Are Your Affairs in Order? Four Ideas to Help You Get Started.

“The most important asset a family has is Family Unity and Harmony.”[1]

Recently, a close friend of mine died suddenly. Sadly, he was unprepared for the unexpected and his affairs were not in good order. By that, I mean his will was not easy to locate, his financial papers were unorganized, and his last wishes were unclear. This sad and unexpected situation has forced me to ask myself, “Are my affairs in order? Does my family understand my last wishes?”

What does it mean to have your “Affairs in Order?”

After much reading and observing families who have inherited wealth, I've concluded that there are two critical components to making sure your Affairs are in Order:

#1.   Your Financial Assets. Financial assets represent property, financial accounts- your money.

#2.   Your Family Assets. Family assets represents your heirs- the people in your family or life that will inherit your wealth.

Most of us are familiar with #1, believing that if we have the proper estate documents in place, the transfer of our assets will go smoothly. However, studies show that family unity and harmony are often the most powerful pieces to ensuring a successful transfer of assets. While drafting proper estate documents is essential, spending time preparing your beneficiaries on how best to receive and manage the assets is critical to successfully transferring wealth without destroying relationships and wellbeing.

Four ideas to help you prepare your Family Assets:

How do we go about preparing our Family Assets? It starts with intentionally building communication and trust between family members. I was talking with a friend the other day who told me she and her sister regularly discuss how they will handle their parent's assets. They are openly communicating NOW, before their parents pass away, building communication and trust between the two of them. 

1.    Create a Written Family Mission Statement.

This statement should spell out the purpose of your wealth. It will act like a compass for your heirs to refer to when making decisions. What do you want your wealth to be used for in future generations; educational opportunities, entrepreneurship, the management of a special piece of property, or philanthropic purposes? 

Here are two examples of a Family Mission Statement:

                 i.     "We are committed to family bonding, community outreach, and education."

                ii.    “To grow closer to God and each other using the resources entrusted to our care for the benefit of God’s work, family, and community.”

2.    Hold family meetings.

These are essential in creating the Family Mission Statement. Involving the entire family (spouses too) will engender trust and commitment between all the family members to carry out the shared family mission.

3.    Introduce heirs to your financial advisors.

Be sure your heirs know who is your estate attorney, tax preparer, and financial advisor. These advisors can create a bridge between the generations, helping your beneficiaries carry out your wishes.

4.    Match family members' interests and competencies to the roles and needs of the estate.

Most of the time heirs find out who has what role, such as executor or trustee, at the reading of the will.  This can create bitterness between the heirs.  Instead, examine your heirs and try to match their strengths and abilities to each legacy role such as management of the trust, executor of the will, communicating with the advisors, overseeing philanthropy, or writing the family newsletter. Have a conversation with each heir and ask if they would be interested in the available roles.

It’s Not Easy

Preparing your Family Assets through building communication and trust among family members is not an easy thing to do. Therefore, you may need to involve a third party to help you gain clarity around your Family Mission Statement and help guide family communication. If you are interested in learning more about how to prepare your Family Assets, please feel free to contact me and stay tuned for my next blog, where I will share ideas on how to best prepare your Financial Assets.

[1] Bridging Generations by Roy O. Williams and Amy A. Castro