All Wealthy People Need an Estate Plan to Preserve Their Family Legacy

Studies show that up to 68% of Americans might not have any estate plan at all. It is equally disturbing that even if these estate plans are updated to reflect the desires for the family, many plans are woefully inadequate.

The reality is that having more money does make you different in many ways, particularly when it comes to addressing intergenerational wealth transfers. The stakes are higher and the mistakes are magnified.

We recently held a workshop for our clients where we discussed the benefits of drafting a “Family Love Letter” for their heirs. This is not a legally binding document, as this focuses more on the emotional aspects of the estate plan. Having said that, we believe that a “Family Love Letter” can be extremely helpful in explaining certain bequests and communicating wishes.

A family governance plan should be in place before you need it. This document can also be thought of as a conflict management policy, where roles and responsibilities are outlined.

An estate plan should be updated if there is any change of circumstances in the family, such as a birth, death, marriage, or divorce. We conduct an estate plan review annually for every client, and we remind them that their estate plan should be updated at least every three years.

Any basic estate plan should include a will, durable power of attorney, and a health care proxy. These documents are separate from each other and should be thoughtfully drafted to support your wishes.

Trusts can come in all shapes and sizes, and can accomplish much, but they also have their limitations. Understanding your situation, including your finances, your concerns, and your goals is a prerequisite to creating the appropriate trusts.

Before changes are made to an existing estate plan, we recommend having a “planning letter” or some type of executive summary of the estate planning documents. This summary will serve two purposes. First, you will be able to review the estate planning documents in advance and comment on them. Second, this provides some type of memorialization of your intent. Comparing the planning letter to the family love letter will help to make sure you are on the right track with the updated estate plan.