Originally published in Coloradoan.com
By Jim Sprout
When an estate plan goes wrong, the consequences can be really frustrating – needlessly steep tax bills, for instance, or worse – lawsuits. Financial advisors like me follow a well-worn path to avoid these poor outcomes.
But what saddens me — and it’s not something the average financial adviser thinks about much at all — is when I see friends get the technical stuff right, but neglect to pass along the legacy of themselves and their values, leaving their heirs with questions and doubts.
Estate planning should be about more than just money.
I’ll explain. Wealth — in the form of cash or assets, property or a business – is most of what an estate plan deals with. But the real wealth of a family is in the tradition, the lessons learned, and the common experiences that have been shared. There are values passed on that can be more important than the money.
A client of mine who inherited money from her father said her greatest regret was she never had the chance to talk with him about it and was left to guess what his hopes and expectations were for all he was handing down to her. Responsibility comes with wealth, and some heirs wish they could have a last consultation with the people who raised them about what comes next. Or at least how this wealth connects to the family story.
As bad as no explanation can be, messages that are hastily assembled as the life’s journey nears its end can be problematic too. Often the influence of the pain and confusion of the final days is apparent.
The better way? Do it now. Today. Collect your thoughts, reflect on your history, your family’s history, and the values and memories you want to pass down, and create a record of them. This is not a maudlin exercise. Approach it as a memoirist and in a spirit of hope for the next generation, while there are still many more good times in front of you.
Often the people that are leaving the wealth are less likely to want to talk about these things. But rest assured, I’ve seen it again and again as a financial advisor: the next generation is interested in how this legacy was created and what mattered to the older folks. But they don’t know how to talk about it. The children are afraid to broach the subject. Even asking certain questions suggests one day the older generation will not be around, and no one wants to think about that. Or they are careful not to violate their parents’ privacy.
So, depending on your personality, either a legacy letter or a legacy video can be a remarkable gift for the next generation that can complement conversations you may eventually have, and fill in gaps and missed opportunities.
These are and should be celebrations of life that the heirs can keep and treasure and refer to and pass on. If you need help getting started, you can find guides online, including some tips I’ve assembled.
Collect your thoughts and present them in a careful and deliberate way, knowing you’ll have the rest of your life to make edits or additions. Your advisor can keep the letter or the video with your estate documents, a priceless addition to your legacy to the next generations.
Jim Sprout is the Northern Colorado chairman for First Western Trust.