Planner Jane Ricardi knows just how devastating it can be when people don't clearly express their final wishes to their family. Take the case of an octogenarian who did not communicate how she wanted her retirement accounts and other assets to be distributed among her four children, says Ricardi, founder of North Light Financial Services in Kingston, Mass.
The only daughter, who had been divorced twice, moved in with her mother. Saying she needed access to pay bills, the daughter persuaded her mother to add her name to the mother's bank account and to make the daughter the retirement accounts beneficiary, according to Ricardi.
When the mother died, 100% of her assets went to the "scheming daughter" - and nothing to her three sons, one of whom was Ricardi's client. "What ensued was a family estrangement and lots of hurt feelings, not at all what the mom intended to leave as her legacy," Ricardi says.
Disputes like this happen all too often, planners say, when clients don't discuss their plans with family members, whether for distributing their estates or funeral arrangements and services. For clients whose parents are still alive, Ricardi encourages them to hold meetings with their parents as well as with their children.
While planners can't mandate that their clients have such conversations, many feel it is their fiduciary duty to strongly encourage clients to express their wishes - because not doing so can create endless fights that can tear families apart.
LEAVING A MESS
"I always stress to my clients that you don't want to leave behind a mess for other people to clean up, nor do you want to create family strife," Ricardi says. "If a client really wants to keep their cards [close] to their vest, I can't force them to talk to their family members, but I can encourage them to at least visit an attorney to complete their estate planning documents."
Maggie Kirchhoff, vice president at Wisdom Wealth Strategies in Denver, says many of her clients are part of the "silent generation" who avoid talk of final planning with their family members. Indeed, two of Kirchhoff's clients are sisters who no longer speak to each other because they had a spat over the ownership of family photos after their mother died.
"It is heartbreaking - they fought over pictures!" Kirchhoff says. "I always tell people: No matter what, create some form of personal memorandum stating who gets the dishes, the clock, the rocking chair. Some family members may feel more emotionally attached to some items than others."
Kirchhoff also gives clients a document developed by the Alliance for Healthy Aging in Aurora, Colo., of which she is a board member. It helps clients start family conversations about issues such as legal services, wealth management, insurance, home health care, adult day care, assisted living, long-term care and hospices.
But for some families, she notes, such conversations can be "incredibly awkward." Planners may sometimes be wary of pushing too hard, too fast. "It's absolutely important to know when to back off when their kids may not be best suited to have that conversation," Kirchhoff says. "Maybe a friend ... can have that conversation, especially when the kids feel like it's taboo to talk finances, health or estate planning with their parents."
'COVER YOUR ASSETS' FORM
Thomas Balcom, founder of 1650 Wealth Management in Lauderdale-by-the-Sea, Fla., says many of his elderly clients want to invest aggressively in hopes of boosting the value of the trusts they leave for subsequent generations. If so, he urges them to let family members know so they don't think Balcom is investing improperly.
"I have a CYA form - a 'cover your assets' document," he says. This records "that the client wanted to invest this aggressively, so that it doesn't come back to bite me and someone sues me."
Beneficiary provisions are another area to check. Robert Pagliarini, president of Pacifica Wealth Advisors in Mission Viejo, Calif., recalls a client whose father had not named her as a contingent beneficiary on his IRA, even though the primary beneficiary had died.
After her father died, the proceeds of the IRA went to his trust, which required that the account be fully distributed by Dec. 31 of the fifth year after his death.
If the daughter had been named a contingent beneficiary, she could have stretched out the proceeds over time, reducing the immediate tax burden, Pagliarini says. That mistake is "going to cost her thousands and thousands of dollars," he says.
FUNERALS AND MORE
Planners should also encourage clients to talk to family or friends about their wishes about funerals and cremation, says Thomas L. Howard, an advisor with David A. Noyes & Co. in Elgin, Ill. "I had a client who was a retired engineer," Howard says. "He planned out everything and was very particular about the way things should happen."
But the engineer kept all his notes about his desired funeral - including which songs he would like played - in his Bible, telling no one but his wife. Then he and his wife were both killed in a car crash, and no one knew about his plans until weeks after the funeral, when his sisters cleaned their house.
"These kinds of things happen all the time," Howard says. "When I first get a client, I spend a lot of time listening to them. ... Within a year, I try to get them to make a will with an executor and communicate where all that information is to their heirs."
Advisor Catherine Seeber learned this after her father's death. Because he had voiced different preferences to family members about his feelings about burial and cremation, the lack of a directive created "a messy situation," says Seeber, of Wescott Financial Advisory Group in Philadelphia. In the end, he was cremated, but she says some relatives are still uneasy about the decision.
"I believe we should institute a Death Planning Day," she says. "There should be some kind of national holiday forcing us to acknowledge the importance, because nobody wants to."
When Seeber first meets with clients, she tells them that, beyond the basics of life insurance, legal directives and IRA beneficiary designations, they will discuss final wishes eventually.
"We give them a template of things to discuss, including how they would like obituaries to be written or whether they even want an obituary," she says. "Some clients have estranged relationships with certain family members and don't wish to include them in their estate division or meetings. In those cases, we urge them to at least have that discussion with the executor of their estate so that they are aware of potential conflicts."
Clients are also encouraged to share important financial details, including a list of lawyers, accountants and other advisors, with their executors. Seeber makes this information available on her firm's online client portal.
Another sensitive issue: how clients feel about their spouses dating after they die. "A lot of spouses don't date or get remarried out of guilt, so that's the best gift a client can give to their spouse - permission to date and get remarried," Pagliarini notes.
He's learned to tread lightly. "It's more about asking questions, such as, 'Have you thought about how you would feel if your wife got remarried?'" he says. "I just throw ideas out, and if the client picks up on one, then we can talk about the issue."
Katie Kuehner-Hebert is a writer in Running Springs, Calif. She's contributed to American Banker, Risk & Insurance and Human Resource Executive.
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