Discover the essential elements that make up a comprehensive estate plan. During this info-packed webinar, our Trust and Estate Planning Advisory team shared the critical steps to take when establishing your legacy.
Hear the complete details regarding what to do, who to work with and when to start the estate planning process. Our in-house experts discussed best practices for family governance, taxes as well as legacy planning.
After the webinar, you’ll understand how to:
- Minimize family confusion, conflicts and misunderstandings
- Avoid probate using lifetime gift, tax and proper estate planning strategies
- More effectively share your charitable legacy with your family
- Gerald Baker, Head of Trust & Fiduciary Services, Co-Head of Center for Wealth Planning Excellence, SVB Private
- Krista Conover, Managing Director, Trust & Fiduciary Services, SVB Private
- Katie Sheehan, Managing Director, Fiduciary Advisor, SVB Private
Gerald: Hello, everyone, and thank you for joining us today. I’m Gerald Baker, head of Trust & Fiduciary Services and co-head of the Center for Wealth Planning Excellence at Boston Private, which as you may know is now part of Silicon Valley Bank. I’m joined today by two of my colleagues representing our core markets of New England and California who work with our clients to help develop and execute estate plans to help our clients achieve their wealth planning and execution objectives. I’d like to start by handing the floor to Katie to introduce herself.
Katie: Good morning and good afternoon, everyone. I am Katie Sheehan, and I am a fiduciary advisor with Boston Private an SVB company. I have been with Boston Private for about four years, but prior to that, the bulk of my career was as a practicing trust and estate attorney. So the fiduciary advisory role that I have is something very near and dear to my heart. And I very much enjoy working with all of our clients institution-wide, whether they’re trust clients, wealth clients, lending clients, deposits clients, no matter where they find themselves working on their holistic wealth and estate plan, and helping them facilitate the planning process and working with all of their advisors to do full-circle planning.
Gerald: Thank you, Katie. And now I’d like to introduce Krista.
Krista. Hi. My name’s Krista Conover, and I’m pleased to be here today joined by excellent colleagues. I have been with the bank for a little over 17 years now, and prior to that, I practiced law doing estate planning and business transactional work. And that very much relates to what we do here, which is really help clients make sure that their estate plans meet their wealth planning goals, meet their family goals. And so my job is to meet with current, new, and prospective clients, and to go over what their plans are, what their goals are for themselves, for their legacy, for their family, and to make sure that the plans that they have in place really will be able to be executed so that happens. And then, you know, we can come on board to really help the family navigate as we’re working with them on those plans. So, very pleased to be here today.
Gerald: Well, thank you so much for taking time out of your busy schedules to participate in today’s webinar. Our discussion today will not only cover the importance of family governance and engagement as a critical part of estate planning, but will also include examples of key mistakes we see families make when they don’t leverage an independent third party to work with them and their other tax and legal advisors to serve as their hub and sort of chief administrative officer in the execution of their plans and engagement across generations. During this webinar, we’re happy to take any questions you may have. To do so, feel free to submit them throughout the discussion through the box that is located on the lower right side of your screen. You just type in your question under Q&A, and we will answer them as we have availability during the webinar. If we are unable to get to your question, please be assured that we will get back to you individually.
So, let’s get started because this is a fun topic or at least it’s fun for the three of us. So, Krista, in your role serving as an independent third party working with trust and estate’s counsel, tax advisors, and families, can you give us a little bit of your experience and how you’ve had to pivot when estate planning in process or estate planning that has been already developed hasn’t necessarily been done with family engagement in clear communication and expectation setting?
Estate planning & expectations (4:04)
Krista: Sure. We have so many examples of that, but I’ll give you one that’s occurred recently. I was approached by two women who are beneficiaries of a trust. And their parents passed away when they were in their early 20s, and they are now in their 30s. And the uncle was made as the successor trustee. And this family of innovators here in the Silicon Valley has a family business, have a lot of real property, and had made the uncle as the trustee for their two young adult daughters. And the uncle really wasn’t up to speed with how to run a family business. He made some errors in charitable or distributions from the retirement accounts, missing key dates that he needed, and on the real property didn’t have them all appropriately rented or anything like that. And so the girls have come to us… the women have come to us and asked us to be engaged at this point and really to help kind of redirect the ship, so to speak.
