The two go hand in hand when preparing your beneficiaries.
Timing discussions around money while clearly communicating your financial values with beneficiaries can be tricky.
You may already be asking yourself: How will I help them understand this is more about passing on a legacy than money? What financial knowledge and decision-making skills do my beneficiaries currently have? Will my family understand the importance of charitable giving as much as I do?
We’ve compiled some insights below to help you build a solid foundation for your values and principles long before any money changes hands.
Open lines of communication
Talking about inheritance may be uncomfortable for some families for a variety of reasons. Facing the prospect of losing a loved one can be very overwhelming. Disparities with inheritance to your children can also be a sensitive issue to discuss.
But while these might be difficult conversations to have, the sensitivity of these topics emphasises the importance of addressing them. Once you’ve built a foundation for honest, open financial conversations, your beneficiaries will gradually become more comfortable addressing these topics in time.
If possible, bring all your beneficiaries together, or at least those inheriting the majority of your estate, to help ensure everyone is aligned and understands your intentions.
You may not want to go into all the specifics during these group conversations, but it’s valuable to set expectations and open lines of communication among your beneficiaries too. Transparent dialogue may mitigate the risk of any conflict between them later.
Group sessions are important, but it’s recommended you also take the time to sit down with each beneficiary individually to discuss their gift and role in the estate process. After all, each of your beneficiaries’ has their own needs, aspirations, and special relationship with you.
At some point – and it doesn’t have to be the first or second meeting – consider introducing your family members to your wealth manager so they can start to build a relationship and feel comfortable asking questions as they arise. Your wealth manager can make their office available as a neutral location to host the meetings and act as an impartial intermediary, if necessary.
Involvement and guidance
It’s only natural to want to prioritise the well-being and financial readiness of your loved ones, especially to ensure they’re well-equipped to manage their inheritance as well as make the most of it.
When the time is right to initiate these discussions, it’s crucial to ensure the topics you plan to bring up are right for the maturity level and financial literacy of your beneficiaries. The overarching goal is to gradually instill and enhance their financial literacy, and that process should happen well in advance of the inheritance itself.
For example, young ones in primary school can often grasp important lessons about tradeoffs. You can point out that skipping out on buying crisps every day after school might mean getting that Lego set or video game at the end of the month. Incorporating everyday money management skills, like spending, saving, and sharing, helps build a strong foundation that makes your beneficiaries good stewards of your wealth later in life.
Once your loved ones become adults, don’t be shy about sharing more details about the story of your wealth. As young adults, they’re perhaps pursuing their own investment opportunities and planning for their future. They may be putting money into their first job’s pension pot or learning how a savings account works, so will already have some knowledge to draw from.
Discussing the hard work and smart decisions you’ve made to earn your wealth with your beneficiaries is an engaging approach that can foster credibility and respect in the long run. Inspiring them to understand how you’ve nurtured and grown your funds through the years may be the catalyst for your beneficiaries to carry your values forward.
Passing down values
Wealth often represents the accumulation of a lifetime of hard work. By passing down both financial wealth and values, you can ensure your legacy is preserved and future generations understand the principles that guided your success.
By instilling values like financial literacy, philanthropy, and a robust work ethic, you’ll set your beneficiaries up for success as well-prepared and responsible stewards of the wealth they inherit. Lead by example, set clear expectations, communicate openly, and provide your beneficiaries with the opportunities to learn and make decisions. A unified – and communicated – vision for your family’s wealth will leave you feeling confident that your beneficiaries understand the responsibility and great privilege of carrying on a meaningful legacy.
Next steps:
• Open communication channels early to talk about responsible stewardship.
• Encourage involvement with your beneficiaries to promote philanthropy.
• Talk to your wealth manager to get your intergenerational wealth plan in motion.
