RHP Market Talk

Ensuring Your Legacy With Family Meetings

August 31, 2021 Royal Harbor Partners Episode 11
RHP Market Talk
Ensuring Your Legacy With Family Meetings
Show Notes Transcript Chapter Markers

There are many reasons why you should hold regular family meetings and in this episode,  partners Natalie Picha and Michele Jones discuss financial value meetings.  

Sharing values and digging deep into family dynamics can be uncomfortable but it's never too late to have that first family meeting.

www.royalharborpartners.com

Natalie Picha:

Welcome to RHP Market Talk. I'm Natalie Picha.

Michele Jones:

And I'm Michele Jones.

Natalie Picha:

And with Glenn Royal, we are the founding partners of Royal Harbor Partners Wealth Management. Our topic for today is the importance of family meetings. If you work with our team, you hear us use the word family all the time. We like to say you're part of the RHP family. We all know that family means many things, to many people, but certainly when it comes to financial planning and estate matters. What we've learned over the years through our deep financial planning process, is that it never happens in a vacuum. And the people closest to you will someday have a part in your financial life. As a wealth management team and financial planners, we do so much more than portfolio management. And involving us in your family meeting process, helps to build confidence and security around your financial goals and legacy planning. There are many reasons that you should hold regular family meetings. And we want to share some of those with you today. And how we can help you organize and host. There's three types of meetings. There's the value meeting, the business transition meeting and the inheritance and estate planning meeting. Today, we want to focus on the value meeting. Michelle, I know you've done a lot of work in this area and you've done a great job, even within your own family. Would you like to tell us a little bit about what the value meeting means for you and how you've acted on that within your own family?

Michele Jones:

Thank you, Natalie. There are many different stages of the family value meeting, which can start as early as educating your children in elementary school, all the way through legacy planning and discussing your last wishes. The important thing to note is, whatever stage you are in, it is never too late to have your first family meeting. Now, one thing we were consistently discussing, here at RHP, is how to educate the next generation. My husband and I believed it was important to start educating our children at a very young age, on how we valued money. When my boys were in elementary school, they would earn money by helping around the house. We taught them the money they earned was divided into three buckets. There was a giving bucket, a savings bucket, and a spending bucket. We also found there were a lot of great tools available for young kids. In middle school, we introduced a debit card called Green Light. What we really liked about this is it had an app for the parents and the children. You could establish the chores in different ways for them to earn money. You could transfer money to them through a parent account, as well as you could restrict how and where they would spend their money. What was nice is, it too had buckets for giving savings spending and investing. This teaches them at a very young age, how to start managing and budgeting their own money.

Natalie Picha:

Yes. And that translates into why we talk about value meetings. Is that not all families start young. So, you guys have a rhythm of talking about money within your family, but not all families do. And what we find, is that after people start to get a little bit older, if they haven't had that experience, that it's good to have their financial advisor team actually begin to help form some of those meetings. When the kids are older, maybe the person that's close to them, that they know, is actually carrying out their legacy. Those are those adult meetings that we have closer to the end of life. You're talking about meetings, that basically you're starting within your family. You are giving a value system. That's early on with the kids. We even get kids coming in the college and high school age where our clients are saying, hey, we want them to understand what investing is like and what the tools are that they might have to work within. And I know that you've mentioned something, because you know, your boys are now in high school. Maybe you can talk a little bit about some of the tools that you guys have used, like a Custodian Roth.

Michele Jones:

Absolutely. So , just like any IRA, when you have earned income, you can contribute to an IRA or a Roth IRA. For minors under the age of 18, you can open a Custodian IRA or a Custodian Roth IRA. So, when my oldest son turned 14, he had his first job where he earned money. From that summer we talked about, again, those different buckets and we talked about saving for his future. And I know at the age of 14, it's really hard to think about your future, such as retirement and what that looks like for you and your goals. But, what we did was , I talked to him about how a Roth IRA worked. What we did was contributed a portion of his earnings to that Roth IRA. And he was able to choose some investment options within that Roth IRA. And that will help him start his retirement journey. Another thing he was very interested in was learning about different stocks and investing. And he wanted to , open not just a Roth IRA or Custodian Roth IRA, but also a Custodian Taxable Trading Account. So, with some more of the earnings that he had, he opened a Custodian Taxable Account where he's doing some stock picking on his own.

