New Service: Preparing Heirs

In 1972, Norman Rockwell painted Father and Son for the cover of the U.S. Trust Company annual report.

The painting shows a well-intentioned father teaching his son the fundamental principles behind the family’s investments. Dad is explaining an investment certificate pulled from the documents strewn across the table and stored for safekeeping in the family’s strongbox. The attentive son’s blank and anxious expression suggests his naiveté. One can only imagine where he would rather be on a Saturday morning!

This one-sided conversation may have been the traditional way families prepared their heirs, but as we now know it was not very effective. According to the book, Preparing Heirs, by Roy Williams and Vic Preisser, a majority of families lose control of their assets and family unity in the first generation after the assets transfer. But what may be surprising, and helpful, is why families become victims of the old adage, “From rags to riches to rags in three generations.” And how families can break that cycle.

Families, with the prudent guidance of professional advisors, typically do a very good job at preparing the assets to transfer to the heirs through the pre-transition planning processes of estate and tax planning, investment management, and philanthropy. But what is lacking is preparing the heirs to receive and manage the assets – the missing link in estate planning.

This is a topic that I’ve found very interesting for the past few years, and now I’m pleased to announce that we will be making this service available starting this year.

Parents may deal decisively with business matters or in selecting their professional advisors. But when it comes to involving their heirs in the preparation of the wills, trusts, and other estate plans, many are reluctant. Parents may fear that disclosing the size of the estate and their intentions for distributing their assets will diminish their children’s motivation and distort their values. They may also fear that heirs are insufficiently mature to participate in the decisions concerning their own futures.

The parents’ seemingly good intentions often have led to mistrust among family members, which leads to less communication resulting in a cordial hypocrisy among family members agreeing to not bring up the subject of the estate plan. According to a survey conducted by U.S. Trust, parent’s worry primarily about the impact of money on their children, with 65% believing that it will put “too much emphasis on material things”.

We believe that preparing heirs is a crucial piece of multigenerational financial planning, and we are happy to begin offering this service to our clients. If you’re interested in the program, please let us know and we’ll make sure you receive more details later this year.

Thank you for choosing Prosperion Financial Advisors.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The performance data given represents past performance and should not be considered indicative of future results.

Securities and Advisory Services offered through LPL Financial. Member FINRA/SIPC.