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Howard Lutz, Senior Vice President at Intercontinental, recently co-authored our new Special Report on "Navigating the Complexities of Family Wealth Conversations", and wrote this blog post as a follow-up piece:

Determining the best approach and the inherent hesitancy that exists at the mere thought of broaching such a sensitive topic as talking with parents about their estate plan is often an insurmountable hurdle, but it doesn’t have to be. Setting aside the complications, frustration, and loss of control when someone passes away intestate, there are also significant financial ramifications. The results of not having these conversations are stunning, with up to 90% of family wealth being lost by the third generation.

The lost wealth is not typically a result of poor financial advice, inadequate legal assistance, nor improper tax planning. It has been suggested that two thirds of Americans who have at least $3 million in investable assets have not talked to their children about their wealth and never will. So a great place to start is for the adult children to proactively initiate the conversation with their aging parents by sharing a few simple observations: 

  • Parents feel compelled to talk with their children about religion, political views, drugs, alcohol, bullying, mental health, and other topics of great magnitude, yet a surprising number don’t talk about wealth and inheritance.
  • Beyond the sheer desire to maintain the family wealth through generations, having these types of conversations enable the family to effectively explore topics such as shared values, attitudes towards charitable giving, and passing knowledge onto future generations.
  • It’s a natural desire for family members to want to care for their parents, but desires and financial capacity do not always go hand in hand. As the adult children, it’s far better to have years – hopefully decades – to start saving for and putting planning into place to take care of their parents. With the ever-increasing cost of healthcare combined with a greater number of post retirement years, it’s very easy for people to underestimate the true expense and resources needed. Having this tough conversation with parents is not just about gaining a better understanding of their assets, it’s also critically important for the children to know to what extent they will be called upon to take care of their aging parents. 

What other details should children consider when approaching their parents about estate planning?

Sharing family values can and should be an integral part of family wealth conversations. They often stir up strong emotions full of joy along with a general feeling of doing good. Accordingly, discussing family values provides an impactful and typically well received opening to approach parents about their estate planning. Children should also consider exploring topics such as debts, philanthropic and charitable desires, and thoughts around leaving a lasting legacy. 

Never discount the power of pulling on the parent’s heartstrings when it comes to their grandchildren. The aging parents can have a profoundly more lasting impact, both financially and through the sharing of values, when their grandchildren are also included in robust family wealth conversations.

What strategies might be helpful?

At Intercontinental Wealth Advisors, we always encourage people to include their financial advisor when they are planning on having family wealth conversations. Beyond the technical expertise they can bring to the conversation, their ability to share real life, relatable, and impactful stories from helping other families navigate the complexities of family wealth can turn an overly abstract conversation into one of meaning and urgency.

Who should be involved — and in what capacity?

Although discussing wealth and estate planning is often a sensitive topic, we typically recommend including as many of the family’s relevant professionals as possible after the adult children are able to successfully engage their aging parents to explore this important topic. Financial advisors, estate planning attorneys, and CPAs all play an important and impactful role in robust family wealth conversations. It also goes without saying, but the more family members involved with family wealth conversations, the greater the likelihood of success.

Howard Lutz
Senior Vice President at Intercontinental Wealth Advisors