Have You Discussed Your Estate Plan With Your Children?

siblingsAs a financial advisor to families for over 30 years, one of the most difficult conversations I had with clients was convincing them to discuss their estate plans with their children. They would often tell me. “The kids will work it out after we are gone” This was a recipe for disaster, setting the children up for messy battles that could tear a family apart.

One of my clients worked for his father in his waste management company starting when he was in high school. His older and younger brother also worked with him to support his dad’s business. When Dad passed away, he stipulated in his will that the oldest brother would inherit the business expecting my client and his younger brother to go to work for him.

Unfortunately it didn’t work out that way. My client felt like he had been cheated out of his future. He never spoke to his older brother again and started his own waste management business which became very successful.

It certainly seems easier to let our executors share with our family our intentions after we are gone. But it is a grave mistake. It is our responsibility to share with our children what our intentions and desires are before we die.

This is especially true if we own vacation real estate. One of my clients has a beautiful cottage on a lake in New Hampshire. His children and grandchildren have been going there since they were born. I asked him what his plans were for the cottage after he was gone. He replied, “ I don’t know. I will let the kids decide that”

I asked him what he thought would happen if two of his three children wanted to keep the cottage but the third couldn’t afford to support it. How would they decide what to do with his share? I informed him that this type of situation would do nothing but create friction within the family that could have horrendous ramifications. He needed to meet with his children and develop a strategy that they all could live with.

Fortunately he agreed with me and had a family meeting that was very successful, making it very clear to the family how the cottage would be handled and avoiding any future conflict.

Will You Go to a Nursing Home?

images-1In a recent AARP study, nearly 75% of adults 45 and older said they strongly desire to stay in their current home as long as possible if they have a chronic illness or need long term care. Many baby boomers state that they would never cross the threshold of a traditional nursing home. But what happens if a spouse is not able to take care of you or you can no longer get around your home?

Many assisted living residences have replaced nursing homes to provide care to those who are chronically ill or have lost their mental capacity. But Increasing numbers of baby boomers will seek out new alternatives for independent living where care can be provided.

Intentional communities for philosophical, religious, and lifestyle groups are emerging. Wikipedia describes an intentional community as “a planned residential community designed from the start to have a high degree of social cohesion and teamwork. The members of an intentional community typically hold a common social, political, religious, or spiritual vision and often follow an alternative lifestyle. They typically share responsibilities and resources.”

Alex Mawhinney (jamlll@charter.net) , a developer of retirement communities for over 25 years, reports that “intentional elder neighborhoods are becoming the new paradigm for elder living.” He states that boomers will no longer be interested in “the older generation of elder living options that were available to our parents that follows this model:

  • Age in place — in a home not designed for aging in place, and eventually aging alone
  • Move in with children or other relatives
  • Move to an institution — and pay dearly for care delivered by strangers, under their rules and according to their schedules. The institution might be a nursing home, an assisted living facility, a rest home, a retirement hotel, or a continuing care retirement community with multiple levels of care.

There are SOTELs (service-oriented technically enhanced living—like an upscale Embassy Suites); ecovillages; senior cohousing; and the new lifestyle communities like those being developed by Canyon Ranch.These elder neighborhoods are taking many different forms.

The common traits of these new alternatives are that they are:

  • Human scaled (not large and impersonal)
  • Relationship-based
  • resident managed/centered, with an overlay of lifelong learning, later-life spirituality
  • giving back to the community

Dr. Bill Thomas, came up with an alternative that he describes as “Green Houses”  in the 1990s,  based on “a really radical idea: Let’s abolish the nursing home.”

Thomas, a geriatrician from upstate New York, had patients then who lived in nursing homes, and he realized “that the medicines I was prescribing were not treating the true source of suffering, which was loneliness.”

He also realized that traditional nursing homes were going to have to be replaced soon anyway. “Most of them were built in the 1960s and ’70s, and, you know, their time is done. So I got to asking the question: What comes next?”

What came next were the first Green House homes, which opened in Tupelo, Miss., in 2004. Now, with 148 Green House homes nationwide, there’s enough research to get an idea of how they’re working.

And they’re doing pretty well.

Each resident has their own private room. There are no strict schedules at Green House homes, so while many of the residents gather at the table for lunch, they can have their meals sent to their room. David Farrell, director of the Green House Project nationwide, explains that those private rooms aren’t a luxury — they’re safer than a traditional nursing home, where two or even three people might share a room and also share a bathroom with the two or three people in the room next door.

