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Family Asset Management Fails Without Proper Estate Planning

Good family asset management requires balancing your family’s short-term and long-term financial needs. You want to spend enough that your loved ones have what they need to be comfortable and happy, while preserving enough assets that you can take care of future generations too. Sharing your money and property with your kids, grandkids and other younger relatives gives them opportunities they might not otherwise have, which they can use to further your family’s legacy.

Passing family assets to the next generation with minimal taxation is a common estate planning goal, and there are a lot of ways estate planning advisors can help clients achieve it.

Keeping Money in the Family: Estate Planning and Family Asset Management

Because every family is unique, the only way to find the most lucrative estate planning strategies to preserve your family’s assets is to talk to your estate planning advisors. These are just some of the ways that estate planning can be used to preserve family assets for future generations.

Estate planning minimizes estate taxes. Using trusts and other estate planning tools to remove assets from your taxable estate lets your family pay lower or no estate taxes when you die. In states that impose their own estate taxes—like Massachusetts with its low estate tax exemption of $1 million per individual—family asset management becomes especially important. Even someone who owns a modest home outside Boston and few other major assets could have an estate that’s worth enough to incur Massachusetts estate taxes. A significant portion of the family’s assets may go to paying those taxes if you don’t plan ahead.

Estate planning can help your heirs avoid long, expensive probate. Let’s say you don’t use any estate planning strategies to transfer assets to the next generation and you die with your home and all your other property in your own name. Your kids and other family members named in your will as your heirs can’t access any of your assets until your estate completes the long probate process. It can take as long as a few years for heirs to receive probated assets after a decedent’s death. Attorney and court costs will diminish the size of the estate and cut into family members’ inheritances.

If you don’t have a valid will when you die, the courts will decide who inherits your assets according to the state’s intestate succession laws. Your property could pass to an elderly parent, estranged sibling or other close relative who you don’t trust to manage assets responsibly or transfer them to the younger generation.

Estate planning can minimize your future long-term care expenses so family assets don’t get swallowed. The high costs of long-term care (LTC) can devastate a family asset management plan. What could happen if you or your spouse has a serious medical event like a stroke, necessitating full-time care in a nursing home? Without a strategy in place to afford any LTC you might need, you could easily spend more than $150,000 a year out of pocket for one person’s care.

Covering those costs might require pulling money from savings and investments and/or selling family property. Adult children sometimes jeopardize their own finances by using their money to pay for their parents’ care. You can’t build generational wealth if you and your younger relatives are nearly bankrupted by medical and LTC bills.

Speak to your estate planning advisors about planning for long-term care as part of your estate planning. Buying long-term care insurance could make sound financial sense. If you think you’ll need to qualify for long-term care coverage under MassHealth or a different state’s Medicare program someday, start talking about strategies to spend down and transfer assets now. Ideally your MassHealth planning would start at least five years before you need to apply for LTC benefits.

Estate planning allows you to exert some control over future family asset management. You have a lot of leeway around how you structure trusts and what kind of instructions you leave for trustees. Create whatever boundaries you think are in the best long-term interest of your younger relatives. For example, if you’re concerned that a family member will spend their inheritance on a substance abuse addiction, set up a trust with discretionary distributions instead of mandatory distributions. The trustee is empowered to withhold trust assets if the beneficiary can’t demonstrate they’re in recovery.

This approach will also afford the beneficiary some liability protection and may even help protect assets from the divorcing spouse in some circumstances. This liability protection can help keep family assets in the family and available for the designated beneficiaries.

Estate planning reduces family conflict during asset transfers. Resentment builds and feelings get hurt when family members are in conflict about how to manage and share inherited assets. A thorough estate plan should leave no room for confusion or debate about who you want to inherit what assets. Your family members might not be happy about how you choose to divide things up, but they’ll have to accept your choices instead of playing legal tug-of-war over a cherished family heirloom and racking up attorney fees as they do it. Sometimes it makes sense to set up a family meeting to discuss what you have decided. It is better for family harmony to share, in advance, who will be acting as the trustees or executors responsible for handling the estate.

Sachetta’s advisors work with families of all sizes and backgrounds on estate planning strategy. We want to help you protect what you’ve built and pass it on to future generations. Reach out today for help with family asset management and estate planning. Contact us today.


Stephen P. Ahern, CPA/PFS, CFP®, AEP®, MST provides individual financial, investment, estate and tax planning and small business consulting to a diverse base of clients including key top-level executives, high-net-worth individuals, business owners, venture capitalists, and entrepreneurs. Stephen co-founded and served as President of Wealth Management Advisors, LLC for twenty-one years before joining the Sachetta team.