By Scott Burns
Photography by Photodisc/Getty Images and RJ Hinkle of Quad/Photo
Never have so many had so much. A recent study by TNS, a British consulting group, estimated there were 8.9 million American households with a net worth of at least $1 million, excluding the value of their primary home.
Think about it. Millions of millionaires.
That’s a long way from “ashes to ashes, dust to dust.” It also implies that lots of us are facing an issue rare in human history: What do we do with all the assets we leave behind? How do we prepare our spouses, children, and grandchildren?
To find out, I visited Don Malouf, Dallas estate-planning attorney extraordinaire. The co-author of 10 volumes on estate and tax planning, he doesn’t do what many estate attorneys do — try to amaze you with the number of unexpected permutations of death and distribution that could occur within your very own family.
Instead, he goes to the heart of the matter. “An estate plan is the easy part,” he says. “Sadly, plans are frequently motivated by the wrong reason — saving taxes — when it is really an opportunity to do something for the family.”
The word “opportunity” is important.
Rather than writing a will and locking it up, not to be read, revealed, or discussed until the Prime Mover is gone and all the miscreant family members are gathered for the reading, as in an Agatha Christie novel, Malouf suggests doing, talking, and relating while you are still alive. Like all opportunities, he points out, it won’t last forever.
He suggests a “family meeting” — a gathering in which the parents or grandparents can have their attorneys explain what they are doing, how they are doing it, and why they are doing it that way. “The most precious wealth a person has is his or her family. To abuse that wealth by not treating one’s family informatively and fairly is worse than burning money,” he says.
He quickly points out that disclosing dollar amounts is “neither necessary nor particularly desirable.” Nor should the presentation be complicated. Instead, it should be designed so the least sophisticated family member can understand it. It also should be done in terms of “this is what your father and mother are doing for you and here is their reasoning.” Questions are invited. So is discussion. The idea, he says, is to air issues before death, not after. That way, heirs aren’t left with anger (justified or not) and without an opportunity to express their views.
He also suggests that “unless there is an imperative reason to do otherwise, one should treat one’s children equally. To not do so is almost cruel. The child who feels ‘shortchanged’ almost invariably feels that this was done out of a lack of love or resentment — but he or she can’t go to the deceased parents to seek a resolution.”
And what happens if there is just a will and no meeting?
“Then we — the estate planners — inherit whatever stresses and issues are in that family, but without the clout of the senior member. You would be amazed at the transference of all these feelings, usually negative, to the lawyers.”
I ask: Is a family meeting easy to do?
“No. It’s a brave thing to do,” he says with a smile.
Scott Burns (www.scottburns.com) has been a personal finance writer since 1977 and has been syndicated in newspapers across the United States since the late 1980s. Send your questions and comments about managing your wealth via e-mail to privateclubs@clubcorp.com.