Natalie Picha:

Right. And by bringing him into that conversation, educating him early about not just your value system, which is to be a saver and plan for the future. Now, he knows what a Roth is. He understands what an IRA is. And quite frankly, he knows the difference between a stock and a bond. And it's surprising to us, how often we work with the young adult children, young professionals, I would say in their twenties, getting their first job out of college, who may not even understand the difference between a stock and a bond. And we love to be a part of those conversations and help to give that sort of education. So, that's another family meeting. As you hit milestones, in your life, as your children hit milestones in their life, being comfortable, having those conversations, can make all the difference, as you move through your financial journey. I think pre-tax, post-tax savings conversations, with those that have got their first job. We've done those kinds of conversations, quite a bit. Helping them set their first budget. Sometimes their first goal is the opportunity to buy a house. Sometimes there's marriage on the horizon. Now you have a spouse , or a potential spouse. Sometimes there needs to be conversations about what that might look like for families that have large inheritance or businesses. Because there may be a need for a pre-nup and things like that. And those are conversations that people sometimes really shy away from. And if you can get a neutral party, like our team involved, it tends to really help things go much more smoothly. I want to talk a little bit more about other high school, college, young professional tools that we can use in educating that next generation and what that looks like as we move from young professionals, into adult children. And truly, we see such a wide range of things that happen, in this time period from again, young professionals, getting ready to buy their first home to maybe having to take over some of the health decisions for adult children. And the fear around that, for not just only the adult children, but for the parent as well.

Michele Jones:

Right. And we've seen a lot in our office. We're having a lot of our client's children, who are graduating high school, graduating college, like you said, starting their first job and coming and sitting down and talking to us. And the nice thing is, you know, all these years they may have had a part-time job or even worked in college, but now they have their first full time job and they have to understand what it's like to create a budget. So, you know, we have a lot of budgeting tools that we work with and we're happy to share. We start talking about what your income looks like, what your expenses look like, what are your short term , your midterm , your long-term goals. What do you need to be saving now to be able to meet those goals? Through our financial planning software, we can create a preliminary financial plan for them that really shows them the difference and how different your life would look if you start saving early, it's amazing with goals such as, like you mentioned buying your first home, what does that look like? What can you afford? Midterm goals of starting a family, having children? What does it look like saving for education planning for children and long-term goals like retirement. Starting to plan at the young age of 21, 22 for your financial future, makes a huge difference on the end result. Another thing that we always talk about with our clients is, once your child is 18, they are an adult. It's important for them to have what we call a Kiddie Will and Powers of Attorney, Medical Powers of Attorney. If something were to happen to them, it's important for those all to be in place. We have attorneys we work with that can absolutely help in these different areas. But there's a lot of different stages in that early adulthood that you, as a parent or the young adult children aren't thinking about. So, we like to bring all of that together in meetings. Talk about the different things and, you know, just start the conversation.

Natalie Picha:

Right. Like you said, it's that beginning that conversation. I'm glad you brought up. Basically the Kiddie Package Will, you know, when your kids are going off to college, don't forget, that as adults under all the new laws, you don't necessarily have a say. And if you're not already named as Power of Attorney, a Medical Power of Attorney, that could cause a problem. You know, if something happens while they're away at college. And so all of those things should be addressed. Obviously, if they already have accounts, like you mentioned, the custodial accounts, you want to understand what would happen if something happens to them and, oh , God knows we don't want that to be the case. But, again, having a plan makes all the difference. And also having that comfort level of having those conversations. Because at some point, we also hold, we call them value meetings, but it's now you've got adult children. So, we're talking, you're now third generation, there's grandchildren, probably in the picture. Parents are thinking about, they're already in retirement. Maybe nearing the end of retirement. And we call it aging with dignity and grace, right? It's making decisions that you prepare for end of life and letting all the people in your life know what your wishes are, how you want things handled. Some of these conversations can be very uncomfortable and we are here to help facilitate those conversations. Because if everyone understands who is going to be the primary person to make health decisions, if everyone understands who that Power of Attorney is. What the role of a Power of Attorney is, it really helps. And then, we see, you know, the situations where someone hasn't planned and how hard that can be. We also see things like the executors , maybe not understanding what it means to be an executor. All the roles and responsibilities, as you come to an end of life. It makes life just easier. If that person that's in charge already has a clear understanding of what they are in that relationship.

