The Wealth-Transfer ‘Talk’

Advisors can offer to share the strategy behind trust arrangements that stage distributions of income and principal to beneficiaries while mitigating taxes. Parents can lean on these trusts as a guide to the terms of wealth distribution, and young adult children will see that thoughtful planning was part of the process. They will also begin to understand that managing wealth is more complex than it may seem and that the process deserves their respect.

Stick To The Plan
The wealth-transfer talk can often take on a life of its own. When tensions lead to extended, anxious moments, advisors can relieve anxiety by talking about objectives. This introduces objectivity into the equation and gives participants a rest from emotionally taxing subjects.

Advisors can also serve as translators. It is no mystery that parents and children sometimes do not communicate with each other as smoothly as they would hope. With a carefully tuned ear, advisors should be ready to lend their perspective if messages are being misconstrued.

Perhaps most importantly, advisors may be called upon to referee if the conversation escalates into a tense exchange. Seasoned advisors have a distinct advantage over the family in this situation, as they will have experienced such talks a number of times in a number of different ways. They can use that knowledge and keep their antenna raised. If the meeting is going in an unproductive direction, they should suggest the rest of the talk be deferred while the family works out other details. The advisor can then circle back to talk about the next steps with the parents.

Advisors should know when they are needed and when they are not. Not every client needs to have this type of conversation, and not every family needs an advisor present when talking about inheritance issues. Families that have been fortunate enough to live their value statement and instill it strongly in their children may want to discuss wealth transfers on their own. They may also be well versed in the estate plan and know how to articulate its structure and the benefits it provides for the next generation.

Advisors should not be afraid to lend support in more subtle ways, however. Parents who do not fully grasp the strategies used in their estate plan may find it helpful to have you walk through their plan before they talk to their children.

Bridging Generations
Whatever course these conversations take, they should mark the start of a long-term process. Children, parents and advisors often learn a great deal from the discussion, and it can set the stage for more complex planning. Advisors who bring their knowledge and a keen ear to the wealth-transfer talk will create a bond that goes beyond financial advice. They will show that their guidance can cross over to the next generation as they help a family extend their values and wealth.

Brian Broderick is a partner at Hemenway & Barnes LLP.