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Advisor Perspective

Advisor Perspective

How Can You Ensure the Success of Your Successors?

Meggan Carroll

Advisor, CFP®
Thoughtful communication, attentiveness and problem-solving are the hallmarks of Meggan’s role as an advisor. Working with clients and helping them make important decisions about their financial futures gives her a unique opportunity to make lasting connections while pursuing her passion.

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As a fan of HBO’s recent hit show “Succession,” I’ve noticed the topic of succession planning travel from my professional world to my personal life. And as a member of the Millennial generation[i] with Baby Boomer[ii] parents and clients, the show has brought up some questions for me as to what “the great wealth transfer” will look like over the next 20 years. (By some estimates, as much as $73 trillion will transfer to Millennial and Generation X[iii] heirs by 2045 (Cerulli, 2021). Families don’t have to have the wealth of a global media and entertainment conglomerate – like the Roy family in “Succession” – to have concern for their heirs’ financial future. JMG works with our clients to not only get to the root of their concerns for passing on wealth, but also how we help structure an estate plan to meet their wishes. This can take many forms and may include bringing the next generation into the planning process.

The first key to a successful transition of wealth is to have a plan. But to do that, we must understand what the goals for your estate are, the level of confidence you may have in your heirs, and what you wish for your family now and when you are no longer here. It’s critical to get these details right and memorialize them through the estate documents. These documents include a will and very often a trust (or multiple trusts), as well as Powers of Attorney for Health and Property. (For more details on how to maximize your estate plan and account titling, see our previous articles, Preparing for Retirement: Estate Planning and Estate Planning: Organizing Your Estate Through Account Titling and Beneficiary Designations).

As important as it is to have these documents in place, it is equally important for us to spend time with you and an attorney to understand your family values and dynamics. Who are the important people you would like to include in your documents? For some, this answer is rather straightforward, for others, this can be uncomfortable to talk through. No one likes to think about dying, and when you have a family, that worry expands to include the people you will leave behind. It can be stressful, sad, confusing, overwhelming and many other emotions. If we truly want to give our plan the best chance for success, we must honestly answer the following question: Are my heirs in a position to handle inherited wealth in a responsible manner that upholds our family’s values?

If the answer is yes, this is the perfect scenario to involve your heirs in the estate planning process. Ideally, even if you don’t agree on everything, there is mutual respect and appreciation. Through education and family meetings, involving your heirs gives them time to plan for and process this eventual transition, without referencing specific amounts. But even more important, they are given the gift of fully understanding your wishes while you are still here to share with them.

If you are not as confident in your heirs’ abilities or feel there may be potential in the future, there is still a solution to involve your heirs in the process. For example, JMG offers education and guidance to the next generation on their own situation. Sometimes feedback is heard clearer when it comes from someone other than mom or dad. Beyond education and family governance, we can also place restrictions in your estate documents to protect your heirs from themselves and outside forces. This could include age and income restrictions on assets or a third-party trustee to help administer the estate without personal bias.

Ultimately, whether you feel your heirs are ready in this moment to handle the management of inherited wealth or not, very rarely is the answer to ignore the situation and hope it gets better. Through thoughtful communication of your goals and wishes, JMG can work with you and your heirs as a resource for the challenges they may face in the future.

Please feel free to share this article with someone who may find it helpful and reach out to your JMG Financial Group Advisor if you would like additional information on our intergenerational planning process.

[i] Millennial Generation references those born between 1981-1996
[ii] Baby Boomer Generation references those born between 1946-1964
[iii] Generation X references those born between 1965-1980

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