After Life Wealth Management

By Brian J. Cunningham, CFP®

I'm always so sad to learn that one of my clients has died. We've shared a close relationship, and I know I will miss them very much. Over the years, I have helped them achieve their financial goals, assess their estate, and develop a plan to distribute their assets upon their death. That carefully crafted and comprehensive estate plan is the only way to ensure that their legacy reflects their wishes.

The Estate Planning Team

While my clients' attorneys and accountants are integral members of their estate planning team, it has been my experience that my leadership role in this process is greatly appreciated. As my clients' fiduciary, I am aware of the scope of all their investments, assets, and income sources. The depth of my knowledge and my client's high level of trust gives me the ability to guide them through this complicated process. I am responsible for implementing my clients' plans once they are gone while providing compassion, sympathy, and support to their families.

Division of Assets

Everyone has heard stories of families being torn apart because of misunderstandings or disagreements resulting from a relative’s bequests. I help my clients avoid conflicts by explaining the differences between an equal inheritance and an equitable inheritance. I recently developed an estate plan for a client with two adult children. Through equal inheritance, each would receive 50% of the estate. As we were reviewing assets, I asked if there were any other assets of value. My client mentioned that he had a modest collection of sports memorabilia he had collected over the years. Since his daughter had never shown an interest in this, and he had built much of the collection as a project with his son, he planned to bequeath it to him. In theory that seemed to make sense. However, upon my suggestion, he had the authenticity and value of his collection assessed. It was determined to be worth to close to $125,000. His daughter immediately became more interested! The family discussed the situation, and the decision was made to sell the collection upon his death with the proceeds split equally between the children.

A House Divided

When real estate is involved, we determine the dollar value of the property. The client may choose to have it sold and the proceeds shared. Geography often guides decisions regarding real estate. The child living closest to the home sometimes inherits the property, with the other children making up the value in cash or assets.

Equal or Equitable?

Equal distribution works best when each child has a similar life situation, has received the same level of support in the past, and has no mental or physical handicaps. Even if that's the case, some clients may feel that a particular child doesn't deserve an equal inheritance. I encourage them to anticipate the adverse reactions this can create, including the potential for expensive litigation initiated by the disgruntled child.

While equal distribution can help avoid conflict, it might not be equitable if some children have received extra financial favors or are in need. If a child was a caregiver to a client or their spouse, they might want to reward them or compensate them for their time. Perhaps the client has paid for a child's car, grad school, wedding, or a down payment on a house. An equitable distribution might deduct that amount in determining individual bequests.

I also help my clients determine how to plan for the future of special needs children. Usually, the siblings understand and support estate plans that provide for their living and medical expenses. Blended families bring added challenges to estate planning. So do family businesses, addiction issues, and many other variables. Each situation is different, but the outcome is the same; giving my clients the confidence that their final objectives will be achieved. It is always an honor to be granted this trust.

New Year's Resolution

I encourage all my clients, no matter what their age, to make estate planning a priority. Whether it's working with me to establish a plan or revising one based on life changes, there's never been a better time to focus on the future.