And I think the real things that we’re missing is, first of all, the daughters didn’t know what their role was as beneficiaries. They hadn’t received a copy of the trust. They haven’t received regular statements. They didn’t know what was going on. And when they asked questions, it was just dismissed as though you don’t need to know that. And, you know, we regularly send statements to our clients, we regularly give them online access, and we’re engaged with them so that when they do inherit the wealth outright, that they have everything set up that they need to. And that really hadn’t been done for them. So now they’re in a position where, you know, kind of getting up to speed with everything. Also, the family business hasn’t been run in the way that the parents intended, and so we’re helping them get up to speed so that they also can now become part of that. But, of course, after a lapse of many years, it’s just not where the parents had intended it for their daughters.
And so I think through better communication at the outside, having a neutral third party who knew what was going on, knew how to execute the estate plan, and perhaps having better business counsel, somebody to bring everything together because their estate planning council wasn’t the person who was helping with the business interest, so somebody really to be a quarterback to work with the CPA, the attorneys would have been very helpful, and probably the trust would be doing much better now than it is and saved a lot of frustration on behalf of the daughters, and greatly, you know, we would have had increased wealth. So that’s just one example of many where I think it really helps to have that independent neutral third party who’s a professional help engage with the beneficiary so that they can continue that family legacy and what their parents intended in the estate plan.
Gerald: It is such a commonplace situation, and really it spans across our client profiles, doesn’t it? Whether it is multi-generation wealth that is passing from one generation to the next, whether it is innovators in the innovation economy who have accumulated significant wealth in short periods of time, the fundamental needs are still the same, right? It’s effective communication. It’s effective understanding of goals and objectives. It’s appropriate documentation of those and appropriate information sharing across family members, advisors, and interested parties that are working with these folks. So, Katie, I know for a fact that you have a lot of similarly situated circumstances in your career both at Boston Private and SVB Company and when you were in private practice. What are some observations you’ve made over the years of best practices to mitigate situations like the one that Krista just outlined?
Katie: Sure. So, you know, the luxury of time, right, is always a great way to mitigate these kind of experiences, but we often don’t have that. And so in practice and certainly now, we meet our clients where they are. So in Krista’s example, like the horse had already left the barn, right? So it’s sort of trying to fill that information and right the ship. But we often find clients who are in the middle of the estate planning process, and so we’re looking at those documents before they’re even executed. And we’re circling all of the advisors, not just us, but the estate planning professionals, the tax advisors, to make sure that the documents as drafted really are a complete and accurate picture of what the client’s goals are. And if they aren’t, then we have the opportunity as a multi-disciplinary team to make sure that before those are drafted and executed, it is a complete picture of what the clients had envisioned, right? Or sometimes clients haven’t done any planning, right? That’s the best-case scenario, right? They come to us clean slate, “Tell us what to do,” and so we sit with them. We provide our recommendations. We look at their entire picture, again, not just the financial piece, but the estate planning piece, the tax piece, and making sure that they are working in concert together. And then lining up the appropriate professionals if they’re not there, and if they are, certainly working with them to make sure that everything goes as it should. And, of course, that’s an ongoing process, right, getting the plan done. People think of that as sort of transactional, “It’s done, and I never have to look at it again, and here we go.” But no, as your circumstances change, both personal, professional, financial, whatever they might be, you know, clients’ plans need to change with them. And so that’s an opportunity for all of the advisors to be having constant contact with the clients to make sure that everything’s working as it should because their goals five years ago, six months ago may be very different than they are now. And like I said, we meet clients where they are, and we certainly have clients that are, you know, older thinking about retirement. We have folks in our innovation space who have just gone public, and they’re very young, and they’re wondering what to do now. And so our older clients and our younger clients are at a very different perspective planning wise. And so those are opportunities for us and their other advisors to really meet them where they are and then make sure that we put a plan in place that works for them.
