By Stacy Kahan, RFC®
As a daughter, mother, soon-to-be grandmother, and insurance broker for almost 40 years, talking about the future planning of a family is clearly dependent upon the relationship that the family has. Most families, unfortunately, never come to understand that the demise of the family leader has not just monetary consequences but emotional as well, and very little is ever discussed about any planning that has been created and what it means.
We, as insurance brokers, come upon this objection early in our careers, understanding that people are uncomfortable talking about their death and the creation of proper planning with the language that tells your family and loved ones your final wishes. It’s hard to believe that 67% of people have no estate plan per a 2022 survey from caring.com. Even only 50% of people have a simple will. This is leaving your family open to confusion and ultimately misunderstandings.
In our society, we even see it with people who are famous. You would think that they have a team of people around them to make sure they do the right thing – proactively plan. What we know, through experience, is that people have an aversion to discussing this topic. Look at Diana, Princess of Wales, Aretha Franklin, and Prince to name only a few. If they could have faced their demise, someday, they could have done better. Done better by fulfilling the dreams they had and focusing on a legacy to those they love.
Educating your family on inheritance and future planning allows them to make informed financial decisions throughout their lifetime. It also allows you to “teach” them about the importance of respecting and being responsible for the family’s well-being financially, spiritually, and emotionally.
I like to think of it as a trial period. This mentoring phase will show your beneficiaries what is expected of them to continue the tradition.
It’s a Teaching Moment
Often, families keep the financial picture a family secret. Personally, I have never understood why we are not teaching our children how to respect money. Fifty-five percent of people carry credit card debt in our country today which does not allow the building of wealth. This, in my opinion, is the most important lesson we need to follow and teach our children. Be wise about your spending.
At the beginning of my career, earning only $17,000 and $22,000 annually during my first two years as an agent, I knew I had to pay myself first. What does this mean? Put money into savings then, pay my bills. Well, we know this requires living below your means. Not a fun scenario for anyone BUT the most important lesson learned.
The Compound Effect of MoneyThe compound effect of money is an amazing phenomenon. Compounding is the process whereby interest is credited to an existing principal amount as well as to interest already paid.
Compounding thus can be construed as interest on interest – the effect of which is to magnify returns to interest over time, the so-om “miracle of compounding.”
Today, we are seeing young adults just making it. Living too high, accumulating credit card debt early, but wanting independence. We are seeing a trend in them getting smarter which helps in generational planning.
Mirroring Your Wishes in Everyday LifeIt is often said that children “mirror what they see in front of them” which encompasses a broad range of personality traits, management of money, and how relationships are formed and grow. Your legacy is written through estate planning documents. It says how you want your legacy spoken to the people it impacts.
A positive impact on the next generation begins during the life of the grantor. Showing the family your wishes is always best displayed by how a life is led and ensuring that the beneficiaries, most often the children, understand how to fulfill those wishes.
An interesting book by Dr. Masaru Emoto discovered that crystals formed in frozen water reveal changes when specific, concentrated thoughts are directed toward them. He found that water from clear springs and water that has been exposed to loving words shows brilliant, complex, and colorful snowflake patterns.
In contrast, polluted water, or water exposed to negative thoughts, forms incomplete, asymmetrical patterns with dull colors. The implications of this research create a new awareness of how we can positively impact the earth and our personal health. So just imagine that showing and demonstrating your wishes through loving words and gestures can change the impact of your family dynamic.
Fulfilling your Dream with the Next GenerationThese documents can be defined as a list of instructions to guide your loved ones as to how to manage your affairs if you are gone, or simply unable to manage them yourself. A properly drafted estate plan allows you to protect your property, your loved ones and yourself:
• Last Will and Testament governs the distribution of assets which are solely in your name, through a legal process known as probate.
• Living Trust lets you distribute your possessions to people and charities after you die. The assets inside of the trust are “owned” by the trust escaping probate at death.
• Durable Power of Attorney (POA) gives the authority for someone to manage your affairs while you are alive.
• Healthcare Power of Attorney allows someone you trust to make medical decisions for you.
• Living Will specifies the desired medical care if you lose the ability to communicate. Finding the Right Estate Attorney An estate attorney creates the above documents to ensure your wishes are fulfilled. An estate lawyer can be especially helpful in identifying any weak points in your planning and help you make the best decisions for your estate when you are gone. Here are three reasons that you should consider hiring an estate lawyer:
1. Beneficiary Protection 2. Avoid Court 3. Reduce Family Conflict
You want someone who is asking lots of questions to challenge your current thought process and ensure your wishes are written down in your documents.
The Family MeetingHaving a family meeting is preferable when sharing your dreams with your family. I would imagine this is difficult for most families but has multiple positive effects. First, getting in front of any animosity reduces family conflict. And the planning effect. Your family can plan since they will know what to expect.
We sat in my parent’s house 20 years ago while my dad handed out binders labeled “Estate Plan.” Within this big black binder was a letter of his wishes and his estate planning documents. He explained what responsibility each of us would have in fulfilling his dreams when he was no longer here. He was not sick or injured when this happened. This was just good planning.For more information on solutions for individuals, families and business owners, contact Alana. For more information on solutions for employers, contact Stacy.