Where there's a Will, there's a way

Many topics in life are difficult to discuss. Uncomfortable truths are often more easily brushed aside and ignored than discussed. The reality is that this doesn’t fix the issue. Although it can be difficult, it is essential to have open and honest conversations, especially with those closest to you. Being on the same page when it comes to these tough conversations often results in much better overall outcomes than ignoring them and hoping they go away.

One topic of particular difficulty for families to discuss is inheritance. The reasons for this are obvious. Nobody wants to think about losing their loved ones. It is one of the most painful experiences in this life. Not wanting to endure it more than one already has to in one lifetime is a completely understandable mindset.

The problem becomes that without a plan, families often find themselves in all sorts of predicaments that arise due to a lack of planning. Without having the conversation, children often don’t know what they even stand to inherit from their parents. When an inheritance comes as a surprise, it is even more difficult to know what to do with it.

Where there's a Will, there's a way

If you have never had a discussion with your core family about an inheritance plan, you probably aren’t super keen to start discussing their or your untimely demise over a casual dinner.

One major reason that people don’t set a plan is that inheritance doesn’t come up easily in conversation. It is simpler not to make others uncomfortable, as well as not to address the uncomfortable truth of one’s own mortality. Furthermore, unless someone has had the experience of having someone close to them pass away before, they likely don’t have the context for how the process of distributing assets to next of kin works and why it is so important to create a plan.

The law surrounding what happens to assets without a legally binding will from the deceased varies from one country to another, but the process of claiming assets without a will is messy at best, no matter where you go. The assets can end up getting tied up for months, sometimes years, and there are instances of people not inheriting their loved one’s wealth at all due to the lack of a will naming them the heir.

Willing assets to next-of-kin is already a painful enough process without having to combat outside parties, including the possibility of your own government, to obtain what you should have been rightfully entitled to from your loved one. As painful as it can be to think about losing a loved one, creating a legally binding will is a great first step to ensuring that there is some type of plan that can be carried out should the unthinkable happen.

Stick to the Plan

In addition to the grief that comes from losing a loved one, there are a great deal of practical expenses that come up when someone passes away. Ideally, these things are already covered through some plan in the will, allowing those closest to the departed to grieve instead of frantically coming up with thousands to cover end-of-life expenses while they’re in distress from losing their loved one to begin with.

Even with a will, there is no guarantee that the recipient of this windfall of assets is going to know what to do with them. The first step is to ensure that while expenses are covered, the family doesn’t transition their grief into a massive spending spree from receiving a windfall of assets. In many instances, inheritance is the largest individual wealth increase that a person will experience in their life, and it can be overwhelming to suddenly have significantly more money and borrowing power at your fingertips.

Fortunately, the ability to immediately access assets can vary greatly, depending on the liquidity of the asset class being inherited. It is not simple to turn around and sell a home, for example, but it can be fairly easy to unload stocks, bonds, and crypto, given the liquidity of the market. Avoiding the pitfall of liquidating everything is a step that many struggle with, and it isn’t easy to accomplish on your own, especially given the severity of emotions in this moment of life.

If this isn’t enough, there are also major tax concerns when it comes to inheritance, which vary based on geographical location. Again, unless they’ve had the great misfortune of going through the process previously, it is not very likely that the average person is an expert in tax law regarding willed assets and inheriting wealth. Without proper planning, wealth that should be going to the next of kin of the deceased can end up being paid in unnecessary taxes instead.

Inheritance management advisors can help with this issue. Not only do these experts have a lot of experience being a supportive presence for grieving families, but they also have the benefit of being well-versed in how to maximize the impact of an inheritance to help the family going forward.

Additional Considerations

An initial meeting with an expert in inheritance can make a world of difference in how solidified your plan is for when the worst happens to you or your loved ones. The professional advisor likely has years of experience in having discussions about wealth and estate planning, and can help to overcome the initial hesitancy regarding the difficult topic of death.

Your planning professional will also know local inheritance tax law and can help to create a structure that allows you or your loved one to give as much of the wealth that has been accumulated to whomever you desire, instead of having to pay an unnecessary amount to the government. Of course, it is best to follow the law and to pay the necessary taxes to avoid even further headaches when mourning a loved one, but few people would sign up for more of their wealth going to their government than to their own family, friends, or charitable causes.

In addition to tax planning, a proper plan will also help to create a route forward for the assets in question once they’ve been passed along. There is not necessarily a “right” answer to what should be done with the inheritance, but meeting short-term goals while ensuring longevity of the wealth to benefit the family without burning through it all is a balance that is easier struck by an unbiased third party than from within the familial unit.

Experts should be well-versed in the asset class or classes that are being passed on. There are so many different types of assets, especially today, that everyone can’t be an expert on every type of asset class or market. Ideally, the initial meeting with an estate planning professional can help identify what types of assets you or your loved one owns, what the plan is for those assets, and how comfortable the advisor is with planning around these types of assets. A good professional will assist in their own areas of expertise and have a network of experts in areas that they’re less familiar with to consult with or outsource management services to on behalf of clients.

With the emergence of blockchain technology, wealth has started being accumulated in digital assets over the course of the last decade and a half. While most asset custodians execute the beneficiary wishes of their customers on their behalf, digital assets can be self-custodied.

A plan for digital asset inheritance management should be conducted with a company like Vault12, who have experts in blockchain and crypto technology. This can be done in addition to planning for non-digital assets, which a traditional estate planner would likely have more experience with up to this point in their career.

If you or a loved one is involved in blockchain and digital assets, it can be too easy to misplace or lose access to wealth that exists on the blockchain without a proper plan. Instead of panicking during an already traumatizing event, consider reaching out to Vault12 for a consultation to discuss creating a wealth management plan.

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