Gerald: Thank you. You hit upon two things that as you both know are very near and dear to my heart. One, planning and engagement on planning is iterative, right? As your life evolves, your plan evolves. As your children grow older, you may be tweaking your trust instruments to reflect a different level of decision-making once they reach a certain age. As your career path as an entrepreneur evolves, and you may move from, you know, a few rounds of funding to going public to then starting your next entrepreneurial endeavor, your asset structures change. And asset-liability protection and tax optimization strategies directly play into your estate plan, and therefore those are just a couple of examples of why they are iterative living, breathing plans that need to evolve with you, your circumstances, and your family’s circumstances. And what better way to be able to ensure that you are coordinating across your advisors than leveraging professionals who are used to doing that, right? We kind of, no pun intended given who’s been jumping in the background, we herd the cats, so to speak. We bring all of your advisors together and our best thinking and subject matter experts together to really help in a coordinated manner, make sure we are moving in the direction that meets your goals and objectives.
So, with that, though, we’re talking about the wealth creator, the wealth transfer, the structures, the planning that’s important, but a huge component of successful execution of a plan isn’t just having advisors in place and subject matter experts to coordinate with those advisors to help you achieve your goals. There’s a fundamental component of governance and communication, and that governance and communication happens with your nearest and dearest, your loved ones, your family members, etc. So, Krista, in your first example, you gave an example of where there was sort of a dearth or lack of communication amongst the parents who were leaving this wealth for the children and putting the uncle in a fiduciary capacity to administer that wealth for their benefit. You know, what are ways we work with our clients and our partners to ensure a constructive dynamic of engagement, communication that really create the framework for family governance?
Creating a family governance framework (13:32)
Krista: Yeah. I think there’s a number of things that we do. You know, you typically when we’re working with a client really getting to know them and their families because, oftentimes, I think the advisors are very… they’re great at getting the tax implications and everything else, but really understanding the family. And so I’ve had a number of situations where I’ve sat down with families, and I start obviously with the trustors, really understand their intent, but then also meet with the kids. And I think that’s really important that they become engaged, and sometimes the parents don’t want to communicate to the kids, or the kids have trouble voicing their opinion to the parents. And so I had one situation where they made their oldest son the trustee, and daughter was a beneficiary. She wasn’t getting the funds outright. And I talked with the parents, and then they said, “Oh, do you mind meeting with our son who’s first in line?” And I met with him, and he said, “I really don’t want to be trustee for my sister. I can’t tell my parents. They might be really upset with me. But I don’t think that’s a good role. I’m a busy professional. I have my family. I love my sister, and I don’t want to be controlling her money.” And then I met with the sister, and she said, “I love my brother, but I don’t want him in that role,” you know. And then I went back, and I spoke with the parents, and we talked with their advisors. And having a third-party professional really made sense in that situation because it meant that the kids could have Thanksgiving together. They don’t have to worry. Brother could be an advocate for his sister but didn’t have to be in charge of the money. And so I think really getting to know the families, having those family meetings. Sometimes we have family meetings all together. Sometimes they’re separate with different kids. And then going back to the tax advisors, going back to the attorneys, and making sure that those plans that they’ve drafted really are able to be executed in a way that keeps family harmony and keeps those family meetings happening where everybody is engaged, they understand the parents’ goals. So, I think it’s just having a coordinator with respect to all the advisors but then a coordinator with respect to the family as well.
