By Eric Reich
I’m not typically shocked by most financial statistics, but one that never ceases to shock me is that only 1/3 of Americans have documented their wishes in an estate plan. My guess is that of that 1/3, probably half have not done it properly. That means that realistically, only about 15% of people have a proper estate plan. This begs the question, why? While the reasons for not having an estate plan are different for most people, there are certainly some common categories that most people fall into. Not knowing where to start is an obvious one. Not wanting to face our own mortality is certainly up there too. For those who actually want to start the process, many struggle with not knowing who they should name to handle all of their affairs. Most often, this is because they don’t want to appear to be favoring one kid over another, etc. I’m going to address this specific topic next week. The last major area would be that people simply don’t know how they should divide their estate. There is a very specific concern for some folks within this general area, and that is that some people simply don’t trust their kids, and the thought of leaving them a pile of money when they aren’t financially responsible causes them to avoid the planning all together.
So, what should you do if you don’t trust that your heirs are responsible enough to handle an inheritance? Here are a few ideas to help you get started in your estate planning.
1. Set up a trust. Trusts are established for any number of reasons, but the reality for most people is that they are set up because they want to exercise control over the beneficiary’s actions. The trust acts as you, once you are gone. You are the one that establishes the terms of the trust, meaning you get to control the who, what, when and how of beneficiaries receiving the money. If you want them to get money only at certain ages, milestones, reasons, etc. that can all be spelled out in the trust.
2. Family meetings/education. Many families are reluctant to discuss money with their family. We have been told all of our lives not to discuss money or politics with people. The reality is that whoever started that saying probably wasn’t talking about having that conversation with your heirs. Discussing your wishes and expectations with your heirs can be very helpful for both them as well as yourself. Give your heirs guidance or teach them about being responsible with money. Some people are financially irresponsible, simply because they were never taught otherwise, and it’s never too late to learn to be responsible when handling money.
If you don’t know exactly what you want to happen with your assets after you are gone, don’t worry, you are not alone. Have this discussion with your advisors including your financial planner, CPA and a qualified estate planning attorney. They can help you determine exactly what you want to happen with your estate by asking lots of questions about what is important to you. The attorney can then translate those wishes into legal documents to ensure that what your wishes are, actually get carried out. They can also provide you with all of the other documents you should have as a part of a complete estate plan. If you don’t know who to call, let us know and we can provide referrals to several different qualified estate planning attorneys in your area.
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.
