You may have heard that the great wealth transfer is coming. There are estimates of $30 to $70 trillion in assets to be transferred between generations in the coming decades. For some, it is much closer than they would like, and many individuals leaving an inheritance don’t have any personal experience to draw on. Help is available, but it can be awkward when you don’t know what questions to ask.

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Having your will prepared and planning your estate are important and serious undertakings. To gain the most from your meetings with professional estate planners, it helps to be prepared with an agenda to guide your conversations. Here are six questions an estate planner can help you explore, and a few follow-up questions they might ask you to consider.

How much will my passing cost?

The list of possible expenses that come with death is longer than one might expect. Typically, funeral expenses are just one piece. Probate and estate settlement expenses can add up quickly. Any outstanding debts will have to be repaid. Very large estates may be subject to federal estate tax, and some states still have inheritance taxes, estate taxes, or both (the so-called “death taxes”).

Question for you – are you a first-time executor? Your executor will have to file your final state and federal income tax returns and pay any taxes due. Death and taxes may be certainties in life, and dying doesn’t exempt you from paying taxes for the partial last year you were alive.

How do I give my heirs a long-term legacy instead of a short-term windfall?

If you are concerned about the financial maturity or investment savviness of an heir, consider providing an inheritance in trust rather than through an outright distribution. This strategy puts the asset management responsibilities in the more capable hands of someone or some institution. The trust may provide the heir with a steady income, and perhaps offers distributions of principal in identified circumstances. The trustee may also be given broad discretion. The trust may have one beneficiary, or it could have several, depending upon the estate planning objectives.

Question for you – Does one of your beneficiaries struggle with drug misuse? Incentives can be written into the trust to ensure the assets you leave provide a positive reason to lead a drug-free life. Other incentives can be put in place too, such as rewarding education or employment, or ensuring there is money available for travel for family reunions.

Can I direct my money to my children rather than to my in-laws?

This is a surprisingly common question. It’s not that folks dislike the people their children marry. Rather, the real issue is that divorce is dishearteningly common. The concern that an inheritance might fall, in part, into the hands of a son-in-law or daughter-in-law after a marital split is understandable. An inheritance in a properly drafted trust can avoid this outcome. It also may protect the inheritance from other creditors of the heir, while continuing to be a long-term financial resource.

My spouse doesn’t handle our money or investments, and I worry about what might happen if I pass first. Any suggestions?

Many couples use a revocable living trust for investment management and estate planning purposes. Naming a trusted financial institution as the successor trustee can ensure the surviving spouse will benefit from continuous professional financial management. When one spouse passes, the trust continues for the life of the survivor. Trusts for surviving spouses are generally exempt from death taxes as well.

Question for you – what happens if you become incapacitated? It’s not just death that could leave your spouse suddenly holding the financial reins, and sometimes they don’t even know where all the accounts and assets are located. An added benefit of a revocable living trust is that a professional can step in if you are suddenly unable to manage your assets.

Should I talk about my estate plan with my kids? How do I break the ice?

This can be a difficult and uncomfortable conversation to have. The general rule is that it is best for heirs to have a reasonable expectation of their inheritance, both as to its size and the intended purpose of the legacy. This tends to mitigate the chances for misunderstandings and conflicts when the plan goes into effect. One great way to break the ice is to bring the estate planner into a family meeting to present and discuss the estate plans. The planner will have the background to be able to answer questions and concerns that may emerge. However, the family meeting should be understood as a presentation of an already executed estate plan, not a discussion or deliberation about changes to the plan. The suitability of such a meeting should be determined on a case-by-case basis. Learn more tips for Having “The Inheritance Talk” in our previously written article.

Question for you – Have you consider early divestment of some assets? Depending on the size of your estate and type of assets, there could be tax benefits to taking advantage of the annual gift tax exclusion each year. Beyond the financial benefit, the more important benefit may be the ability to share the stories behind the assets when gifting them.

Have I overlooked anything?

Your estate planner may have a checklist for preparing a comprehensive inventory of all your assets. Some items, such as insurance policies and retirement plan accounts, may have named beneficiaries and will not pass through the probate estate or be affected by the will. These need to be revisited regularly following big life events.

Question for you – Do you know where all your beneficiary designations are? You might be surprised at how often people fail to make changes to their beneficiary designations after a divorce, which could mean the ex-spouse remains the beneficiary.

Question for you – Have you considered consulting with Arvest to have a family meeting about finances?

For larger or more complex estates, a team approach is often best. In addition to an experienced estate planning attorney, an Arvest Trust Officer can be especially helpful to fill in some of the blanks and prompt common questions. The benefits discussed above are only some of those available from this powerful resource, so going through your objectives will be helpful in defining the agenda for an inheritance talk (should you desire to have one). A formal family meeting can create an acceptable environment to ask questions and raise objections. Beyond the financial realm, questions may come up around the sentimental value of items, or even who will become the new caretaker for pets. If you are considering steps to prepare your heirs for the great wealth transfer, please consider Arvest as a resource to draw experience from.

This content has been prepared by The Merrill Anderson Company and is intended as a general guideline.

© 2023 M.A. Co. All rights reserved.

Informational content only. Arvest does not provide tax or legal advice.


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