By Cindy Radu
From the comfort of your home, you pick up the paper, scanning articles, relaxed while enjoying the fruits of your life’s labor that have allowed you to be in San Miguel de Allende. The warmth of the sun, the relaxing atmosphere; you want to believe in peace of mind for your future and the legacy you will one day leave behind. But is it that simple?
Have you seen the provocative and entertaining HBO series “Succession” about the dysfunctional Roy family? Most people don’t expect to see their hard-earned wealth eroded through years of drama and disagreements. You don’t have to be mega wealthy to end up in a situation where family members are fighting and may even be headed down the path to broken relationships or worse, litigation. Although the Roys are a fictional family, we can all think of “real-world” families that seem destined for their own personal mini-series.
From your vantage point, you may feel shielded from this path. Yet statistically, the financial wealth you have created will be significantly eroded by the end of the second generation and almost completely depleted by the end of the third generation. Why does this happen? There is a tendency to focus on numbers in estate planning, but only five percent of wealth transition failures are attributed to tax and financial plans; 60 percent to poor communication, 25 percent to inheritors not being adequately prepared for the wealth coming their way; and 10 percent to lack of vision for the wealth.
You do a mental review of your planning and say to yourself, “I’ve hired the best of the best advisors. Surely my advisors know what is best for my family and will help them through all this. That is what they are paid to do.” However, this approach likely won’t address concerns you or your family have that your plans may not go as smoothly as you hope. Do you expect your advisors to simply tell your family how all this was intended to work? Does your family know who your current advisors are? Do they have good rapport with these advisors? Is it possible that your documents and plans are out of date? Thinking about these questions, it is not hard to imagine how circumstances can spiral out of control after you are gone.
As Warren Buffet says: “Your children are going to read your will someday… it’s crazy for them to read it, after you’re dead, for the first time. You’re not in a position to answer questions.” When was the last time you proactively talked about these important topics with the people who will be impacted by plans in place? Do you wish your parents had discussed or would discuss their plans with you? If so, perhaps now is a good time to invite family members to have a facilitated family meeting. You don’t know what you don’t know.
