Transfer Family Wealth Seamlessly with These Tips

Transfer Family Wealth Seamlessly with These Tips

A conversation about money between parents and adult children or grandchildren can feel uncomfortable for everyone involved. However, it’s essential for family members to get past the initial reluctance and sit down to discuss wealth transfers from one generation to the next. This is the best way to ensure that the money one generation has worked so hard for stays within the family or goes to worthwhile causes.

Start by Creating a Family Vision

Older people who are in the last several years of their lives typically have a good idea of how they want to distribute their money after they’re gone. They just don’t know how to complete the legal documents and set themselves and their families up to pay the least amount of taxes. While that aspect of estate planning will require professional assistance, it’s possible for many people to start the early and simplest parts on their own.

The first thing most financial planners recommend is creating a family tree of anyone who will receive part of the family wealth transfers. The person creating the chart should then consider the number of assets he or she wants to give each family member and when this should take place. Some other key things to consider during early estate planning include:

  • Is it necessary to set up one or more trusts in addition to a will and estate plan to ensure the correct distribution of assets?
  • How much does the person or couple expect to spend on healthcare?
  • What is the purpose of wealth transfers to family members? For some, it may be to provide for general living expenses while others want to pay for a specific expense of a family member such as higher education.
  • How should family wealth transfers and other key decisions play out if the person or couple creating the documents becomes incapacitated due to cognitive decline or a serious health issue?

Evaluate and Document Assets and Liabilities

After finishing the family vision statement, it’s helpful to create a personal balance sheet. This should list the following types of financial accounts at a minimum:

  • Business interests
  • Life insurance
  • Personal property
  • Real estate
  • Retirement accounts
  • Share certificates

The document should also include all liabilities and a title or record of ownership for every asset.

It’s Now Time to Meet with a Financial Advisor

After documenting assets and liabilities and determining who will benefit from family wealth transfers, the next step is to schedule an initial consultation with a financial advisor. He or she will guide the people creating the estate plan in obtaining, completing, and filing the proper legal documents. In addition to a will and a trust, this could include a healthcare directive, power of attorney form, letter of intent, and several others depending on the unique circumstances.

A financial advisor can also be the ideal person to help facilitate discussions of wealth transfers among family members who might have no idea of which topics to even bring up. Having a neutral third party present can reduce the awkwardness and help keep everyone on topic.

Aura Wealth Advisors would be honored to assist you, your parents, or your adult children with this important transition. We invite you to learn more about our comprehensive wealth management services and then contact us to request your first appointment.