3 Reasons To Involve Heirs In Your Wealth Management Plan

17 September 2020
 Categories: , Blog


Should your children be involved in your wealth management efforts? Many Americans prefer to keep their finances to themselves. But keeping your financial planning a closely guarded secret may not be the best path if you plan to leave your money to heirs. Instead, you have good reasons to bring your spouse, children, and others into your circle of trust. Here are a few of them. 

1. Heirs Know What to Expect

Even if your kids know that they will inherit your assets, they may actually have no idea how much they'll inherit or in what form. This lack of transparency gives adult heirs no chance to properly prepare for how they will manage things once the assets become theirs.

If your fortune is tied up in non-liquid real estate holdings, for instance, heirs will face the unexpected task of selling property or becoming a landlord. If you've established a trust rather than plan to give cash, your kids should understand the rules so they can plan their actions. And certainly, how much of your wealth is tax-advantaged and how much of it is not will affect how much they receive and their own tax strategies. 

2. They Develop a Relationship With an Advisor

Why not take your kids to some of your meetings with a financial planner or advisor? The benefit to heirs is that they know the advisor and the advisor can get to know them. This will help the beneficiary get started with financial help once your portfolio is passed on. At a minimum, they know who to talk to when you pass away and they need to figure out their next steps. 

3. They Learn Wealth Management

Managing a large portfolio isn't a skill most people are born with. You likely have learned a lot over the years of being an investor and making key financial decisions with your team. When you take your children or grandchildren under your wing in this matter, they get a financial education they'll need to manage their own wealth down the road.

If you worry about kids burning through your money, this is a good way to help mitigate that problem. No one can guarantee that heirs won't intentionally act foolishly, but you will have given well-meaning heirs the tools to make smarter choices. 

Conversations about your own wealth management decisions may not be the most comfortable for you and your heirs, but they are important. How much you want to disclose is, of course, up to you — but it can provide a better, smoother transition when something happens to you. Learn more about how to involve others in your financial planning by talking with a wealth management advisor near you.