The Great Wealth Transfer refers to the anticipated transfer of colossal sums from the older generations, such as baby boomers, to their heirs—millennials and Generation Z—in the upcoming decades, but this concept is presently a topic of discussion.
“This will undoubtedly impact the economy, whether we approve or not,” states financial adviser Sofia Cianciulli. “Families must prepare for an unexpected influx of wealth, emphasizing the need for strategic and tax-conscious wealth transfer planning, which will be crucial for countless families in the near future.”
Nonetheless, research indicates a significant gap between the expectations of millennials and Gen Z regarding inheritance from boomers and what they might realistically receive. The prospect of inheritance is unlikely to be the financial answer to alleviate housing expenses and student loans. Moreover, discussing inheritance can lead to conflicts that extend beyond just financial strategies and tax considerations. The topic often has the potential to fracture families when the specifics of a will lead to emotional turmoil.
Why Wills Can Be Contentious
Wills can be a sensitive issue, frequently regarded as a taboo, since they are closely associated with death. Many families find themselves confronting the details of a will after the last flowers from the funeral have faded, navigating the potential aftereffects while still grappling with the grief of losing a dear one.
Grief expert Bêne Otto sheds light on the anguish caused by perceived unfairness in wills. “Upon someone’s passing, the chance for open discussion is lost,” she observes. “This leaves much room for speculation, and the likelihood of misconceptions is high.”
Cianciulli concurs with this perspective. “I’ve frequently encountered individuals who feel that their parent showed indifference towards them if they were not included in the will, or if they felt overlooked…. We naturally seek clarity on these matters,” she shares.
The most straightforward way to ease potential sentiments of betrayal or neglect is by initiating a dialogue with loved ones regarding your intentions while formulating your will.
“For those closest to you, it provides an avenue to communicate what their desires are, their reasoning and intentions behind them… This can offer reassurance and lessen anxiety,” explains Otto.
The Importance Of Open Dialogue
Cianciulli believes this approach also benefits the heirs. For example, a child may realize her parents are aiming to leave a substantial inheritance at the cost of enjoying their own lives fully. This allows the child to inform her parents that she prefers them to enjoy their wealth during their lifetime.
Otto views talks about inheritance and final wishes as chances for connection, alleviating one more burden for family members after the loss of a beloved individual.
“The power of having a document that articulates a loved one’s wishes cannot be overstated, particularly in moments of helplessness that follow a death,” Otto emphasizes.
She recognizes, however, that for many families, tackling such frank discussions may seem daunting, acknowledging the unique dynamics within each family. For those hesitant to engage in discussions about inheritance, she suggests leaving behind letters or some form of explanation might prove beneficial. “It doesn’t need to be detailed. It could simply state, ‘I’m allocating this to you for this reason, and I hope it serves you well.’”
Tips For Discussing Wills
From a financial standpoint, Cianciulli advises that wills should clearly outline “any life insurance policies, debts, assets, and distributions—indicating where the assets are headed, to whom, and in what proportions.”
She cautions against the repercussions of unequal distribution. “Failing to distribute assets equally can tear families apart. If distribution isn’t equal, that’s precisely the moment you need to initiate that conversation—while you are still alive.”
Such disrupted family dynamics may escalate into legal disputes over the estate, diverting funds towards attorney fees regardless of the outcome of the contested will. She also warns against shocking revelations contained within wills, as families may encounter hidden aspects of the deceased’s life, and without their insights, they have no means to seek further understanding.
Otto encourages individuals to examine their assets and contemplate what they want their loved ones to inherit, as well as the significance behind those choices. She also recommends creating a folder with all pertinent documents, passwords, and personal wishes, like views on organ donation and life support. It’s crucial that loved ones know how to access this folder.
Family Feedback Can Help Final Decisions
Otto proposes discussing the initial draft of your will, treating it as a preliminary conversation where feedback is welcomed. Perhaps there are important aspects you haven’t considered, she notes. “You don’t need to be influenced if you don’t wish to be. You maintain your own decision-making power and autonomy. However, taking your loved ones’ feedback into consideration might be valuable,” she suggests.
She points out that making decisions on larger assets, such as properties and investments, might come more naturally, but it can be beneficial to seek opinions on smaller belongings like clothing and jewelry. “[Inquire with your loved ones] ‘Is there something that holds particular memories of me? What could help you feel more connected to me?’ Then, ask yourself, ‘Can I factor this into my decisions?’”
Discussions regarding your will’s contents and the rationale behind your choices can foster connection with your loved ones, offer clarity, and establish arrangements that will ease the challenging times for those you care about.
