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How to prepare loved ones for inheriting wealth

Nevada residents might know that they need an estate plan, but they may not have heard of a wealth transfer plan. While an estate plan deals with the necessary legal documents, a wealth transfer plan is more about communicating with family members and preparing loved ones for what is in those documents.

A wealth transfer plan is important because all too often, family wealth is squandered due to squabbles within the family, disputes among blended family, and a lack of preparedness to receive the inheritance among other reasons. On average, by the second generation 70 percent of a family's wealth is lost, and by the third generation 90 percent is lost.

Elements of a wealth transfer plan include communicating and transferring values to family members, discussing estate plans with beneficiaries, and working with family members so that they are prepared for the inheritance. For example, a person might arrange for heirs to meet with professionals who will be able to help them manage their wealth. It is also important to discuss various options with family members such as setting up trusts. People can also encourage family members to invest and prepare estate planning documents of their own so that they are in a better position to manage their inheritance.

Another aspect of estate planning that some people might neglect that can severely reduce a family's wealth is failing to update the documents regularly. For example, if an ex-spouse is named as a beneficiary on accounts and not changed, the person's surviving spouse may not receive anything. Births, deaths and marriages may also change who should be included on an estate plan. An attorney can assist in conducting a periodic review and making changes as appropriate.

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