Help Clients with the ‘Inheritance Talk’

It wasn’t easy for your clients to talk to their kids about sex, drugs and being safe on the Internet, but they managed — whether with red faces or not. But when the subject turns to inheritance, many clients would rather have a root canal than talk about family money.

Telling children how much they stand to inherit is fraught with what The Wall Street Journal calls “emotional land mines.” Parents who came from much more modest means might feel guilty about their wealth. They worked hard for their money and don’t want their children to lose their work ethic. (

There’s also the thorny subject of who inherits what, and how much. Not talking about it can lead to confusion, mistrust and heirs ill equipped to manage wealth.

Despite these obstacles, experts interviewed by The New York Times say it’s important for parents to talk openly to children about money because failing to do so brings with it its own set of problems. (

Etiquette in discussing money with family

Is there a “best way” of approaching the conversation about wealth with your client’s family? We found an interesting article in AARP interviewing etiquette expert Peggy Post of the Emily Post Institute about this issue. (

Post says there is no set “blue print” to follow for every family. Before money is left to heirs, Post suggests having one-on-one conversations with the children. It’s also important to have group meetings so everyone is on the same page.

Dropping the news all at once can overwhelm and dumbfound heirs who had no idea of the scope of their inheritance. Sudden wealth can be a burden.

Developing a family mission statement can help heirs know what a family’s values are regarding money. Also, holding regular family meetings can reinforce those ideas. Sharing stories about how the wealth was created lets the kids know the money didn’t come out of thin air.

There’s going to be a lot of money transferred in coming decades. Baby boomers will leave their children more than $30 trillion in the next 30 to 40 years, The Times says.

The “blank check” exercise

Parents need to assess their children before revealing too much information, The WSJ says. What is their level of financial responsibility, ability to think in an adult way and adjust to a potential large inheritance?

Hand them a sheet of paper and tell them to pretend it’s a blank check and to write down what they would buy if they had the money now. If they say a sports car or a wardrobe from Mercedes-Benz Fashion Week, then clients know more mentoring and teaching is called for.

It is all about communication and planning

Deciding how assets will be divvied up can be a chore. Should everything be equal? What if one child is active in a parent’s business working for below market salary with the implied understanding that the business will be “left” to him or her? What if it’s a blended family? This is why working with a professional team of advisors is critical in thinking these issues through. Unique family dynamics call for unique planning strategies. In the end, it comes down to great communication within a family and thoughtful legal planning.

We hope this information was useful to you and helps your clients and their families. If you have a specific case or a question, don’t hesitate to call our office.