Gerald: It’s so true. And oftentimes, the hardest conversations are amongst family, right? Why parents or the wealth transfers or wealth creators who are transferring the wealth are thinking the way they’re thinking and making the decisions that they’re making and memorializing those in these trust documents that are really going to govern to a certain extent the financial lives of future generations? And having that clear and concise and open dialogue is important. And one of the most valuable things I think we do in the pre-engagement process and then once we’ve been engaged throughout the life cycle of the relationship is serving as a central point of communication and reference for all of the varying constituents and interested parties. So, Katie, let’s pivot that though to someone… a young entrepreneur, right, who may have siblings, may have nieces and nephews, is pursuing various, you know, business endeavors, but they don’t really have a nuclear family of their own. And so they may say, “Yeah, but what do I care?” What do we say to folks in those situations? And how do we help them think about that differently?
Katie: Sure. And people say that a lot. They say that a lot, and they are often more complicated, or complex, or fun for us, right, to plan for because they don’t know. They’re fairly young. They may not have apparent heirs, right? And they’ve come into a great amount of wealth in a very short period of time typically, and they don’t know what they want to do with it or where they want to go. And in their heads, they think, “This won’t be my problem. It will be someone else’s, so, let them worry about it.” And they are typically younger, right? They’re thinking about it in a very different mindset than certainly our older demographic of clients is. So it’s an education process. And I think just, you know, circling back to what we were just covering, all of what we do is an education process. It’s sitting with the clients no matter where they’re situated and walking them through all the pieces of the puzzle and making them fit together and make sense for them, right, because they may have all this chatter going on, and so and so told them to do this, and I read this article about this. But it’s our job to make sense of it, and we’re giving it an objective manner, right? It’s not the estate planner trying to sell them a plan. It’s not someone charging hourly for it. It’s objective advice.
So, circling back to our young entrepreneur who’s, you know, about to go public and about to come into a great sizeable amount of wealth. Their planning is just as important as if they are just about to retire, right? Or we’re looking at it through a different lens because they don’t have apparent heirs that they want to leave this to. So we want to have some level of flexibility built into their initial plan to provide for beneficiaries that may come down the pipe, or they may be in a relationship with someone but not married to that person just yet. And so that’s a key element of planning that needs to work into that as well. And then they’re thinking, “Well, I have all of this wealth, and, you know, what if I want to mitigate my income tax exposure or mitigate my estate tax exposure? What if I want to do some gifting?” Yes, all of those should be pieces of the planning puzzle that we are talking about and planning for. But when we are certainly younger, right, and we don’t have obvious folks to give it to, we need to be that much more careful about what we are recommending, what we are giving, the vehicles that we’re giving it to because they’re so young, right? Do you want to tie up all this wealth someplace where you can have access to it 20 years from now when you’re only 50 years old? What if you do have heirs? What if you have charitable inclination? It’s like peeling back layers of the onion, right, to think about all of the what-ifs.
You know, clients used to say to me when practicing, “Why is this document so many pages long, right? An 80-page trust document.” The reason for that is we’re covering all of the what-ifs, right? Because if you don’t cover all of those, whatevs you have holes in your plan, and that’s a mess, right, because that’s the other thing. When we’re young, we think, “I don’t need to plan for this right now. Nothing’s will happen to me. I’m invincible.” Life is uncertain that much we do know, and so we need to plan for that because when we have nothing in place, you have no control over what happens, and it is a giant mess no matter where you are situated, right? Whether you have $200 million, if you have no plan in place, that’s one thing I can guarantee you, it will be a mess for whomever your loved ones are, right? We’re talking about legacy today. We don’t want to leave a mess. We want to leave a nice, tidy package for whomever we can.
You know, I was thinking about in prepping for this, this show “Succession” on “HBO,” right, which has got a lot of us estate planning nerds very exciting that, you know, there’s a show about estate planning and business succession on “HBO.” But those are all very real issues that the three of us see probably every day. And so sometimes it takes seeing something like that on a Hollywood screen to really click for people like, “I need to go out and do something about this,” right? That shows the intergenerational space, right? We have the patriarch, and then we have the young kids, and then there are grandkids. There’s a stepmom, and there’s blended kids from two different marriages, and it’s kind of like a perfect fact pattern, right, to sink your teeth into. But we have a lot of clients that look exactly like that. It’s our job to make sense of all that for them.