Research also shows that Green House residents maintain their independence longer than residents of traditional nursing homes, where hallways are long and schedules are tight. “So people really are kind of relegated to a wheelchair in order to efficiently move them around,” Farrell says, “and they quickly lose their ability to walk.”

This program of private rooms and personal service sounds like it could be much more expensive than the traditional nursing home, but Green House home costs have shown to be about the median for nursing homes nationally.

There are now about 150 more Green House homes in development, where residents will be able to enjoy the privacy of their own rooms or the company of the communal table. It’ll be their choice.

Have You Had the Money Conversation With Your Children?

imagesWhat is your relationship with money? Do you completely ignore it and let your spouse handle it? Or are you a saver, keeping track of every penny you are able to add to your savings account? Are you a risk taker, making big bets on the next big thing, or a risk avoider, not even sure if you can trust the banks to protect your money? Do you associate spending money and buying things with pleasure or pain?

Why do I ask you these questions? Because whether you know it or not, your relationship and attitude about money has influenced your children and how they relate to money. It is important to begin to understand this connection when you start talking to them about their finances and your own.

As she has done many times in the past, my daughter taught me an important lesson five years ago. She asked me, “Dad, you’re a financial planner, and every day you are talking to your clients about money. How come you have never talked to me about it?” I was stunned, speechless. I realized that I had never shared our financial goals with her and had never inquired about her own financial situation.

From that day forward we have had an annual financial planning meeting around the Christmas holiday. I share with her what our financial goals are and I ask her what her plans are for the next three to five years. It is a way for each of us to keep our intentions clear and it has been a wonderful tool in cementing our relationship.

At first I had difficulty sharing with her what our income was and how much we had saved for retirement, but after a while, it became much easier. After all, I really didn’t have anything to hide. In the same way I had to be careful not to judge her for the amount of credit card debt she had or the amount she had saved.

As each year has progressed, we have become more confident is sharing financial information with each other. She has become more willing to ask me questions about her future and get my input on the best course of action for her to take. And to my constant amazement, her financial situation has improved significantly each year. At this point her income is much higher and she has saved much more than I had at her age. A true miracle!

I believe it is very valuable to have this money conversation with each of your children every year. I suggest strongly that you set a specific date to have a financial meeting with them. Your daughter might expect the meeting on the first day of summer, your son on Father’s Day. In this way they will know and look forward to this event.

The first few times may seem uncomfortable, but eventually you will find that you feel much closer and are more honest with each other. You may even find that you have a clearer picture of your own financial goals.

Who is Your Alpha Child?

images-1The Allianz Life Insurance Company conducted a study they defined as “The American Legacies Study”. They gathered information by conducting over 2000 interviews with Baby Boomers and their parents. One of the findings their study revealed was the existence of the “Alpha Child.” This is the child that keeps the family connected, who is always the first to make sure that family gatherings occur on a consistent basis, and communicates often with his siblings and parents.

Take a look at your relationship with your own siblings. Who is the Alpha Child in your family? It may be you. Examine your relationship with your parents. If the above listed characteristics describe you, then it is most likely that you are that person. But don’t let your ego get in the way. Be objective in your evaluation of your relationship with your parents and your siblings’ relationship with them. If you are married, discuss it with your spouse and ask for his or her feedback.

It is valuable for you to identify who your Alpha Child is. Who is the child your other children respect? Who is the child that you ask for feedback? Who is the child that acts as a leader in the family?

Once you have identified your Alpha Child its important to have a conversation with him or her, preferably face to face. Share with her what your plans are and the preparations you have made for your retirement years. Discuss your long term care planning. What happens if you or your spouse need care? Will you stay in your home? Will you move? Who will take care of you?

Share your end of life planning with her. I suggest strongly that you fill out “The Five Wishes: available from www.agingwithdignity.org before you do that. It is an extremely valuable tool to clarify your end of life wishes. I call it a living will with soul.

Ask you Alpha Child if he or she will help you organize a family meeting to discuss all of your retirement plans and concerns with the whole family. This meeting will have a life changing impact on your relationship with your children. It is most likely that you have never discussed these issues with your family before. Send me an email at:  (bob@giftofcommunication.com )and I will forward to you “The Seven Steps to Have a Successful Family Meeting”