How to Prepare Heirs to Inherit Your Estate


Within the next several decades, younger generations of Americans will inherit approximately $30 trillion from their baby boomer parents and grandparents. Given that they won’t have the experience and challenges of making the money themselves, it’s important to have conversations about wealth with your children or other heirs. Doing so can help empower them to build a healthy relationship with money and possibly avoid costly mistakes in the future.

Here are five ways you can help your children now to ease into their new roles and understand the privilege they are entrusted with when they receive an inheritance.

Put family values front and center. Share your family’s values with your kids, both in conversation and in actions. Talk about things like family history, values and cultural perspectives. If qualities like getting a good education, working hard, and exhibiting integrity and loyalty in business are important in your family, model them. Children are more likely to do what you do rather than what you say. Be frank about the responsibilities and challenges of wealth, as well as the positive aspects of it. Help them understand that it’s OK for them to make mistakes, because you’ve made them, too. And show them how to find effective solutions when they’re not sure what their next steps should be.

Educate, educate, educate. Your heirs will need to know not only how to manage their own personal finances well, but also how to be a responsible investor and philanthropist. Help them grow into understanding by showing them what financial stewardship looks, feels and sounds like, and involve them at their level of education and ability as they learn. Also, explore whether wealth management classes, offered by many family office structures and financial firms, align with your family’s values and consider attending with your children. Statistics show that 70 percent of wealthy families lose their wealth by the second generation, so advance preparation and education are essential for maintaining multigenerational wealth.

Help them find their own way. Inheriting money can make life feel both easier and harder. Your heirs may be taken care of financially, but they may struggle to balance financial stewardship with finding their own way. For example, attending college may not be necessary if they want to use their inheritance to pursue their own passions and interests, and succeed on their own merits. Having a sense of self-led purpose and direction in life is often critical to well-being.

Share your estate plan. All your cards should be on the table, so to speak. Be transparent with your heirs about what plans you’ve made for your estate and their roles in it. Doing so will likely help reduce the possibility that difficulties and resentments will form down the line. Arrange for them to gather in one place, in an appropriate setting, so you and your legal and financial teams can start the process of familiarizing them with the estate plan and setting reasonable expectations.

Make introductions. Over time, you’ve probably selected several trusted advisers to assist you, such as a lawyer, a financial advisor and an accountant. Although your heirs may not choose to work with the same professionals, you can offer them a place to start by initiating the introductions. Plus, these professionals can help get conversations started that you — or your heirs — may find uncomfortable or difficult.

Managing wealth across generations takes care and planning. By keeping the lines of communication open, being the example you wish others to follow and helping educate your heirs, you can better prepare them for the roles, and the path, that lie ahead.


Kristen Fricks-Roman is a Financial Advisor with the Wealth Management Division of Morgan Stanley in Atlanta. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Information contained herein has been obtained from sources considered to be reliable, but we do not guarantee their accuracy or completeness. Morgan Stanley and its Financial Advisors do not provide tax or legal advice. Before investing, investors should consider whether tax or other benefits are only available for investments in the investor’s home state 529 college savings plan. Investors should carefully read the Program Disclosure statement, which contains more information on investment options, risk factors, fees and expenses, and possible tax consequences before purchasing a 529 plan. You can obtain a copy of the Program Disclosure Statement from the 529 plan sponsor or your Financial Advisor. Morgan Stanley Smith Barney, LLC, member SIPC. CRC 2235406 09/18
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