Gerald: Which is so true. You know, the other interesting thing is… at least with those young wealth creators, also, the thing for them to remember is that wealth is an opportunity for them to also further charitable endeavors that are complementary to tax optimization strategies. I think too often at a certain age range, people think about estate planning as how do you leave money, right, to some future generation But it’s also a key tactical tool to be leveraged strategically for tax optimization strategies. So when you think about QSBS and SBS elections and funding certain types of irrevocable trusts to get assets out of your estate but also protect them from certain other tax exposure, it is very nuanced. And that’s where, you know, I think all three of us spend a lot of our time also messaging, estate planning isn’t just how do you leave money to people. It’s how you leverage estate planning to be strategic in what your tax exposure is, what your asset-liability protection exposure is, what your privacy exposure is. Estate planning structures are key components to achieving goals, not just leaving money to future generations. And so, Krista, I know that you’ve had this conversation frequently with clients, but what are some successes in sort of getting folks to understand that estate planning covers a lot of different things for the solution set of tax planning, asset-liability protection, charitable giving? You know, where have you really seen this be truly transformative to clients you’ve worked with?
Tax planning & charitable giving (23:35)
Krista: Yes. It’s helpful for clients to understand that it is such a big range, and oftentimes, they can achieve their family goals by doing charitable giving. And a lot of our clients don’t realize kind of what buckets they want to use to give, for example, to charities that have really meant a lot to them and their families. But that might also optimize how much money is going to their children and going to other family or other things that they want to have, you know, as part of their legacy. And I think that’s really important. And so I think it can be most successful when we talk to clients about what’s most important to them, because, you know, to your point, I think, you know, everybody can either get caught up, “I’m just giving it to my kids, or I’m just giving it to charity. I’m doing these things.” But really, it can be a blend of everything in terms of what the client wants their legacy to be, what their client wants to be as part of their family going forward. You know, do they want their family to be able to get together every year and really enjoy each other? And that’s also part of it. And so I think that it’s most successful when we have those conversations with the client as part of a holistic package, not just as, “Okay, what’s going to your kids?” But kind of, “What are the overall goals?” And then they can really look at, “Okay. What part is going to charity? What part is going to various different organizations? And I think that’s where it’s most successful is where you really understand the client and what their purpose is, what they want as part of the funds because that can really optimize it for everybody and for all of their interest.
Gerald: It’s so true. And, you know, when you think about charitable giving, it’s not just donating money to charities or having something named after you. Oftentimes… I know all three of us have had engagements with families where we talk about charitable giving to facilitate family governance, to pass on certain sets of values that the wealth creators have attached to this money, and passing that on to future generations. And it creates a mechanism for engagement within the family unit or across families and loved ones to really instill a value proposition of why this wealth is here, how the wealth creators view it, and what’s important for them for it to be leveraged. But then it facilitates that connectivity, that annual family meeting to talk about charitable giving to a donor-advised fund, or whether you want to set up a private foundation that will have formal governance structures that facilitate the informal in family governance engagement. There are so many different nuances and layers to how clear, concise communication, engagement across your advisors and in leveraging a third-party subject matter expert to serve as the coordinator of all of those parties invested interests to unlock the potential, right? Because, again, with my question to Katie just a few minutes ago about that young wealth creator that, “I don’t have a family. I don’t have this.” You may not have it today, but there’s a strong likelihood you’ll have it in the future. Let’s help you build a discipline around that wealth and around communication and engagement.
So, here comes the fun question for both of you, and we’ll start with Katie on this. We’ve all gotten in plans that are now irrevocable, and there are either gaps in understanding… and, Krista, you kind of led with an example similar to this, but there are gaps in understanding who does what. There are gaps in understanding what the assets are. There are gaps in understanding what the trustors’ intent was with putting those assets in trust for the benefit of individuals or other entities. What do we do to plug those gaps and prohibit things to move forward rather than either spinning in place or sinking? This is oftentimes the case.
