Legacy Planning: Starting the Conversation With Your Heirs

Building significant wealth can create opportunity for generations of your family. But doing so effectively requires more than just solid estate planning. Your planning should also emphasize passing on your wishes, aspirations and family values alongside your wealth. To achieve this, the key is to plan with your heirs, not just for them.

These can be difficult conversations. But they’re important. To help you as you approach your legacy planning, we spoke with Dr. Keith Whitaker, president, Wise Counsel Research Associates, a firm specializing in family wealth and legacy and estate planning. In his role at Wise Counsel, Dr. Whitaker consults with family wealth creators as well as members of the rising generation to help build legacies that stand the test of time.

Through these questions and Dr. Whitaker’s responses, we hope you’ll gain valuable insight into how you can start legacy planning with the rising generation, not just for them.

First, to give our readers some background, you wrote a book called “Voice of the Rising Generation.” Why do you and your co-authors refer to younger family members as “rising”?

Professionals in my field often refer to the “next generation.” After we did so once, a young woman approached us and said, “I don’t like feeling like I’m merely ‘next’ to whoever really matters. I’d like to be seen as worthwhile in myself.” That’s why we came up with the term “rising.” Every generation has room to rise and to grow. Every generation, in itself, is worthwhile.

Thank you for that background. So why is it important to bring the rising generation into the legacy and estate planning conversation?

Parents with wealth want their resources to enhance the lives of their children rather than harm them. But that enhancement doesn’t just happen on its own. It requires communication with — and education of — rising generation family members. Chances are you’ve taken steps through estate planning to prepare the money for the family, but don’t forget to prepare the family for the money. Preparation is the key to successful wealth transfer.

Married couples will likely want to approach legacy planning together. What steps can couples take before engaging the rising generation to ensure they are well prepared for the conversation?

The big challenge that couples face is not communicating openly with each other about their wishes regarding their money and their children. Maybe they fear that they hold different or conflicting views. Maybe the members of the couple are not clear in their own heads. Whatever the cause, this uncertainty can lead to procrastination and inaction.

To deal with this challenge, we use this three-step process to help couples communicate:

1. Each member of the couple should reflect, individually and privately, on what he or she wants to communicate to their children.
2. The members of the couple come together, and each one shares their wishes with the other. The one member speaks, the other listens. No interruptions or questions.
3. Lastly, once both are done sharing, allow time for clarifying questions and to identify the common ground between them. This common ground then serves as the basis for communication or action regarding their children.

We have used this process in our practice for legacy and estate planning communications regarding the succession in a family business and discussions regarding the purposes of family trusts. In most cases, members of the couple learn that they are more aligned than they thought. And in the cases when they have strongly held differences of opinion, they can then address those differences openly and productively.

Why do many wealth creators find it hard to have these legacy planning conversations?

It is natural to find these conversations difficult. As parents, we all want to do what’s best for our children. That means first and foremost we want to do no harm. We fear that talking about money will disincentivize them, and so we procrastinate or avoid the topic.

Additionally, this work is hard in and of itself. Most of us do not have experience thinking about what really matters most to us and what part money should play in our lives.

Lastly, there is no simple roadmap or template for legacy and estate planning conversations. We need to proceed slowly, step by step, listening and learning about ourselves and our children as we proceed.

Because many will find starting legacy planning conversations challenging, what advice can you offer to help start the process?

I’ve got three key pieces of advice for wealth creators looking to start the legacy planning conversation:

1. Reflect on what messages you are already giving your children through your words and your deeds. Your actions speak much louder than your words.
2. Think about your children and ask yourself these questions. Who are they? What do they truly need at this point in life?
3. For young children, focus on the teachable moments when you can help them begin to develop skills such as keeping track of money, saving and spending wisely. For older children, engage them in discussions about their reasons for a purchase or a financial commitment. For adult children, begin a dialogue with them by sharing with them the values that you believe helped create your financial wealth, and then ask them what questions or concerns they have about your plans. They may be hesitant to ask right away, so give them time and encouragement; this request can prompt a powerful dialogue.

Some of our readers might see legacy and estate planning conversations happening spontaneously. Is it better to plan?

Most spontaneous legacy and estate planning conversations have long been brewing in parents’ or children’s minds. But all too often the thoughts stay there, locked away in people’s heads. The goal of these conversations is to approach the subject intentionally. The conversation does not have to be formal or forced. It can happen in a car or sitting together after dinner. But with some planning you’re more likely to feel at ease, share what you want to share and be able to listen to your children’s responses.

Once the legacy planning conversation is started with the rising generation, what are your “must cover” topics?

First, it’s important to note that what to talk about depends on your children. Who are they? How old are they? It also depends on your own readiness. That being said, I think there are two key topics: values and skills.

For values, what values have motivated your family? What values have shaped your own life? What values are you seeking to instill in your children?

For skills, which skills regarding money have your children already developed? Which skills do they still need to develop? Which skills do you need to develop if you’re going to serve as an effective model for them?

When helping families with legacy and estate planning, what have you seen work well? What doesn’t work well?

What does not work well is silence. At worst silence breeds resentment, suspicion and mistrust. At best it costs you the opportunity to teach and learn from your children.

What works best is effective communication, grounded in your own understanding of who your children are and what is most important to you to share with them. That communication can take the form of one-on-one conversations with them as well as family meetings.

How have you seen financial advisors helping with the legacy planning conversation? What are the benefits of consulting with them and/or having them facilitate?

Most clients have experience with only one family: their own. They often feel that they’re the only ones struggling with these challenges. This feeling can be incapacitating. Advisors have experience helping hundreds of families over many years with their legacy and estate planning. An empathic advisor can assure family members that the challenges they are facing are normal. An advisor can share examples of what they have seen work in other families (respecting that every family has its differences). Perhaps most importantly, an advisor can listen and help draw out the client’s hopes and fears, enabling the client to pursue the former and effectively address the latter.