After spending their lives building wealth, most parents hope their legacy will provide their heirs security and enjoyment—not family strife. Unfortunately, when it comes to wealth transfer, it doesn’t always work out that way—families may say they all get along great, but finances have a way of creating strife during heightened emotions.
If you want to preserve relationships among family members after you pass away, while also making sure your estate will be managed according to your wishes, consider these five tips.
1. Recognize underlying family conflicts
Much of the emotional turmoil that professionals see while handling estates comes down to long-simmering conflicts that boil over.
If you know this kind of resentment exists, deal with it now and build in safeguards to minimize it when you’re not around.
2. Introduce family members to your advisors
It’s helpful for your loved ones to have relationships with your trusted network of advisors, including financial advisors, lawyers and accountants. Make introductions and explain why you have confidence in your team.
That group should have up-to-date versions of your estate plan and legal documents and instructions on how to contact your loved ones after you pass away.
It’s also important to leave clear instructions for your relatives about what documents exist and where to find them. Too often, people spend weeks searching for their parents’ important files.
3. Clearly communicate specific wishes
Many disagreements revolve around one beneficiary who wants to sell the family home and another who wants to keep it in the family. Make clear what should be done with your major assets, including property.
Personal items that hold sentimental or historical value may also cause conflict. One family member could claim they’ve been “promised” something, but the estate documents do not have clear instructions.
Talk to your family now about what items they would like to have—and avoid the possibility of a future argument.
Take pictures of special or meaningful objects—such as jewelry, heirlooms or furniture—and list who should inherit them, either in your Will or in an addendum. Making those wishes known in writing helps eliminate room for misinterpretation.
4. Appoint an objective executor
Many may think administrating an estate is a straightforward task and often select their oldest child or a close friend as their executor out of tradition. Few appreciate the proper settlement of an estate is critical and it is far more important to have someone in charge who has the time, health, patience and objectivity to ensure accurate record keeping and timely administration than doing what traditionally was done.
For this reason, choosing a professional, such as a corporate executor, can be a smart decision.
5. Hold a family meeting
The last people to find out the details of the estate plan are often the beneficiaries—not an ideal situation.
To ensure there are no surprises, a family meeting can help smooth the future process and explain your wishes to beneficiaries.
If you’re leaving a donation to charity, for instance, your heirs could be confused or resentful if the first they hear of it is after your death. But if you explain in advance that the charitable gift is your heart’s desire, they are more likely to appreciate the gesture.
You could also take the family meeting as an opportunity to invite your financial advisor. By helping to conduct the meeting, your financial advisor gets to meet your beneficiaries and can help take emotions out of the conversation.
You can’t plan for every single family conflict that may arise after you’re gone. But by taking the time to explain your plans in advance, you may help avoid future conflict and preserve family harmony.
This article was originally published on RBC Wealth Management–U.S.
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