Estate Planning- Is It A Family Affair?

At some point your surviving spouse or partner or even your children will assume responsibility for investing the family’s wealth.

Your children’s portfolio may be in the form of a personal trust owned by the children, or due to illness or death the entirety of the family’s invested assets. Children should be prepared to take on this responsibility and unfortunately many aren’t and significant family wealth is lost.

The Solution?
Prepare your children to preserve and grow your family’s financial legacy.

 The Right Time
There is no perfect age to begin teaching and passing on responsibility for investing the family’s wealth but the role involves a level of maturity, experience and judgment that often comes with age. In my experience children in their teens and 20’s can begin learning and can be given some exercise and limited responsibility, children in their 30’s are often ready and able to begin to handle this type of responsibility (even if only on a limited scale). Also please remember asking a child or children to take on some family financial responsibility too early can lead to poor investments and resentment of too much responsibility too soon. But the failure to give only education and no real responsibility can result in a child not being prepared for the reality of handling large investments.

 Transition
Teaching and transitioning financial, tax and investment decisions to your children should be done over a period of time. This gradual timeline allows your children to learn and grow into their role. Often this begins with making them responsible for working on their own tax returns or with an advisor. Then, they can be given advice and mentoring on business or investments.
As parents you have been likely making the decisions about family investments for a long time and it may be difficult to give away some of that control. This s a great opportunity to review your financial strategies with a fresh set of eyes. Take the time to talk with your children about your family’s financial goals, your risk tolerance, and your expectations of them. Communication is a simple but incredibly effective way to set your children up to successfully invest the family’s wealth.

What do your children need to know?
- What professionals are involved in your investments?
- What services do these professionals provide and how much do they cost?
- Do you have legal documents and have your children gotten to review them with a professional?
- What benchmarks are used to judge the performance of investments?

Teach your children how to successfully manage the family’s investments over time and smooth the transition from your control of family investments to their control with little or no loss in wealth.

By: Estate and Trust Attorney’s, David M. Frees

Unruh, Turner, Burke & Frees Attorneys At Law

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