Building Wealth Is One Thing, Passing It On Is Another
Posted on January 24, 2008
For years I have offered tips for financial success that ordinary working people could use to improve their finances and build wealth. Hopefully you have taken a few of these tips, put them to work and are now beginning to accumulate some assets. The question is, once you build wealth, what do you do with it? There are many different philosophies. Some say they plan to retire, live it up and die when the money runs out. Others live like paupers, hoard their money, and then pass on without ever enjoying their wealth.
The way you deal with your wealth while you’re alive can make passing it on an almost seamless event or it can create a contentious and hostile situation. No one likes to think about death and dying, but it’s an event we all have to face and we should do our best to make it as easy as possible on those we leave behind. Believe it or not, people change when people die, especially when there’s money involved. This can lead to hard feelings and quarrels and destroy relationships between siblings and other relatives who have been close throughout their lives. That’s why building wealth is one thing, passing it on is another.
Estate planning is a very complex subject and one that can’t be fully addressed in this limited space. There is much more involved than just preparing a will to direct how you want your assets distributed. Matters like selecting a guardian for minor children, planning for the care of children or elderly parents with special needs, naming an attorney-in-fact to handle your affairs if you become disabled, avoiding probate and minimizing death taxes are just a few of the often complicated issues everyone should address.
I serve as power of attorney for my mother and handle all of her financial affairs. I have three siblings who rely on me to handle things with the same degree of attentiveness she would use. That places me in a position that could easily lead to doubts, loss of trust, hard feelings and other difficulties if my siblings felt I was abusing this fiduciary position. Since the four of us will share equally in our mother’s estate, I make it a point to keep my brothers and sister informed. I provide them with complete records of all income and expenses each year and give them a balance sheet listing all of her assets at year end. If they ever have a question, they know they can call me and get straight answers. When our mother passes away, which we hope will be many years from now; there will be no unpleasant surprises. That’s how it should be.
On the other hand, I am privy to a totally different situation where one sibling is handling her mother’s affairs and refuses to provide the other sibling with any information whatsoever. This has led to a strained relationship between sisters who had been very close all their lives. Things changed when one of them assumed the duties as power of attorney for their mother. Although there may be no improper conduct involved, the failure of the sister in charge to share information or even discuss it with the other has led to doubts, mistrust and a strained relationship. This is a perfect example of how people can change when money is involved.
Most people who have been fortunate enough to build substantial wealth, also seek professional advice on how to deal with it. It’s people of modest wealth who are more prone to neglect putting their wishes in writing and those that do often fail to consider situations like the one just described. And if you think the actions of an inconsiderate person acting as power of attorney can cause problems, imagine the chaos that could exist if you should become incapacitated or pass away without leaving any directives.
I haven’t discussed any of the specific tax implications that can have devastating impacts on estates, because I want to encourage you to seek professional advice as the tax laws change nearly every year. The bottom line is that no matter how uncomfortable the subject of death and dying may be you should not put off getting your affairs in order and leaving instructions about what you would like done the things accumulated during your lifetime. In the absence of such instructions, the state will decide who gets what and you can bet the government will rank high on the list of recipients.
Here’s a tip! I recently read the new second edition of A Parent’s Guide to Wills & Trusts by Don Silver, an estate planning attorney with over two decades of experience. What I found most appealing about the book is the way he discusses the most delicate issues in a question and answer format that anyone can understand. Even if you already have a will, living trusts, power of attorney, living will, health care power of attorney, and other estate planning documents in place, these should be updated regularly. The information provided in this book can help you better understand the issues and be able to communicate with your advisors in a more informed manner. The book is available in bookstores nationwide and on www.amazon.com or you can order it directly from the publisher Adams-Hall Publishing on their website www.adams-hall.com and get a substantial discount.
I’m sure there are many other good books on estate planning, but the most important thing is that you get your affairs in order now. Whether you’re 18 or 80, it will ease the pain of your loved ones when you depart this world for the afterlife.
» Filed Under Success Tips Articles
Comments
Leave a Reply