Myth 1: My estate plan is just for me, so I don’t need to tell anyone anything about it.
False. While the details of your estate plan are ultimately your choice, sharing some of the information with your loved ones can prevent misunderstandings and conflicts after your passing. It’s especially important to communicate your plans if:
1. You’re treating individuals in the same generation differently.
2. You’ve placed specific conditions or restrictions on how your assets should be used.
3. You’ve chosen to exclude a group or individual who might typically inherit, such as a spouse, children, or grandchildren.
If you intend for your estate plan to benefit multiple generations, some of whom may not even be born yet, it’s crucial that your family understands your intentions. By clearly conveying your wishes, your loved ones can help carry them out after your passing, ensuring that your legacy is preserved and managed in the way you envisioned.
Myth 2: The reason there’s no money left by the third generation is because of bad investments.
False. While poor investment choices can certainly impact family wealth, the real issue often lies in unprepared beneficiaries. According to one study, it’s not bad investments but rather a lack of financial preparedness among heirs that leads to the loss of wealth by the third generation.
If you want your wealth to last for multiple generations, it’s essential to prepare your beneficiaries. They need to understand what they’re inheriting and what your intentions are for that inheritance. Additionally, teaching them how to manage money is key. Financial literacy isn’t something everyone is born with—it’s a skill that needs to be developed. Without proper financial management skills, it’s no surprise when an inheritance is quickly depleted.
