One common truth everyone shares is that we all will die someday. But before that happens, we want to ensure our children are taken care of. For this, we make a plan for what to do with our estate: who gets what, how funds are distributed, etc. It’s a complex and onerous task.
When it came time to do so for my family, it was just as complex and onerous, even though I am a financial planner. But things were made slightly easier because of the kinds of lenses I used to view my decisions. It’s all thanks to my filter.
How to Make Decisions
The estate planning process takes time. You have to make many decisions about where the money goes, how it will grow, and various tax liabilities. Again, it’s complex, but whenever I have a tough problem to solve, I turn to my values, and they help guide the way.
What matters to you? What are your boundaries? What is too much? The answers are your values, and whether you vocalize them or not, you have them. When it comes to money, many people don’t look at their decisions through those values. They ask if it is a good idea, and not whether or not it is something they should do based on their principles.
In reality, you should do the opposite. Look at your values and then make a decision. Ask yourself, “Is this what someone who held my values would do?” If not, then don’t do it. If so, then press forward. You can answer these questions however you like, but the responses—good or bad—need to come through that primary filter.
What You “Should” Do
When it comes to money, many people start to look at their estate and divide things up based on what they think they are “supposed” to do. I hear this all the time from my clients, and I often respond with a variation of, “But have you ever wondered why?”
Why should your Aunt get 10 percent of your fortune? Why does the house in Texas go to Jim and not Tom? Why do you want your children to have free rein with their inheritance? Most people don’t ask those questions, and while there are no right or wrong responses, many dislike their initial answer.
You should only do something if it aligns with your values. Our family’s values were the guiding light I needed when I did our family’s estate planning. We feel it is important to give back, and so that is a component of our system—but it’s not the only part.
The Next Step
Your family has values, as do you personally, and before you do your estate planning, you should cement them properly. Have a conversation with your significant other and children about what your values are or should be. Check in regularly to confirm that you still want these values in your life and whether or not they make sense.
With that in mind, you now have to incorporate those values into your estate planning. The concept is to pass your values on to the next generation so they can reap the same benefits. In this way, you are also building a family tradition—a legacy—that continues well after you pass.
After all, you don’t know what the future holds. Your ancestors may receive part of your wealth in their lifetimes, but they may not know what to do with it or how to manage this sum of money properly. History is littered with examples of this happening to families across the world. Sometimes it takes just a generation or two for the money to dry up and the lessons to be lost.
By instilling your values—and the importance of continuing them across decades—into your family, you can stop that cycle from happening. Your great-great-grandchildren won’t have to worry about how to use their money; they’ll have values through which they can evaluate their options.
Every Family is Different
I made a lot of decisions when it came time to get our affairs in order, and while some of them were difficult, having that extra standard in place helped tremendously. I could always ask myself, “Would someone who held X value do this?” If the answer was no, then I wouldn’t.
You have the same set of problems to work through. And while trying to figure out if the estate tax is an issue or where to put your money is important, nothing is more valuable than the worth you derive from giving your family a path forward for decades or longer.