Effective planning (27:53)
Katie: Sure. We find ourselves in this situation a lot. And I love this situation because estate administration was always one of my favorite things to do. And that’s the space where we find this a lot. So we have a client, a patriarch, a matriarch who’s recently passed, right? And so they have revocable trusts that may… or are now irrevocable. There are other trusts at play. There are other assets variously situated. And the family is coming to us, and they say, “Now what, right? What are we supposed to do now? What do all these different estate planning documents mean? Do we have any flexibility here? What did they mean when they put these together?” I had a call with a family member this morning, right? I find myself in a situation like this with one of our families. And it’s walking them through the process. You know, estate administration is a marathon. It is not a sprint. And it is often first just getting the family around the table in an education about, “These are the assets that are at play. These are the different documents that govern how all of these different assets will be distributed, can they be distributed, who are the beneficiaries of all of these. Is it bomb [SP]? Is it stepmom? Is it kids? Is it grandkids? You know, how does that all interplay? When can we have full access to these funds? Can we ever have full access to these funds?” And a lot of times, it’s educating them about documents that have been in place for a very, very long time.
So a question I was asked this morning was about, you know, a rule against perpetuities clause that was in a trust that was drafted in like the ’40s, right? And so they were like, “Why does it have to go on this long?” And I said, “That’s how it was drafted.” And it’s been irrevocable for a very long time, and there isn’t a whole heck of a lot that we can do about it. Now, you know, I’m in Massachusetts, right? And so we are a Uniform Trust Code estate now, which we weren’t for a very long time. And so we have the luxury of things like non-judicial settlement agreements and things like that that allow us a little more flexibility when trusts become irrevocable, but we can’t rely on that, right? So the education piece is saying to clients, you know, “You’re kind of stuck with these. Let’s make sense of it, and then we’ll show you how we can, you know, move forward.” And along the way, you know, feathers get ruffled, and people always don’t like the provisions, and people don’t always like the fiduciaries that are in place. So it’s also educating them about that. And it is a nice key role that we… you know, like I said before, we’re objective, right? We’re a third-party. It’s particularly important in this space often because all of these people are coming at this from a very different lens, right? They may have their own advisors, their own families. They may have liked this person. They may have not liked this person. And our job is looking at it very objectively and explaining it very objectively so that it sounds, you know, and looks… and makes sense to them. Not like we’re king and on mom’s interest, or dad’s interest, or whatever it might be. And that’s usually an ongoing process. You know, I talked about that being, you know, a marathon and not a sprint. And so that often lends itself to at least once, you know, annual family meetings, if not a regular… a more frequent cadence of meeting so that everyone feels like they have a place where their voice can be heard, they understand what’s going on, they’re getting full access to information and that things aren’t sort of fed to them, you know, in drips and drabs. They’re getting a full and complete picture. But that’s so important because, a lot of times, there may not have been clear transparency while mom and dad or whoever were living. They might not have even known this trust was in place. They might have not had any idea about the magnitude of wealth that they were about to inherit or have access to. And so now it is like, you know, opening up Pandora’s Box. So, we hope that we might have been involved beforehand so that we get help with some of the education process then, but if not, our job is even more important now to try to have all of this make sense and sort of put the flames out before they are fueled. And certainly, if things do get acrimonious, right, we’re here. I say sometimes we serve as a referee. There’s a lot of things we do in our jobs. We’re mediators. We’re referees. We’re psychologists. We’re counselors. We’re all of those things, and those are all part of this process. Estate planning is intensely personal. It is your family, and it is your money. It doesn’t get much more personal than that.
Gerald: Krista, how about from your perspective?
