Making estate planning a family affair

Like many veteran advisors, Renee Porter-Medley, CFP, has compiled quite an extensive catalog of client stories and anecdotes, many of which end happily. But then there are those, such as the one involving a male client of hers in his mid-60s, with not-so-pleasant outcomes.

Porter-Medley, vice president and senior financial planner at Key Private Bank in Naples, Fla., recalls spending the better part of two years gently but persistently urging the man to consider investing in some form of long-term care (LTC) coverage because he clearly lacked sufficient assets to pay for care himself if the need arose. Despite her persistence, however, whatever form of LTC coverage she would recommend, “he pushed [the proposal] back across the table without glancing at it.”

The man was in good health then. But within months of rejecting another LTC entreaty from Porter-Medley, he incurred a serious, debilitating injury, which led to complications, and, unfortunately but predictably, a large and mounting tab for care. “He’s been dealing with major health problems for more than a year, plus some very significant outflows” of cash, draining assets that he might otherwise have passed on to his kids, she says.

The advisory annals are full of cautionary tales in which a client’s inaction not only runs counter to his or own best interests, it comes back to haunt multiple generations of a family. In this case, the outcome might have been different, says Porter-Medley, had the man not resisted her long-term care coverage recommendations as well as her appeals to get his children involved in the planning process.

Hearteningly, there are also plenty of multigenerational planning stories that follow the script to a desirable outcome, where the adult children and grandchildren of a senior client played valuable roles in the planning process, helping protect their family’s best interests along with those of their parent(s) or grandparent(s).

Rewarding work

As challenging as managing a multigenerational dynamic can be for an advisor, it can also be immensely rewarding work. “It’s fun because you get to roll up your sleeves and really get to work,” says John Freiburger, CLU, ChFC, AEP, managing partner at Naperville, Ill.-based Partners Wealth Management, whose client base includes a number of four-generation and three-generation families. “But the most fulfilling part is when different generations within a family comes back to you and say, ‘Thank you for helping us.’”

Here’s a look at the when, why, how, what and who of writing a story that ends as the family and their advisor scripted it.

The when: The conversation about getting younger generations involved in planning for an older family member should start “when things are good, when everyone’s healthy,” says Freiburger.

“It’s about having those candid conversations while Mom and Dad still have their cognitive ability,” adds Sacramento, Calif.-based Jeff R. Maas, CFP.

See also: No more estate planning excuses

While the impetus for those conversations sometimes comes from a client who is the older parent (or grandparent), more often it comes from a client with older parents (or grandparents), notes Freiburger.

Whoever supplies the impetus, it’s vital to start the dialogue sooner rather than later. Given complex family dynamics, “it can easily take a year or two to get people on the same page,” observes Porter-Medley. So as an advisor, she suggests initiating the conversation proactively, years in advance, then letting it unfold “gradually, over time, as opposed to when a crisis hits,” when involved parties tend not to be thinking as clearly.

Since a health crisis can strike unexpectedly, that’s not always possible, observes Bhaj Townsend, founder of Focus and Sustain, a family- and values-focused financial planning practice in Kirkland, Wash. Still, kids and grandkids can play an important role by watching for changes in a parent/grandparent’s behavior that could signal a health/cognitive issue, which in turn could signal it’s time for them to get more involved in their elder’s financial life.

The why: “There’s a lot hanging in the balance here,” says Townsend. “There’s the connection of the family, for one. Families break apart over money if they don’t communicate about these issues. Second, care for the older member of the family is hanging in the balance. Third, the legacy of the family is at stake — what it stands for, what its values are.”

When there are assets to protect, whether it’s an estate, a family business, a philanthropic legacy or otherwise, a lack of cross-generational dialogue can lead to a lack of action, leaving the senior, the family and its assets vulnerable. Emotional and financial chaos often ensues.