What are the Big Emotional Issues in Estate Planning?

The largest-ever generational wealth transfer is here: more than $68 trillion is flowing from baby boomers to their adult children. Emotional issues in estate planning abound.

MarketWatch’s recent article “When it comes to estate planning ‘you have to get to the core emotional issues’” says financial advisers and estate planning attorneys have helped their aging clients shift from wealth accumulation to wealth preservation. The next challenge is legacy planning—and that creates several issues.

A significant component of legacy planning is trying to get different generations of a family to accept the patriarch and matriarch’s wishes. If the millennials—the adult kids—can accept their parents’ inheritance plan, there’s less chance for disputes when the money transfers.

Calm, cool rationality is severely lacking when some families address issues tied to cross-generational wealth. Things can get heated.

Retirees will often ask their financial adviser or estate planning attorney to serve as a buffer for the younger generations. This professional becomes the point person when the children ask for information about their parents’ assets.

People usually act for emotional reasons, not intellectual reasons. Therefore, experts say you have to get to the core emotional issues, not just give logical arguments when facilitating wealth transfer within families.

If the family has significant dysfunction, bringing in another professional, like a therapist, is usually a good first step to get everybody to the point they can converse politely.

In most cases, however, it’s not that serious. Advisers confront petty squabbles and field calls from family members with clashing interests. Meetings can be concluded by asking permission to share what they’ve said with other family members. That allows gatherings of the entire family can be more productive.

Advisers typically set ground rules when helping families work through intergenerational strife. For example, they might ask everyone to listen for understanding rather than agreement. That means paraphrasing or asking clarifying questions to confirm they understood what they heard before they rush to make their point. It’s good to caution family members to temper their expectations. If someone is determined to get their way at all costs, it’s a red flag.

Financial advisers and estate planning attorneys will also ask questions to uncover people’s motivations.

Reference: MarketWatch (Dec. 24, 2022) “When it comes to estate planning ‘you have to get to the core emotional issues.’”