5 Steps to Streamlined Wealth Transfer

Putting off estate planning decisions and conversations. It’s a common and completely understandable behavior. After all, who wants to spend time thinking about their own mortality? Yet it’s precisely those two things—planning and communicating—which are the keys to successfully transferring your wealth to future generations.

Ready to take the plunge? The following five steps will help guide you along the way to establishing a thoughtful estate plan and preparing your beneficiaries to be responsible stewards of wealth:

1. Educate heirs about your estate’s value—and your values

This process should begin early with financial education. When your family’s still living under the same roof, it’s easy to have frequent, casual conversations about the value of money, budgeting, saving and credit, taxes, and giving back. Over time, these discussions should gradually expand and deepen to include more details about your estate, as well as the legacy you envision for yourself and the values you hope to see future generations preserve.

2. Consider your assets, as well as who values them most

Liquid assets (such as investment accounts and insurance policies) are relatively simple to divide up between heirs. Other assets such as a family business, art collection or vacation home, tend to be harder to divide. Try to match the assets in this latter category with the beneficiaries most likely to appreciate and enjoy them. Some assets can be shared among children; others can’t. Make preliminary decisions now and try to gauge your heirs’ reactions. Anticipating possible areas of conflict is far better than letting hurt feelings develop into legal battles down the road.

3. Share your plans and make adjustments as needed

You might think you know which heirs value which assets, but there’s no substitute for an open and honest discussion to validate your assumptions. For instance, the person you envisioned taking over the family business may actually have no interest in doing so. By learning information like this early on, you have plenty of time to modify your estate plan accordingly. These conversations can also help flag any conflicts or concerns—allowing you to make revisions that will keep things balanced and amicable.

4. Put your administrative house in order

When drafting your estate plan, you can add restrictions as you see fit. For example, you can place assets in trust for one or more beneficiaries, or specify a use for certain funds (e.g., college tuition). It’s also important to identify capable trustees who will see your plans through, and who can be trusted to be impartial when judgment calls are required.

5. Periodically revisit your plan

Your first formal estate plan should be drafted no later than the birth of your first child. From there, we suggest revisiting your plan every three to five years. This will allow you to add detail and/or revise plans as you reach certain milestones such as retirement, or experience family life events (e.g., births, deaths or divorces).