One of the fringe benefits of going to the doctor is the opportunity to catch up on an interesting selection of dog-eared, outdated magazines—from Reader’s Digest to Bon Appétit (and everything in between). The last time I was patiently waiting for my name to be called, I came across an article that caught my attention. Coincidentally, it was about the importance of communicating honestly with your doctor.
Withholding certain facts or telling little white lies about your lifestyle and habits (both good and bad) may prevent your doctor from seeing the big picture, which can put your future health at risk.
I’m not a model patient myself, so these findings didn’t surprise me. But they did make me think. First, I wonder if my doctor knows exactly how much I enjoy wine tasting and how infrequently I exercise. Second (and more to the point), honesty really is the best policy—in every area of our lives. You have to communicate honestly with your health care provider for the sake of maintaining your health, and you have to communicate honestly with your heirs for the sake of preserving your wealth.
I don’t have much insight into how to get the most out of your next doctor’s appointment (sorry), but I can help you prepare for successful wealth transfer. In my previous post, I touched on the first three keys to successful wealth transfer. Now I’ll cover the final two: preparing your heirs and using philanthropy.
Prepare your heirs
Some people can easily disclose personal details about their finances. Most people can’t (or won’t).
Money can represent a variety of complex feelings and concepts—from security and comfort to selfishness and power. Speaking candidly about the role money plays in your life may sound as appealing as rolling up your sleeves for a shot, but don’t shy away from having the conversation.
Set the right tone
- Be transparent. Share stories about your successes and losses (financial and otherwise) so your heirs can learn from your experiences. Build the discussion around things you have in common, whether it’s heredity, values, or shared experiences. Your loved ones probably already have some appreciation for your financial situation, so even if jaws drop, the surprise is likely to be short-lived.
- Respect your heirs and treat them fairly. Even if you outline specific parameters or conditions regarding when and how heirs can use their inheritance, approach the wealth transfer process with trust and an open mind. Empower your heirs to make smart financial decisions in your absence by introducing them to tools and resources that can prepare them for the future now. Your heirs probably won’t follow exactly in your footsteps, but with some preparation, you can help them become sure-footed investors in their own right.
Tips for having “the talk”
- Talk with your heirs when the time is right. If knowledge of a forthcoming inheritance could potentially sidetrack your heirs from making smart decisions about their future, don’t rush into disclosing specific dollar amounts. Some people wait until their heirs have developed a strong sense of self or chosen a career path before revealing the extent of the wealth they’ll inherit. Because every family is unique, there’s no one-size-fits-all answer to the question of when you should have “the talk.”
- Involve a trusted advisor (who isn’t an heir). An experienced advisor who doesn’t have a stake in your legacy can facilitate the wealth transfer discussion, take some of the pressure off you, and ensure that all your bases are covered. It’s possible to lead by example without actually leading the discussion.
Give as a group
Last but not least, the final key for successful wealth transfer: Consider using philanthropy. If your family is charitably inclined, ask everyone to complete this statement at your next family meeting: I give because _________.
The similarities (or differences) in everyone’s responses don’t matter—what matters is the fact that your family is talking about giving. But don’t stop there. Turn the talk into action.
Family members of all ages can participate in the giving process. Taking an active role in finding a charity that aligns with your family’s values can help your heirs learn how to make decisions, motivate others, and develop confidence—skills that will help them be honorable stewards of your wealth when the time comes.
Many families that are committed to philanthropy find that money is not only currency, it’s also a tool that can drive positive outcomes within the community. You set a powerful example for your heirs to follow when you’re forthcoming about why you give, candidly discuss charities you’re passionate about, and demonstrate generosity with both your money and your time. Your actions can inspire a tradition of giving that will span generations.
Use these keys
Getting weighed at the doctor’s office is an event—you step on the scale; then you step off. But the number tells your doctor a lot about your lifestyle choices in the previous weeks and months. Achieving success on the scale, so to speak, requires preparation. The same is true for the wealth transfer process.
To recap, the five keys to successful wealth transfer are: Identify what’s important to you and your family, communicate honestly, be organized, prepare your heirs, and explore the benefits of giving. My advice on being healthy, wealthy, and wise: Use these keys. And give your heirs (and your doctor) all the information they need to see the big picture.