Families can reduce the risk of estate-planning problems by talking in advance about what will happen when a loved one dies, says Lorne Maltenfort, national director of private wealth planning at Wells Fargo.
He says the process has two key parts: preparing the necessary documents and having conversations that often get put off. A plan needs to move from paperwork to discussion, and then from discussion to action.
That work can start with listing assets and preparing documents, while making sure family members understand the plan’s goals. Signing the paperwork is not the finish line, Maltenfort said. Assets also need to be transferred or retitled, the details confirmed, and the plan understood by those involved.
Misunderstandings can arise when people assume that explaining a plan is enough. Maltenfort said families may need clearer guidance, including visual examples that show how assets will be passed on.
After a death, he noted, is often the hardest time to sort out those details. Family members may be grieving while trying to figure out whether the plan is in place, what taxes might be owed, how transfers will work, and whether the outcome feels fair.
One reason people avoid estate-planning conversations, Maltenfort said, is that they focus too much on the amount of money that will be inherited. He suggested starting instead with shared values, family legacy and financial security. Parents may be hesitant to discuss specific sums because circumstances can change; long-term care costs, for example, could reduce the assets available later.
Financial advisers can help by using a client’s documents to model how assets might be distributed. Seeing the numbers laid out can prompt families to discuss whether the plan provides enough for heirs or charitable giving.
Those examples can help families move from having no plan—or one they are unsure about—to understanding what their estate plan is actually designed to do, Maltenfort said.
