Napolitano says good planning crosses multiple generations.
Family and money don’t always combine for an easy conversation – especially when gathering for a family occasion or holiday. Nevertheless, these conversations are appropriate, and should be had if you are curious and looking to be helpful.
This should happen with family members you care about. Let’s start up the family tree with parents. Sometimes older generations don’t want to talk about money at all. But these are questions that must be asked, regardless of their willingness to answer.
Do they have a current estate plan? Don’t be surprised when learning their estate plan may be nearly as old as they are.
Ask if you have any roles to serve in the settlement of their estate(s), such as health care agent, trustee or personal representative. If yes, then you have the right to examine the documents to better understand your role. This also provides opportunities to revise or improve upon the current plan in place.
If there is a business interest involved, ask about the succession plan and who owns that business after the passing of the owner. Determine if that agreement is in writing, funded, and still relevant based on the current condition of the business and the people that may be left behind to run it.
Ask about cash flow and whether they feel comfortable living their life dreams from a financial standpoint. Probe a little deeper and ask if they’ve got a bucket list. Common among those nearing retirement is an ingrained mentality of not spending. We find many don’t realize they may be able to afford and physically accomplish some of their bucket list items.
Moving on to brothers and sisters – it’s OK to talk about financial issues you may have in common. For siblings with minor children, find out if they’ve appointed successor guardians in the event of the parents’ premature passing. Don’t be surprised, however, when your sister looks you in the eye with a vacant stare and reveals that you were their undisclosed choice or that they haven’t done anything.
The last line of questioning involves your children. If your kids have minor children, these young adults have the most to lose. The important issues for your kids are guardianship of their minor children, the amount of life insurance on each parent, and the type of estate planning documents they possess.
Many young adults don’t have much of an estate. What they do have are dependents and a young spouse. Imagine this, a young parent with $1 million in life insurance passes away and that money goes directly to the young surviving parent who remarries within 3 years and then gets divorced, splitting that money with their ex and not your grandchild. A better solution is a trust for the benefit of a young surviving spouse and your grandchild, disinheriting any potential new spouse.