Keep It in the Family: How to Pass on Money and Assets to Family Members
Creating a plan for how you will pass on money or other assets (anything you own) is called estate planning. Many people think that if they don’t have a lot of money or assets (like homes, cars, and jewelry), they don’t have an “estate.” But the fact is we all have an estate.
How you transfer your estate to the next generation is often referred to as a financial legacy. This legacy is the foundation for building inter-generational wealth.
The Emotional Side of Estate Planning
Transferring wealth is practical, but it is also an emotional process.
You have to consider something that most people don’t like to think about – what will happen to your family or heirs when you are no longer here. It can be sad to think about that reality, but the real question at stake is how we prepare ourselves and our families to continue to build on the financial wealth you have created.
Kathleen Burns Kingsbury, a wealth expert, suggests the following questions to ask yourself as you are preparing your estate:
- What lessons did you learn from your parents about money and finance that you would like to pass onto your heirs?
- What family values would you like to pass down to the next generation and how do you plan on communicating this family legacy?
- What concerns do you have about your adult children when it comes to inheriting and managing the family wealth?
Simple Will or Trust?
There’s no right answer for everyone for whether a simple will or trust is better. It all depends on your circumstances. I recommend that you start by learning about your options. (Note that this site sells products and services. I am not recommending that you buy anything there; it’s just a good place to compare your options.)
Once you decide what you need, consider the most appropriate way to get the service, including pro bono financial planners, nonprofit agencies, or paid financial or legal experts (usually an attorney for estate planning).
You should designate someone as your beneficiary for all of your accounts, including your employer retirement accounts as well as your checking and savings accounts. Make sure you keep these designations up to date if you have life changes (like if you move, marry, divorce, or have children). Do you really want your ex to get all of your stuff?
On a bank account, this is sometimes called a TOD (transfer on death) instead of beneficiary designation. It means that your beneficiary will be able to access the account without the intervention of a court or probate.
If you have children under the age of 18, you should have at minimum a simple will with guardianship arrangements (need to do this? Go ahead…I’ll wait). The guardian may be the person you designate for the accounts if you are leaving funds for them to care for your dependents.
If you have insurance policies, keep good, updated records about the policies, the beneficiary, and the claim forms.
Keep all your records in one place and make a list (written and digital) of all of the above. Let your beneficiary know where that document is so that it’s easy to find.
What to Do Now
I know this all might sound like a lot to do. Well, it is! Estate planning is a big, important topic and I encourage you to learn more before making decisions.
But there are a few things that I encourage you to do as soon as possible:
- Guardianship: If you have minor children, make sure you’ve arranged guardianship for them. Decide now who you want to care for your dependents and talk to them. Get a document establishing this in place even if you still need to work on other issues.
- Records: List your accounts! Know and list every bank, investment, retirement, employer retirement, and insurance account.
Don’t let perfection get in the way of progress. Gather all your documents and communicate your wishes to the person who will be in charge of executing your plan.
This is a great time to think about what is most important to you. Then take steps to make sure that everything you have worked hard for will be passed along according to your wishes!
Saundra Davis is a nationally recognized financial coach and educator. Her experience in the U.S. Navy, where she made every money mistake possible, and her 20 years serving community-based organizations led her to the reality that the best way to help people find a path out of poverty is to help them become their own financial expert.