C O V E R S T OR Y
considerable fi nancial expertise, Furlong says. “We have clients who have an ownership stake in many different businesses. Or sometimes they have homes in multiple states. As a result, the executor must fi le taxes in all of those states.” More- over, executors may have to go through probate court in multiple states or find real estate agents who can help them clean out and sell residences. Straightening all that out can take years of effort and saddle a family executor with unwanted responsibilities and liabilities. “It’s a tough spot to be in, because other heirs may question what you’re doing and question your motives,” Furlong says. “As a parent, the last thing I want to think about is my kids fi ghting or disagreeing.” To prevent such discord, many
families with complex estates select an institution, like Regions, as executor of their estate. An institutional executor can adhere to the various state rules and protocols, keep family members updated and ensure the process moves forward smoothly and expediently, often without the conflicts that arise when a family member oversees the process.
concerns when it comes to how their children will inherit wealth. Some children may not have a strong work ethic, leading to fears that inheriting wealth will only lower their motivation. Others may have mental health issues, substance- abuse problems or a tendency to spend every dollar that comes their way. Because all children are different,
4.
it’s important that estate plans address the individual needs and potential problems associated with each child, Furlong says. Trusts are a helpful tool for dealing with such specifi c concerns. For example, a trust can be designed to motivate a benefi ciary by paying out funds
10 R EG ION S I N S IG H T S SUMMER 2 0 1 5
CUSTOMIZE YOUR PLAN Parents often have unique
parent passes away. They will be given large and sometimes complex assets — real estate, investments, foundations, even businesses — with little guidance on how to manage them. Instead, heirs should at least
“ As a parent, the last thing I want to think about is my kids fi ghting
or disagreeing.”
as the benefi ciary earns income — even matching that income dollar for dollar. Trusts can also be used to help equalize estates between children and protect children fi nancially after a remarriage, since spouses typically inherit all assets. “Trusts are a great way to achieve specifi c estate-planning goals and ensure those goals are carried out in the future,” Furlong adds.
key part of ensuring your heirs are ready to take the reins. Some affluent parents may not want to tell their beneficiaries in advance about their inheritance plans, Furlong says. This may be due to modesty or the fear that the knowledge of a large inheritance may hurt their child’s motivation to achieve. However, offspring who are kept in the dark may feel financially helpless when their
5.
PREPARE YOUR HEIRS Communication is also a
be given a basic understanding of how to manage the family’s assets, so they don’t make major mistakes once they inherit them. A good fi rst step is bringing them in to meet with the family’s fi nancial advisor, Furlong says. They can ask questions about the wealth-transfer process, and will know whom to contact when their parent passes away. Another strategy is to let the
benefi ciary “practice” handling wealth. This typically is done by providing a fi nancial gift and then coaching the child through the process of doing something constructive with it. One client Furlong worked with gave his adult child about $1 million. The child used some of the money to build a house and put the rest into a portfolio designed for long-term growth. Other parents may guide their
offspring through the process of investing in a portfolio, starting a business or building a charitable foundation. Gifting may be a good idea from an estate-planning perspective because it reduces the size of a taxable estate, Furlong says, but it also has other benefi ts. “Gifting gives you an opportunity to find out the financial acumen, or the potential, of a benefi ciary. And it may give you a lot of joy to see how it benefi ts your family while you’re still alive.” Planning the future of your
family’s wealth is a long-term process that should start sooner rather than later. Your Regions Wealth Advisor can build a team of advisors to help you take advantage of opportunities to engage your family members in the legacy-building process and transfer your wealth smoothly. p
PHOTO: CHRIS GRAMLY
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