Greasing the Skids for Your Inheritance
That old idiom derives from a time when heavy equipment had to be transported on giant skids and using grease made it easier to transport. It also applies to preparing for what happens after you’re gone and the details of your inheritance decisions are executed. People sometimes forget that they won’t be around to clarify intentions, sooth hurt feelings and misunderstandings, or to provide advice on how best to use money bequeathed.
I once had a client who died unexpectedly in his late 50s. He was a good investor, frugal, divorced and only had one child. That child, a son, led a rather simple life. He and his wife were hourly workers. They were raising their two teenagers at the time of the death. The son instantly became a millionaire, without any knowledge of how to invest or how to prioritize spending and saving. The next time I saw the son about a year later, he “retired,” bought a new bigger home, was driving a nice big pickup and was catering events at his house for extended family and friends. Something tells me that deceased father would have liked to prepare his son a bit better for handling a seven-figure inheritance. Maybe he would have told the son to be frugal and make sure the money lasts. However, I could also envision him saying “life is short – sometimes surprisingly short, so enjoy it while you can!” All I know for sure is that he didn’t grease the skids for his son’s very heavy responsibility of managing a large investment portfolio.
Don’t let that happen to you. Here are some factors to consider so as to make things “move” easier after you are gone:
- Make sure your financial and medical decision makers know where the estate planning documents are kept. Don’t give them copies because that creates its own set of issues if you later change the plan. Giving them the exact location of the documents, along with any code or lock combination is enough.
- If things are not going evenly to a group of people of equal relation (e.g. kids or grandkids) let them know up front. Whether you give them a justification is up to you, (I mean, it’s your money and you really can do what you want with it), but letting them know things aren’t going to be equal helps minimize tensions and challenges later on.
- Letting kids know how much you have is a unique issue. It’s definitely a good idea if you begin to have trouble keeping track of it and managing it. But while you are still competent, giving details of your net worth can be good or bad. My experience is that children inevitably estimate what their parents are worth, if for no other reason than to plan how to take care of them if they need nursing care. If you think they are way off, you might want to at least give some hints so they have a better perspective.
- Letting your kids know who will be in charge as the trustee or executor is helpful. Again, hurt feelings for silly things can come out of nowhere. Your medical decision maker should also know your feelings about end-of-life care.
- If what you leave a child or grandchild will completely change their financial status, it might be best to start coaching them a bit now about how to handle investments and the types of help they can and should get from professionals. Money can overwhelm people, and many older children might not realize that Jed Clampett and his family weren’t just millionaires, they were more like decamillionaires in today’s dollars. A million dollars is not what it used to be.
Of course, you can eliminate all of these issues if you do what I used to tell my estate planning seminar attendees decades ago: Time things carefully so that the check to the undertaker bounces! Good luck with that!
Fun Fact: I was in Southwest Florida for Thanksgiving visiting family (and golfing, of course) and we visited the Thomas Edison museum. Edison and Henry Ford had winter homes in Ft. Myers. An inventor as prolific as Thomas Edison had to be an optimist. Among his 1,093 patents was the lightbulb, and it was a bumpy road to discovery. Ever the optimist, Edison used to describe his initial lightbulb failures as “discovering thousands of ways it did not work.”
