The Planner's Perspective: Don't Keep Your Cards Too Close to Your Chest

Paul Morrone |

By Paul Morrone CFP®, CPA/PFS, MSA

Crafting a financial plan is a very personal process which often involves making decisions that many put off for years simply to not have to deal with it. As difficult as it may be to face hard realities during the planning process, being open and honest with your planning team (attorney, advisor and accountant) will help to ensure that your financial household, and ultimately your legacy, reflect your most intimate wishes. Your advisors understand that you will be discussing very sensitive topics, which often involves opening old emotional wounds. This may involve discussing family disputes, special needs planning, addiction issues, estranged children, previous marriages, bankruptcies and divorces, to name a few.

The candid conversation you (and your spouse) should have with your advisory team will be the basis for many of the recommendations they will make in crafting your personalized plan. During estate planning discussions, they will help guide you in considering not just who to transfer your wealth to and how to most efficiently create a legacy, but they will also help you determine who the right people are to best manage the process (executor, trustee, etc.). Regardless of whether your family has a significant net worth or not, a basic estate plan is a necessary part of any sound financial plan.

Equally as important as being honest with yourself and your planning team is being transparent with your children and other family members or friends who may benefit from your wealth after you pass. Establishing expectations with your loved ones can help alleviate some stressors that may arise at your passing or incapacity, which is already an emotional trigger for many. While discussion of actual dollar amounts is not as critical as discussing the basics of your estate plan, it may give you the opportunity to explain your intentions personally rather than letting the documents speak for themselves.

We often encourage clients to host a family meeting (ideally with their attorney or advisors present to field technical questions) with the intention of discussing their estate plan and how it will ultimately affect their heirs. It is also an appropriate time to discuss who has been selected or appointed for key roles that will have a fiduciary responsibility in the event of your death or disability. This can help to clarify your intentions while you’re alive and in coherent and may help alleviate concerns your beneficiaries may have that your decisions were made in haste or in a compromised state of mind. Additionally, having all parties present can eliminate the accusation of verbal promises and establish a baseline for all beneficiaries.

Blindsiding your heirs with a complex or inequitable estate plan (i.e. when one child receives more than another, or an individual is disinherited entirely) can create unnecessary tension between siblings. There may be entirely valid reasons to provide more wealth to one individual than another. Maybe one was your caretaker for years and devoted many hours each month to overseeing your care plan while another lived far away. Or, maybe you felt that your children were successful on their own right and decided to pass your entire legacy directly to your grandchildren or a charity. If the tension escalates, an individual can even attempt to legally invalidate a will or trust, claiming that it is not valid under state law, fraudulent, signed under duress or was drafted while the decedent was incapacitated.

While most families experience peaceful wealth transfers, it is never safe to assume that everything will go smoothly. Emotions combined with financial affairs can make people act out of their normal character. Add in a jealous spouse, litigious ex-spouse or your child’s in-law who feels entitled to an inheritance and the snowball can grow very quickly. These practical reasons alone are enough for us to discourage any sort of do-it-yourself estate planning, without even considering legal and tax technicalities that further reinforce the value of working with a professional.

This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.