Estate Planning – Don’t forget to prepare the heirs

Estate Planning should include Coaching Heirs

Estates fail at a rate of 70 percent following their transition to heirs. Why?  Attorneys and financial planners do a good enough job on the assets and the estate but seldom have the mandate or interest to prepare the heirs for the assets they will receive.  Preparing heirs dramatically increases the ability to retain investmented portfolios through the tramatic transition and beyond.

The failure of estates following transition to heirs For many years, estate planning has routinely focused on the “Big Four” issues of taxation, preservation, control and philanthropy. Estate planners do a great job in these four areas, as fewer than 3 percent of estate failures (post-transition) can be attributed to errors by professional advisors, according to research conducted by The Williams Group.

What is missing from the traditional focus on the “Big Four” planning objectives?

. Research clearly shows that the missing element is preparing the heirs for the assets. In fact, the losses that occur during the estate’s post-transition period are driven by unprepared heirs, the lack of a family agreement on the mission of the estate, and the family’s fundamental inability to trust and communicate internally. It is not the scapegoat of estate taxes or the federal government, or even the litigious mentality of the modern day. It is frequently the result of an unprepared generation whose parents have not committed to preparing their heirs to receive and manage wealth in a responsible and competent manner. Lacking both preparation (skills, practice and team support) and motivation (commitment to a mission greater than that of satisfying self), heirs and their bequeathed estates are failing badly, at an astonishing 70 percent rate.

Family coaches that interact with the complete multigenerational family. Their objective is to ready the entire family to work with the advisory professionals by having the family meet and agree upon a mission for the family’s wealth. This is not only mom’s or dad’s mission, but also a multigenerational mission.

Once a mission is agreed upon, the family can move on to work with the family’s advisors to determine the roles that need to be filled (in the post-transition estate), to agree on the qualifications for those roles, and finally to set the observable and measurable standards that must be met to be allowed to continue operating (on behalf of the family) in those roles.

Edi Alvarez, CFP®


(1) Family Coaches: The “Missing” Link in Estate Planning By Vic Preisser and Roy Williams. Institute for Preparing Heirs.