Navigating the Emotions of Wealth Transfer

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There is a massive movement of money going on right under our nose. It’s not illegal or unethical. However, it’s fraught with peril.

The largest intergenerational wealth transfer in history is currently underway, with over $68 trillion passing from baby boomers to their adult children. Financial advisors and estate planning attorneys are helping aging clients shift their focus from wealth accumulation to wealth preservation and legacy planning. However, navigating the emotional complexities of these wealth transfers can be challenging for everyone involved.

Legacy planning often involves trying to ensure that different generations of a family understand and accept the wishes of the family’s patriarch and matriarch. If adult children can agree on their parents’ inheritance plans, there is a reduced likelihood of disputes when the wealth is transferred. However, rationality can be scarce when addressing cross-generational wealth issues, and discussions can quickly become emotionally charged.

In response to this, retirees often request their financial advisor or estate planning attorney to serve as an intermediary with younger generations. As children inquire about their parents’ assets, the professional becomes the point person, helping to manage emotions and facilitate communication.

Experts emphasize the importance of addressing core emotional issues rather than relying solely on logical arguments when facilitating wealth transfers within families. In cases where significant family dysfunction exists, involving a therapist may be a helpful first step in enabling productive conversations.

For less severe cases, advisors often deal with minor disputes and conflicting interests among family members. They may ask permission to share the concerns of individual family members with the entire group, leading to more effective discussions. Establishing ground rules is also essential when helping families work through intergenerational conflicts. For example, advisors may encourage active listening, paraphrasing, and asking clarifying questions to promote understanding.

Advisors should also remind family members to manage their expectations and be cautious of individuals who are determined to get their way at all costs, as this can be a warning sign of potential conflict. By asking questions to uncover motivations and addressing emotional concerns, financial advisors and estate planning attorneys can better assist families in navigating the complex landscape of intergenerational wealth transfers.

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