Krista: Yeah. So, the ways that we can help really as Katie was saying are the communication, you know, coordinating the advisors, making sure everything’s set up. And we had a trust that came in a couple years ago, and it was a blended family. It was parents, and each had two kids from a prior marriage. And the communication wasn’t always there between their two sets of children. So, mom passed away. Dad had Alzheimer’s. I was called out to the house a couple hours after she passed, and somebody had already taken off with her wedding ring. Somebody had already decided to go in the safe and do certain things. Unfortunately, we had all the original documents. I had everybody show up, and we went over the documents and what the expectations were. And the Boston Private was the one who would be able to follow through on that, and that they didn’t necessarily need to be as involved as they were immediately all taking ownership positions, but they had never seen the trust. They didn’t know who was supposed to be involved. And as part of that, one of the challenges was, as they executed a document on mom’s deathbed, the attorney forgot about something, and so basically, a lot of the assets were going straight to grandkids and completely bypassing the children, which obviously didn’t make the kids very happy. So part of that, and to your point, Gerald, was to get the right advisors on so that we could mitigate some of that because it was pretty clear what the parents’ intent was, and there was just an error in this plan. And so we immediately got those advisors on board so we could do it. Dad was still alive. We were able to make some changes to really follow through with what the grantor’s intent was and not just this error that had been executed in her final moments. But it went down to communication. It went down to getting the right advisors involved immediately to make sure that the parent’s intent was followed, and then communicating between these two families and their children to make sure everybody was on board in terms of what the documents were, what the assets were, and how they would be handled going forward.
I just want to echo what Katie said. If we can be involved at the outset on the planning, it really helps because oftentimes, again, the advisors are trying to do their best job, but if we know the families, or we’ve had those meetings, we can mitigate a lot of these issues that we then see more as very challenging situations. But it can really create a lot more family harmony if we can get involved at the outset and kind of issue spot some of those ideas so that the administration goes a lot smoother for the families.
Gerald: You spot on both of you, Krista and Katie. I think one of the important things is don’t come to us when there’s a problem. I mean, come to us when there’s a problem. Come to us no matter what. We’re going to work through it with you. But come to us and engage with… like everything else, engage with us throughout the iterations of your plan and your circumstances so that we’re well-equipped to know you and your needs and your family’s needs or your loved ones needs to serve in that value additive role of preventing strife, preventing misinterpretation and misunderstanding of who’s doing what, why, where, when, and how, right? I actually received a pretty interesting question that I’d like to pose to both of you if you don’t mind. One of the participants or attendees is asking, “At what age do you recommend beginning to educate beneficiaries about trusts? Let’s make that estate plans more broadly. Do you recommend talking about numbers at that point, or are numbers less relevant?” And I loved this question because I think it’s one I know we’ve talked about very often and it’s one we get asked by clients and their other advisors very frequently. So, Katie, why don’t you kick it off and then Krista join in? This is free flow conversation here.
Educating beneficiaries about trusts (36:50)
Katie: Happy to. So, this is something we get asked quite a bit. In the 20-plus years that I’ve been doing this, I’ve seen a total swing of sort of schools of thought. When I started doing this, it was… particularly here in New England, right, it was, “We’re not saying anything,” you know. And people would pass away, and their kids would know absolutely nothing. And the thought was, “If I tell them what’s coming down the pike, then they will be lazy ne’er-do-well, right? We’re not going to have any discussions.” You know, we’re now in a totally different school of thought as I think people evolve and become more educated about a whole bunch of different scenarios, right? Sometimes it’s not just educating the beneficiaries, but it’s educating your clients themselves, the grantors about the benefits of educating those beneficiaries, right, that they won’t become lazy ne’er-do-well. But knowledge is power, right? And sometimes, it can affect their beneficiaries’ own planning, their own estate planning, their own creditor protection planning if they have this information.
