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Financial Planning > Trusts and Estates > Estate Planning

Making estate planning a family affair

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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.

The what: Whether the adult children and/or grandchildren play a role in wealth and legacy planning, and the extent of that role, is dictated by the situation and the players involved. But in the end, says Maas, “it’s the client’s decision.”

Neither younger generations nor an advisor can force a senior to proactively plan for care, legacy, wealth transfer, etc. Nor can they force a younger client to get involved in planning for an aging parent or parents. Sooner or later, however, “younger generations are going to need to get involved,” he says. “That’s why I recommend [multi-generational planning] for everyone.”

If the situation involves a large estate, family business, family office, trust(s) and the like, younger generations are almost always involved. But even with seniors of more modest means, adds Maas, it makes sense for advisors to get younger generations involved, if only to the extent of asking them to observe their parents’ behavior for any red flags, along the lines of, “ ‘If you see Mom or Dad slipping cognitively in a significant way, could you let us know?’ That cognitive piece is important.”

The who: Multigenerational planning scenarios demand a quarterback. That’s you, the advisor. And the quarterback’s job is not to try to singlehandedly handle all the responsibilities that come with such a complex and potentially emotionally charged situation, but rather to figure out which responsibilities to take on and which to delegate others.

That means helping family members sort through who does what — who pays the parents’ bills, who serves as power of attorney, etc. — while also bringing in other professionals when the situation dictates. “We are wealth managers,” says Freiburger. “We can step in and help, but we also need other people to step in.”

That may mean bringing in a psychologist with expertise in multigenerational family issues, a social worker and/or nurse with elder-care expertise, an elder care and/or estate planning attorney, and other relevant specialists.

The how: It’s not easy quarterbacking all the moving parts, egos and emotions that come with a multigenerational family planning scenario. An advisor’s most valuable qualities here, says Freiburger, are “creativity, creativity, creativity, and flexibility, flexibility, flexibility.”

See also: Expand your family business practice

The first challenge is getting all the relevant parties to the table and talking constructively. Working through the many issues in play requires honest, frank conversations. Advisors can initiate those conversations by asking the right questions:

  • What’s your vision for the kind of care you want when you get older?
  • What kind of legacy do you want to leave for younger generations of your family?
  • Do you care what happens to your money when you die?
  • What roles/responsibilities do you envision your children/grandchildren having in your care? Are you comfortable leaving them with the responsibility for caring for you or covering the cost of your care?

Certain senior clients are comfortable broaching such subjects with their children; others, not so much. To help create the impetus for a family dialogue around these topics, Maas says he uses an off-the-shelf “Beneficiary Book” where senior clients can record details about their accounts, their end-of-life and philanthropic wishes, etc. “Getting all this stuff down in writing doesn’t just help the kids, it can start the conversation.”

From conversations like these come contented clients — and predictable outcomes.

For more on estate planning, see:

The widow planner

Are you asking the right succession planning questions?

Endangered trusts: Bring them up with clients now


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