Guidance

RESOURCES TO HELP SHAPE YOUR FINANCIAL FUTURE

Informing heirs of estate plans and grooming them for their roles is essential for ensuring parents’ wishes are realized.

Family wealth brings great advantages but also great challenges. Perhaps the most significant of these is ensuring the younger generation is well prepared to handle the responsibility when the time comes. Parents, while prudently creating estate plans preparing for a smooth and successful transfer of wealth, are often hesitant to divulge intimate details of financial affairs during their lives. As with flowing water, they usually follow a path of least resistance.

This hands-off approach risks a deterioration of family harmony during the post-transition period. Too often serious problems arise that could have easily been prevented with adequate communication and collaboration beforehand.

However, familiarizing heirs with the mechanics of an estate plan is only one component of preparing them for inheriting wealth. A lack of financial acumen concerns both parents and inheritors alike. Judging younger generations to be financially immature, parents often exclude them from investment and budgetary meetings, critically depriving them of developing the requisite skills for handling wealth in the future. Most heirs, on the other hand, understand and accept the responsibility of being stewards and desire the knowledge and ability to shepherd the family legacy.

In order to develop a strong financial foundation, parents can begin the education with age-appropriate discussion. With young children, “wealth” doesn’t have to be addressed specifically. Instead, teachable moments around saving, spending, and sharing money are best. Teenagers are able to grasp the basics of investing, compound interest, and simple budgeting. Young adults should be exposed to the particulars of investments, retirement planning, insurance, and debt (credit card, mortgage, auto loans, and student loans). Adults later in life ought to be versed in trustee and executor responsibilities, in addition to developing a relationship with the family’s financial advisor, accountant, and attorney. Involving family members in philanthropic decisions can also help them understand the value of money, while reinforcing family values.

At Wintrust Wealth Management, we believe in a multigenerational approach. Successfully implementing this method gives peace of mind to parents, educates heirs, and provides for an efficient and respectful transfer of assets to the next generation. It is not an all or nothing situation: plans may be revealed piecemeal, as the situation allows. Your Financial Advisor can help in this process by acting as an objective third party, hosting informal one-on-one meetings, formal seminars, or simply as a sounding board for the many financial challenges families face throughout their lifetimes.

Contact one of our professionals to further discuss how you can better prepare your family for the important responsibilities they will be faced with in the future.