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We all know someone that’s on bad terms with a sibling or family. They may exchange an uncomfortable hello when paths cross… it’s noticeably awkward for everyone involved… and sad for everyone around to see it’s gotten so bad.

There’s always an underlying cause – and in many cases, it’s money. We see this regularly in our business as we help our clients maneuver money issues. Family inheritances and large gifts tend to create awkward and uncomfortable circumstances with the potential to tear families apart. It’s sad to see, and there is no “one size fits all” solution to to these scenarios. But there are steps you can take to reduce the chances of this occurring.

Setting The Stage

Often in an inheritance scenario, you have siblings, spouses of siblings, grandchildren, spouses of grandchildren, nieces, nephews, and sometimes many more people involved. And each of these people have their own set of feelings, beliefs, emotions, and thoughts in general about how the situation should unfold.

To further complicate things, money is usually a taboo subject in families. Especially with the older generations. We grew up not talking much about money in my family. Bringing it up to my parents’ generation can be seen as disrespectful.

And then, the individual passing the wealth likely had a very specific plan for how they wanted things to shake out. They, too, have their own opinions and feelings about how the world works, and want to see their hard work put to (what they believe) is good use.

In A Perfect World

It would be simple. The inheritance would pass and everyone would just incorporate it into their own lives and go about their business. No one would know what anyone else got, nobody would question the intent of the individual passing the wealth, and there would be no emotional attachments to the money. But that’s just not how things work. There are multiple layers of feelings, opinions and intentions to take into account.

So how do you get eliminate the family drama that comes with passing an inheritance? In reality, it’s not possible to eliminate it, but it is possible to limit it. The key is to think about these types of issues long before they even come up.

The Scenario

So consider this scenario. As you gain wealth, you make it clear to your children, grandchildren, siblings, etc. that they will not receive anything from you after your death. Behind the scenes, though, you’re creating a well thought-out estate plan that distributes everything within your family. You want to pass on your wealth, but you also want your loved ones to take responsibility for their own lives… not counting on anything from you.

As you near the end of your life, you feel good about the expectations being set so low – no one is expecting anything from you. And then, after your death, everybody is pleasantly surprised to find out they actually weren’t left out of the estate like you had told them! What a nice surprise for everyone, right?!

What You Didn’t Plan For

Well, now.. disagreements are surfacing around your intentions. Susie and Sally were left out of the will and think you were manipulated by another family member near the end of your life to do so. Johnny and Jimmy, who both received money, aren’t sure what to think. Sammy agrees that you may have been manipulated. Tammy and Tommy think that’s crazy.

And now the family is split in two. What you had intended to be a nice surprise is now a disaster. But, after all, there was no honest communication about what was supposed to happen so you can see why issues are surfacing.

This is obviously just an example – but the principle of the matter is very real… the importance of communication. Communicate your intentions fully and exactly as they are. Be uncomfortably transparent about your wishes as early as possible. Tell everyone who is involved how and why they are involved. Set the expectations so there is nothing to fight about when the day comes.

The Common Thread

Naturally, inheritances bring with them a variety of emotions. People inheriting money feel grateful. They want to honor the deceased’s wishes and be smart with their gift – put it to the best use. How do you do this? Communication.

Family and money dynamics create awkwardness and discomfort. The beneficiary never wants to step on toes or go against the wishes of the deceased relative. Everyone has their own opinions and they never perfectly align. In the end, again, it comes down to clarifying intentions.

Where should all this money go after your death? What are your wishes? You must force the awkward conversations and talk with all parties involved. Explain your intent to them in person while you’re living. Deal with the potential issues now, while you have a voice, instead of having family rely on estate documents to interpret your intent. Communicate openly, honestly, and regularly to ensure conflicts are minimized and your wishes are fulfilled.

If you have experience with a situation like this, please share! What was the issue? How could it have been avoided? How was it solved?

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Wrenne Financial Planning LLC (“WFP”) is a registered investment adviser with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. All written content on this site is for information purposes only. Opinions expressed herein are solely those of WFP, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.