Financial Fitness

by Antoine Williams

One of the most challenging aspects of planning an inheritance is that families are complicated. American families are varied throughout the country but their members tend to fall into one or more of a few broad categories. According to the Key Findings Report in the 2014 U.S. Trust Insights on Wealth and Worth:
Single person: About one-fifth of wealthy participants, in a recent survey, had never married or had not remarried after being divorced, separated, or widowed (a small percentage are cohabitating).
Traditional marriage: About three-fourths of affluent Americans are in their first marriage and two-thirds have children.
Blended marriage: The Silent Generation (24 percent) and Baby Boomers (17 percent) are more likely than younger generations to have blended families, meaning they have remarried after being widowed or divorced and may have step-children.
Multi-generational household: Generation X (11 percent) and Millennials (32 percent) are more likely to live in multi-generational households, meaning they either live with siblings, parents, or grandparents, or have adult children, parents, or grandparents living with them.
In the context of family, what seems like the simplest choice – dividing assets equally among all of heirs – becomes quite tricky because equality is in the eye of the beholder. A grown son may believe he deserves a bigger slice of financial pie because his family has the most children. A daughter may believe she deserves more because she was the primary caregiver when you were ill. Mix subjective judgments about fairness with the complexities of modern American family structure and inheritance issues can become quite touchy.
Minimizing inheritance disputes
Determining an equitable division of assets is never easy, not even for single parents or couples in traditional families. One child may suffer a disability, have an addiction problem, run the family business, be less successful than siblings, or have made life decisions parents are uncomfortable supporting. If your family circumstances necessitate an uneven distribution of assets, there are a myriad of ways to try and minimize the conflicts that may accompany the decision. These include:
Acting discretely. If you’ve decided an unequal division of assets is necessary and know your children will not be happy with your decision, consider establishing a discreet trust for each child.
Establishing a shared trust. If you distribute the majority, but not all, of your estate equally among heirs, the remainder (perhaps one-fifth or one-quarter of the assets) can fund a shared trust to be used when an heir has an emergency need.
Choosing your executor carefully. Some say it’s best to follow family hierarchy and make your oldest child executor. Others say it’s best to choose a family member who is organized, hardworking, honest, and a good communicator. Still others will suggest you appoint a committee of executors because of the checks and balances a group provides. No matter what you decide, make sure everyone understands your choice.
Explaining your thinking. The difference between family harmony and an ongoing feud may be determined by how clearly you communicate with your family. The Wall Street Journal suggests, “Whenever possible, try to be open about your inheritance plan while you are still alive, so every family member truly understands it, minimizing the chances for suspicions to arise later.
There is no right or wrong answer when it comes to inheritance. Parents will make decisions based on their knowledge of family dynamics and individual needs. If you haven’t recently, you may want to review your will and estate plans with your financial advisor and/or attorney.
Securities offered through LPL, Member FINRA/SIPC. Investment advice offered through Private Advisor Group, a registered investment advisor. Private Advisor Group and Antoine Williams & Associates Financial Services are separate entities from LPL Financial. (For informational purposes only. Not intended to provide specific advice or recommendations for any individual.)