A Different Kind of Estate Planning: Sharing Your Money Values with Your Heirs

By Libby Palomeque, Wealth Manager, First Republic Investment Management
November 15, 2016

Few among us are comfortable contemplating our own demise, and fewer still are comfortable with legal minutia…so it’s no wonder that for many people, estate planning can be the financial equivalent of a root canal.

Creating a robust estate plan takes time, effort, and professional expertise. The payoff is twofold: getting your assets where you’d like them to go, and leaving behind as little mess as possible for your heirs.

But what if, instead of just transferring assets, you were able to transfer your life’s worth of accumulated knowledge about money? What if you could share your money values with those you left behind? Would that be a process you would value? Would that bring you peace of mind?

Writing a letter to your heirs explaining your money values can be a treasured final component to your estate plan. Why did you do what you did with your estate? What would you love to have your heirs do with their inheritance? What was the biggest mistake you made in your financial life?

Keep in mind, if you want to control your heirs from the grave, this is not the place to do it. Control should be exerted in legal documents, not here. However if you don’t want to control, but simply want to share knowledge, then writing this type of letter can be an invaluable gift for those you leave behind.

So how do you get started?

I generally advise that my clients begin with a disclaimer. Here’s one I’ve used in my own letter: “I trust you to make choices that are right for you and for our family. If any of the thoughts I offer below are of use to you, I’m thrilled. If none of them are, feel no guilt at making different choices. I trust you, completely.” You can feel free to use my disclaimer, or create your own. Your objective is to make it clear that you are trying to provide tools, not remove choices.

The next step is to dive in with your money values. Because of my profession, I am constantly codifying my money values. I was able to make a twelve-point list fairly easily. If the process isn’t as easy for you (and why should it be, unless you spend ten hours a day working on this stuff?) here are some thought provokers that might help. Do you want to encourage saving? Sharing? Investing? A balance of all of these? Do you believe in working with advisors? Managing things on your own? What types of expenditures do you particularly value and which do you find not worth the money? Education? Lodging? Health? Travel? Fun? Charity?

If none of these big picture items spur thought, try one of these more focused ideas:
- The most important value I’ve learned about money is…
- The biggest financial mistake I ever made was…
- The best financial decision I ever made was…
- The single thing that I’d most like this money to help you accomplish is…
- The one thing I’d hate to see this money end up doing is…

Hopefully, one of these ideas will spur you, and the rest of the letter will flow easily.

Once you feel like you have completed a transfer of your money values, be sure to leave some words of encouragement for your loved ones. They will be reading this, after all, fairly near to your death, and their hearts are likely to be hurting. It’s not uncommon for people to either blow through an inheritance so that they don’t have to deal with it, or to go the opposite route and never spend it because to do so feels sacrilegious to the memory of the departed. Your warm words of guidance can be instrumental in preventing either of these extremes from happening to your heirs.

I can hear some of you groaning: We thought we were done with estate planning! Do we have to do this?

The answer is, of course not! Most people don’t. Writing this type of letter isn’t necessary, and it certainly won’t be everyone’s cup of tea. Furthermore, not every heir will appreciate the time and thought that has gone into the exercise. But I can tell you that, based upon the feedback I’ve gotten from clients, and based upon my own experience, writing this letter can be a highly satisfying process. When I contemplate what would happen to my family should I die prematurely, I like the idea that some of my money values might survive me, and help guide them down the path ahead.

We all know that money is a powerful tool. That tool can build amazing things…but it can also break things down. My hope is that, by sharing my money values along with my estate plan, the money I leave behind is less likely to be destructive, and more likely to act as a building force in the lives of those I love.

The strategies mentioned in this article will often have tax and legal consequences; therefore, it is important to bear in mind that First Republic does not provide tax or legal advice. This information is provided to you as-is, does not constitute legal advice, is governed by our Terms and Conditions of Use, and we are not acting as your attorney. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained here. Clients’ tax and legal affairs are their own responsibility. Clients should consult their own attorneys or other tax advisors in order to understand the tax and legal consequences of any strategies mentioned in this article.

© First Republic Investment Management 2016