Financial Advice for Retirement, Social Security, IRAs and Estate Planning

Forget Estate Planning: Follow This “Inheritance Plan” Instead

Published on: Jun 04 2019
estate planning

Estate Planning isn’t “all about the money.”

At least, it’s not if you want the plan to be successful.

Likewise, I’ve said for years that estate planning isn’t all about taxes.

Truth is, you need an estate plan even when the estate isn’t likely to be hit with federal estate taxes.

You also need to take another step and realize that a good estate plan isn’t focused on the money, the will, or the trusts.

A good estate plan has an even better “inheritance plan.”

Consider this…

Few wealthy families have their wealth last beyond the generation that earned it.

Here’s some data from a survey by The Williams Group…

It found that among very wealthy families, 70% lose their wealth in the generation after the one that created it.

The wealth is gone during the third generation for 90% of the families.

The results are similar for families that don’t qualify as very wealthy, but that pass something from one generation to the next.

When people are contemplating their estates, they worry the following generation might lose the money because of mismanagement, an economic downturn, or government actions.

But those rarely are the causes of dissipated wealth or blown inheritance.

The Williams Group’s study also found that most of the time, family wealth didn’t disappear because of outside forces such as the economy, an industry downturn, poor investments, or politics.

Wealth fails to make its way through most families and make the inheritance last because of problems within the families.

Underlying the data about money are stories about the family members and relationships.

Advisors to the wealthy generally believe members of wealthy families lack a sense of direction when it comes to finances.

Relationships between family members also tend to be bad.

The younger family members often blame those who created the wealth for these problems.

In particular, there’s a lack of communication and trust.

And that’s the greatest threat to wealth and to your estate plan, no matter how big or small your estate is.

It’s almost enough to make you decide estate planning isn’t worth the time and expense.

But don’t fall into that trap.

You can break the traditional cycle – and create your own inheritance plan.

The first generation generally isn’t open with the following generations about how much money they have, how it was accumulated, the first generation’s philosophy about money, and what it will take to keep the inheritance growing.

While 90% of wealthy families fail to maintain their wealth, there are 10% who do, and you can learn from those successful families.

Your focus should be on giving more than just money, however much you have.

A survey conducted for Allianz in 2005 found that most Baby Boomers believe it is 10 times more important that their parents pass on to them memories, stories, and values than to pass on inheritance money.

There isn’t a single key to ensuring a successful estate plan, but there is a clear process that works.

You need to involve the children and grandchildren in the inheritance planning process, and the process involves more than money.

While 90% of wealthy families fail to maintain their wealth, there are 10% who do, and you can learn from those successful families.

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