The IIAR and ARF reserve investment funds are currently managed by Stifel Financial Services under the investment policy established by their respective board of directors. In this and subsequent issues of the Condenser, you’ll find a “financial tech tips” article from the firm on this page. Members of IIAR may use the financial services of Stifel for personal and business investments and take advantage of the reduced rate structure offered with IIAR membership.

Losing a loved one can be one of the most challenging experiences of a person’s life. While grieving, a person must complete many burdensome tasks, such as planning a funeral. Receiving an inheritance during this time can be the source of even more stress, as the recipient must determine how to access and manage the inheritance. This process can seem especially daunting if the recipient needs the inheritance to help cover the decedent’s debts or final expenses. Luckily, the stress caused by an unexpected inheritance is avoidable.

Although it may be uncomfortable, discussing your well thought-out estate plan with your heirs can alleviate future stress. On the other hand, avoiding this discussion could leave your beneficiaries unprepared to handle the family’s wealth. According to a study by The Williams Group, 70% of wealthy families lose their wealth by the second generation and 90% by the third generation. To ensure that your heirs preserve your family wealth for generations to come, consider the following.

IDENTIFY FAMILY VALUES

Educate your family and heirs about your priorities. What are your goals? How do you prioritize these goals? The best way for your beneficiaries to understand your values when it comes to wealth is to lead by example. Do you give to charity? Plan family vacations? Save a portion of each paycheck for a rainy day? Show your family what is important by having these discussions and providing them with a good example throughout your life.

CREATE A PLAN

Consider how to approach this discussion. Would you rather talk casually at the dinner table or in a formal setting at your advisor’s office? Start developing this strategy ahead of time so that you are prepared to have this discussion. Do you want to talk to your beneficiaries one-on-one or invite them all for a family meeting? Decide who you want to lead the discussion and how you can help prepare your heirs to manage the wealth you have accumulated throughout your career.

HOW MUCH SHOULD YOU SHARE?

Deciding how many details to share about your wealth can be difficult. This goes hand in hand with the maturity of the individual. If your heir has a pattern of irrational spending, it might not be the best time for full disclosure. On the other hand, if you have a fiscally responsible heir, you may feel comfortable providing them with more details.

WORK WITH PROFESSIONALS

Work with your Financial Advisor, CPA, and estate planning attorney to ensure that your wealth will be transferred in the most efficient way possible. Together, you can determine if it is better to make lifetime gifts or transfer everything upon your passing. This is also the perfect time to introduce your heirs to your trusted advisors. Let your children know who to contact in the future (or now if they are ready to start planning for their own retirement).

There is no time like the present to prepare your heirs to manage your wealth after you are gone. Have these discussions now to ensure that your heirs don’t blow their inheritance like one in three Americans (as indicated by an Ohio State research study).

The IIAR and ARF reserve investment funds are currently managed by Stifel Financial Services under the investment policy established by their respective board of directors. Members of IIAR may use the financial services of Stifel for personal and business investments and take advantage of the reduced rate structure offered with IIAR membership.

For additional Wealth Planning assistance contact your Stifel representative: Jeff Howard or Jim Lenaghan at (251) 340-5044.