Column for What’s Next website FINAL THOUGHTS By Mark Levine The last people to speak with about wills and estate planning are your attorney and financial advisor. Sure, they’re experts on proxies, trusts and all the intricacies of intergenerational asset transfers and taxes. But before you commit post mortem plans to paper and lock dollars away in perpetuity, you’d be wise to first speak with your psychotherapist and clergy-person. That’s because wills and estates aren’t just legal documents: they’re also expressions of emotions and values. Forget one part of that mix and you guarantee trouble. One affluent couple I knew decided to split their estate among four grandchildren, as long as each graduated college. The couples’ goal was to encourage education. At the time the will was prepared, no one could imagine one grandchild would suffer an accident making college (and much else) impossible. As a result, the heir who most needed help was the one who didn’t receive it. The mistake was kept from becoming a tragedy by the selflessness of the other three grandchildren, who took it on themselves to compensate for the will’s shortcomings. Rather than relying on good intent and hoping your heirs are equal parts prescient and magnanimous, you need to ask yourself some hard questions, and communicate your answers and ideas, before bringing in the tacticians. WHAT WILL MY WIDOW NEED? Providing for your spouse is probably your first priority. But rather than automatically leave her the bulk of your assets, consider your bequest in the context of the rest of your estate. For instance, life insurance benefits could add considerably to the size of your estate. And if you’re taking care of dependent children in separate bequests that will lessen her own financial burdens. It usually makes sense to provide enough for her to maintain her lifestyle, but that might not require your entire estate. Rather than your death resulting in an improved financial situation for her, consider passing surplus funds on to charity. If your wife is much younger than you, and you have no children, providing perpetual lifestyle maintenance could actually be counterproductive. Change isn’t always bad: it can represent growth. Will maintaining your role as breadwinner from the grave keep your young widow from ever spreading her wings and starting a new life? Are you worried about her future, or are you trying to insure your own? Would it be better to just provide enough money for a smooth transition to a new life? WHAT’S BEST FOR MY CHILDREN? A substantial inheritance has the potential for liberating your kids from pressing financial burdens. By all means provide for promised short term financial assistance—college tuitions or home down-payments—that haven’t been met. But beyond those, would a large windfall help or hurt your kids? Will it enable the talented violinist to pursue a symphony career full time rather than play weddings four nights a week? Or will it enable the son who hasn’t yet found himself to give up the search entirely? Does it make sense to communicate your plans now or to wait? Knowing there’s an expected influx of cash down the road could allow your kids to take a trip to Australia while they can still climb Uluru. On the other hand, relying on the demise of a loved one to come into your own can be problematic. Just ask Prince Charles. HOW DO I BALANCE NEED VERSUS LOVE? Should you leave more to those who need more, or should you leave the same to each regardless of need? Logic dictates you leave more to the struggling junior high school Social Studies teacher, with a stay–at–home spouse and three kids, than to the unmarried, very successful tax attorney. But when it comes to family, logic often finishes second to symbolism. That may not just be money you’re doling out, it could be love. I know a very successful recording artist, married to an even more successful performer, who was terribly upset when her parents left more to her two siblings and their wives who weren’t nearly as affluent. The money was insignificant; the gesture, however, was devastating. Whether you opt to provide equally or based on need, it’s essential you communicate your intentions and your reasoning to all your kids. If they have issues they can take them up with you now, mitigating the potential of siblings battling it out at the cemetery.
WHO ELSE SHOULD I INCLUDE, AND HOW? You’re more than just a husband and a father. Don’t forget your friends. These needn’t be financial bequests. In fact, leaving your treasured Mark Messier jersey to your buddy will probably mean far more than a check. Nonfinancial dispositions like this can and should be spelled out in a letter than supplements your formal will. Consider favorite charities, community groups, and your alma mater as well. While it may be tempting to spell out exactly how you want your charitable bequests used—funding a new digital photo lab for the local Youth Bureau for instance—there’s no guarantee the need will still be there when you’re not. Instead, pick an organization you trust and let it decide how best to use your gift. WHO DO I TRUST? Wills and estate planning, while savvy steps in the business of living, can also be the ultimate expression of hubris. Not satisfied with exerting as much mastery as possible over our day to day lives, we’re trying to take that sovereignty with us into the grave or urn. Our motives may be pure, but, as Oscar Wilde once noted, “whenever a man does a thoroughly stupid thing, it is always from the noblest motives.” That why the selection of an executor shouldn’t be taken lightly. Sure, executors are bound to follow the terms of those very carefully drafted trusts and wills. But it’s always possible something might happen. The intended recipient of your gold pocket watch could predecease its disposition, for example. Does the executor sell the watch and roll the proceeds into the estate, or pass the watch on to someone else? You need someone who’ll respect the text of the document, but not at the expense of the spirit underlying it. Executors can hire professional advisors and managers, so what’s important is they know and understand your heart and mind, not the law or finance.