So, you know, you’re not going to sit down probably with your 15-year-old and have this discussion, right? But certainly, I think we see with our folks, you know, 25 to 30 I’d say is when we start to have those conversations. They invite them to join meetings often because they look at it not just having us educate them and help them educate them about their wealth, but it’s also an educational process for them to be a launchpad for their own financial success, right? It’s twofold. Numbers is tricky, right? So certainly, I think it’s a valuable lesson to share with them that there are documents in place, what those documents say, and set clear expectations about whether they will have withdrawal rights or ready access to those, or if they would be maintained in a trust, and the trustee will be holding the purse strings for their benefits. I think all of that is information that should be put out there, right?
Numbers is a different story. I think there’s a benefit to letting them know, you know, in stages, right? And even in the 25 to 31, I think it’s useful to start to have those discussions. I’m not sure you’re going to be fully sharing a whole lot of numbers at that point unless you’re really comfortable with where they are. And all of our beneficiaries are not in the same space, right? Within our own families, we may have a 22-year-old son who is crackerjack and, you know, able to handle complex situations and very financially savvy, and we may have a 35-year-old son who cannot get out of their own way, right? So, we have to also tailor the information to the beneficiary, right, because we want to… like I said, knowledge is power, but we want to tailor it to the source so that we’re not doing more harm than good with that education.
Gerald: Exactly. And, Krista, that was a pretty comprehensive response by Katie, but what would you add there with regard to engaging and specificity and timing of that engagement?
Krista: like, Katie, you know, parents ask this question all the time, and it really depends on your kids and what your comfort level is. There’s different levels of engagement. For example, with young children, you might be talking about, “Okay. We’re going to give some money to charity.” I had this conversation with my kids. You know, where are we giving some of our charitable dollars so that we can make an impact in the community to people may be less fortunate or for specific purposes. And so you can have those conversations, I think, all along. And then they grow over time. Then your kids are prepared. You know, when you’re 18, you might have other conversations that you’re talking about, you know, budgeting for college and those types of things, and, yeah, we have some plans. And then it grows from there. And I think having it as a dialogue that kind of you expand over time I think is really helpful. It can help children understand at any age kind of what’s coming and what’s going on. I don’t think you necessarily need to get into the numbers quite frankly. I think that’s really a comfort level of the parents, but certainly, as you’re approaching, you know, that incapacity area, you probably want to have those conversations with your kids. But I think as young kids, you start at that education process.
And, you know, we have programs here at the bank where, you know, we help the next generation, you know, become involved in what they should be looking for their finances. And I think things like that along the way are perfect. I don’t think there’s a magic age. I think it’s very dependent on children and what their comfort level is. But I think having that engagement from a young age in terms of budgeting, in terms of charitable giving if that’s important to your family that you continue to have those conversations. And they grow as your kids get older, and they’ll ask the appropriate questions and maybe not, and then you can choose how you want to respond for that. That would be my response. I really think it’s so dependent on the family, but I do think having it engaged as a process throughout a child’s lifetime is probably not a bad idea.
Gerald: So well put both of you. Thank you so much. We’ve covered a lot this webinar discussion today. And I’d like to take the opportunity to reiterate that the situations and circumstances like the ones that we covered during this conversation today are real-life examples. These are real people, real families, real situations that we work through in real-time with clients to help them navigate what can be perceived as a cumbersome and complex process. Really, we’re here to make it easier, more transparent, and more efficient, and effective. But with that, as we said earlier in the conversation, your plans are iterative living, breathing things that should continually be revisited and reconsidered to make sure that they are aligning to your goals, to your life circumstances, to your objectives, and looking ahead to how you may anticipate those changing over time. And we’re here to help you do that. Across wealth management, private banking, trust and fiduciary services, private lending, across our ecosystem, we are here to deliver you a holistic and integrated solution set for your planning and wealth management and trust and fiduciary administration needs. Don’t hesitate to reach out to your Boston Private advisor with any questions. And they have the ability to reach out to us and our teams to make sure that we can engage with them and with you to meet your needs think of ways to solution for those needs. I want to thank all of you for joining us today, and I wish you and your families all good health. And thank you again. Bye-bye.