Avoiding Estate Plan Failure

According to studies cited in the new book “Preparing Heirs” by Victor Preisser and Roy Williams, almost 70% of family wealth and succession plans fail. This means that less than a third of wealthy families are able to successfully pass on assets including family businesses, real estate, financial investments, philanthropic foundations, and trusts.

This statistic is particularly sobering when coupled with the expectation that the history’s largest wealth transfer is about to occur. Experts believe that elderly parents will pass $25 million to the baby boomer generation in the next 20 years. Even with this staggering number, many wealthy families avoid the topic of estate planning like they avoid the topic of, well, dying.

Estate plans can fail for a number of reasons ranging from liquidity issues, inadequate estate planning, and lack of specificity. One of the biggest issues regarding estate plan failure is poor inter-family communications. The solution for better inter-family communication may be to encourage family discussions and bonding time. When families are united, they tend to be less controversial and the probability that assets will pass and the testator intended will likely increase.

See Mitchell Kauffman, Wealth Transference Failure and How to Avoid it, Registered Rep Magazine, Oct. 7, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.