Studies estimate that 70 percent of family wealth is lost by the end of the second generation and 90 percent by the end of the third generation. To assist your loved ones in not becoming part of this statistic, you need to first educate them. Then, your job is to discuss your wealth transfer goals and your plan for achieving those goals. Estate Planning for Future Generations is important to understand.

Have the Conversation with Future Generations

You should consider communicating the following information to your family. This will ensure that your loved ones understand and will be prepared to carry out your wishes when the time comes.  They should understand the part they play in estate planning for future generations. At a minimum, you should discuss the following:

  • Financial statements or, at a minimum, a broad overview of your wealth
  • Contact information for your lawyer, CPA, wealth manager.
  • Your final wishes for burial or cremation and memorial services.
  • Estate planning documents that you’ve created which may include the following:

Power of Attorney. This designates someone to make financial decisions on your behalf in the event you become incapacitated. 

Healthcare Directive. The document that identifies who will stand in your shoes and make medical related decisions, on your behalf, if you become incapacitated. It also states your wishes regarding life-sustaining procedures.

HIPAA Authorization. This designates who will have access to your protected healthcare information.

Revocable Trust. This instrument provides all relevant information regarding your wishes. It identifies how your assets will be distributed.

Pour-over will or last will and testament. If this is part of a trust-based estate plan, the will is an ancillary document. It catches all property that has not been properly tilted into the trust.

Irrevocable life insurance trust. This removes life insurance from your taxable estate; provides immediate access to cash for loved ones’ needs, administration costs, and taxes.

Estate Planning for Future Generations

Who you choose to make decisions on your behalf if you become incapacitated or otherwise unable to make decisions for yourself. Your agents for finances and healthcare, your successor trustee, and any representative named in your estate documents.

  • Some of the benefits of properly drafted estate planning documents are:

    • Foster educational opportunities
    • Provide asset, divorce, and remarriage protection
    • Protect special needs beneficiaries
    • Allow for professional account and property management
    • Minimize estate taxes at each generation
    • Create a lasting legacy for future gene
  • Your goals and intentions for inheritances: what the money is and is not to be used for (for example, education, charity, business opportunities, or retirement instead of vacations and Ferraris), and who will be the trustee of any lifetime trusts created for your family members and why you have selected them.
  • Location of important documents: this should include how to access your digital assets such as social media, online bank accounts, and crypto assets.
  • Your key advisors and their contact information: estate planning attorney, financial advisor, certified public accountant, insurance agent, spiritual advisor, etc.

Using Your Advisors to Facilitate the Estate Planning for Future Generations Conversation

If you find bringing up the issue of death, dying, and incapacity difficult to broach, then consider having your lawyer facilitate a group family discussion. Who might be your team of advisors? Your attorney, CPA, wealth manager (if applicable). Your professional advisors are well-positioned to help you discover your wealth priorities, goals, and objectives and then communicate this information to your family. This will prepare your family to receive any necessary information, documents, and access to accounts when the time is right. 

Francine D. Ward
Attorney-At-Law, Author, Speaker

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