Michele Jones:

Right. So, when you're doing your financial planning or estate planning documents, and you're naming people as your executor of your will, trustees, et cetera, it's very important to have an in-depth conversation with those individuals to make sure they understand what that role entails and would they be willing to do it. In some situations, after having that conversation, it sometimes makes better sense to name someone else. Especially in the roles of trustees , you could have a co-trustee. But most importantly, you can always have a corporate trustee. If you don't have someone who wants to take all the responsibilities. The last thing you want to do is create any sort of, any uncomfortableness between family members. And like you were mentioning, Natalie, just the idea of everyone, knowing what their role is prior to actually having to go into that role, makes a huge difference. And that also lets everyone know how they can work together. Where we come in, at Royal Harbor Partners is being a part and understanding it and meeting the people who are going to be your executor. Your trustees. Your beneficiaries, and for us to understand exactly what was set up and why, for us also to work with your estate planning attorneys, because we find a lot of times what happens is, you meet with your estate planning attorneys. You go through the process of setting up all the documentation. You have everything in place. But if you don't follow through in the right titling. Or the right beneficiary naming. Then your whole plan may not go as you intentionally wanted it to go.

Natalie Picha:

Yeah, I have to tell , give a good real life example of someone that we've worked with, where they went to the attorney. They put a plan in place. The attorney said everything is good, but then they never told anyone. And they never went and sat down with their financial professionals to talk about, okay, well this is, these are my wishes. This is how I want everything laid out. And as it turns out, the will is there, but none of the accounts were properly titled. Some were supposed to have payable on death or transfer on death. They didn't. So, there was this disconnect between what the will said, and what actually was being done outside of the will. So, actually following through is such a critical point. Because then what our team has to do in that case is what we call Forensic Financial Planning. We have to go dig and figure out how were the accounts titled? How do we get them to pass according to the will? And in conjunction with the attorney, that's working on the probate, we are helping the family and assisting that family and consolidating. Bringing things together, getting the transfers done. Getting titles changed. It's a lot of work that no one really wants to do when they're grieving. So, how we can assist in that situation? You know, now this is after the fact. Now we're working with an adult child whose parent has passed and they thought that it was all done. And it wasn't all. While one part of the will was done. Everything else on the outside didn't match the will. And now there's, there's a , quite frankly, it's a big mess that we're working through. And now you're going to pay more in attorney's fees. And time. And it's stressful when you're grieving the loss of a family member. And you're trying to bring all of these things together. So, our team wants to be part of these conversations because we know that we can make it easier on the family. So, the sooner you get involved. The sooner you get comfortable with the family value meeting and you are comfortable with proceeding through that value meeting. Even all the way through life, means that your legacy and your value system is protected through each generation. And we want to be part of that legacy planning for you. So, I just want to thank everyone for listening to Royal Harbor Partners Market Talk. And I know this conversation is a little bit harder for some, than other conversations that we sometimes have. Sharing values and digging deep and getting into your family dynamics can be uncomfortable. I just want you to know that we're passionate about planning for your financial future, by sharing our knowledge and experience with you and your extended family, everyone benefits we're devoted to our relationships with multi-generational families, for the creation of successful legacies. Through our one-on-one conversations, we can help you discover a clear path forward for your personal wealth management and investment journey. How different will your life look with the right advice. Call us today or visit our website www.royalharborpartners.com to start your conversation and let us help you with your family.

Disclosure:

Royal Harbor Partners is a registered investment advisor and the opinions expressed by Royal Harbor Partners on this show are their own all statements and opinions expressed are based upon information considered reliable. Although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk. And unless otherwise stated are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal or investment advisor to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.

The Importance of Family Meetings
How to Educate the Next Generation
About a Custodian Roth IRA
Educating Young Adults
Available Budgeting Tools
Kids In College
Understanding Roles and Responsibilities
Following Through Is Critical
Closing
Disclosure