Managing money from the grave

Values along with dollars passed along through 'spiritual' estate planning

Sun SentinelDecember 30, 2012 

"Spiritual" estate planning — deciding how to pass down money based on values — is becoming a hot topic for baby boomers who want to make sure their values are passed along with their money, financial planners say.

Bequests to charities are up 19 percent in a year, according to Charity Navigator, a non-profit that monitors charities. But it goes beyond leaving money to a favorite group, said South Florida attorney Alice Reiter Feld.

"It's leaving money with a purpose," she said.

That extends into deciding how to give money — or not —to family members, Feld said.

Those drawing up an estate plan first have to decide who is included among their kin, in this age of blended families and second or third marriages, Feld said.

"With all the kinds of families these days, there's no simple answer," Feld said.

Other thorny questions from today's complicated relationships: Should couples in a relationship, for example, make sure their children from a previous marriage get their own bequests — separate from the new spouse?

Yes, Feld recommends.

A surviving stepparent may give the couple's possessions to his or her children. Stepchildren can then get passed over — unless estate planning leaves them a specific amount, Feld said.

In setting up a will, parents also need to consider: "Have you passed on your financial values to kids?" Feld said she asks clients. "Sometimes, I have to send them home to think about it."

Some retirees who believe in frugality may decide to leave money in a trust to guarantee that free-spending kids — or their spouses — won't squander it all, she said.

Putting money in a trust for surviving relatives can protect it from any creditors or even an ex-spouse, Feld said.

"It's more control beyond the grave," said Mari Adam, a Boca Raton, Fla., financial planner who has seen more clients wanting to have a say in how their kin spends their inheritance.

A growing number of parents also are deciding not to give equal amounts to their surviving children, financial planners say. Rather, some feel morally responsible in caring for less well-off children, said Ben Tobias, a Plantation, Fla., financial planner.

If one of their children is wealthy, for example, some parents may decide they need to give more of an inheritance to an adult son or daughter who is less well off or who has a special-needs child, Tobias said.

"For whatever reason, they are opposed to doing it equally," Tobias said.

Feld has seen the same trend, although she personally feels that children should be treated equally.

If mothers or fathers are going to leave more money to one child, then they need to communicate that before they die, she said.

Tobias agreed. It's a matter of keeping peace in the family, he said.

Parents especially "should sit down with a child who is going to be given less and explain the reasons," Tobias recommended.

"Otherwise real problems may develop," he said. "I've seen deep resentment develop."

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