gone, or they simply aren’t practical in real life. Let’s take a look at a few of the common issues people have when making their estate plans and why they might not always be realistic.
1. Your home or vacation home. Almost every client I meet says “I want to make sure my kids get my house/vacation house”, etc. I certainly understand the reasons why. You made countless great memories there over the years and you want your children to do the same. If you have an only child, this plan might actually work. Have 3 or 4 kids? Good luck! Multiple children almost never agree on inheriting this type of property. The kid that wants it thinks they are entitled to a “discount” on the buyout of the other siblings because after all, they’re family. This is clearly not fair to the other siblings. Many times the child that wants the house can’t afford to buy out the others especially if the house is the largest portion of the inheritance. No, they can’t share it either. Yes, I know they shared it when you were alive, but that’s because they had to since you owned it. Now that you’re gone, they aren’t going to take turns using it. At least not for long. Eventually someone wants the money more, and someone wants the house more. Make sure your plan spells out the process for a buyout, valuation, upkeep, etc. This can save a lot of heartache between siblings later.
2. Your stuff. We all talk about handing down our fine china, jewelry, art, antique cars, etc. First, and I know you’ll disagree with me, but 99% of the time your kids don’t want it. You can only pass down so many sets of china over the generations, which no one ends up using. I have a prized Corvette. It’s a 1963 split window coupe that was purchased new in the family. The problem? I have 3 kids and all of them want it. It would be unrealistic for me to never allow it to be sold or at least set a methodology for one of them buying it from the estate. One way to deal with the distribution of your stuff is to give it away while you’re still alive. This way, there is little left to fight over. I see this most often with jewelry. Give special pieces away now when you can see the joy it brings, and it will likely be worn more by the next generation who may be more active socially anyway.
3. Really think about who you include. I see plans where people want to give away $500 or $1,000 to seemingly everyone they’ve ever met. While I can appreciate the gesture, you are creating a nightmare for the executor of your estate. They have to track down all of these people, many of whom might be hard to locate. It can also require the estate to take much longer to wrap up after you’re gone thereby making the process take longer and be far more expensive than it needs to be. I’m sure you appreciate so many people that you’ve crossed paths with, but don’t feel the need to make them a beneficiary.
Take time to really plan out your estate. Seek the advice of an attorney who specializes in estate planning. Discuss your wishes with your CPA and financial advisor for tax and logistical issues. This is one area of life planning that you do not want to do on your own.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS visit https://bit.ly/KF-Disclosures.
Eric is President and founder of Reich Asset Management, LLC. He relies on his 25 years of experience to help clients have an enjoyable retirement. He is a
Certified Financial Planner™ and Certified Investment Management AnalystSM (CIMA®) and has earned his Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®) designations. A lifelong resident of Cape May County, Eric resides in Seaville, NJ with his wife Chrissy and their sons ,CJ and Cooper, and daughter Riley.
