Despite decades of progress on women’s issues, when it comes to high-level money matters, men still tend to take the lead. A 2021 paper out of Ohio State University found that while women often make financial decisions in lower-income mixed-sex couples, as net worth climbs the power dynamic shifts dramatically. In the richest 1 percent, the study concluded, nine times out of ten the husband is designated the “more knowledgeable” partner, with a greater ability to answer questions about business, income, credit balances, investments, and value of assets. This is a problem, the authors note, because “death or divorce may leave the less informed partner in a bad situation.”
As an advisor to high-net-worth individuals, I’ve seen this time and again. When inheritance happens, women can find themselves overwhelmed by the responsibility of wealth management. Often they’ve been out of the loop on family finances for decades, and then when their husband or father becomes ill or abruptly steps down for other reasons, they feel too overwhelmed and unsure of themselves to make good decisions.
If your wife or daughter might be put in this position someday, there are steps you can take now to make sure it doesn’t happen. The first, and usually most challenging step, is to acknowledge that you won’t be around forever. Consider whether you might want to retire or at least step back a bit before you reach a stage where you’re forced to. It’s hard to relinquish power, but reminding yourself it’s the best thing you can do for your family should help you come to grips with the inevitable.
Once you resolve to start having the difficult conversation about passing down not only your wealth, but more importantly, your knowledge, you can use the steps outlined in this article as a starting point.
Educate your heirs
The best way to approach handing down wealth is to start educating any successors early and often. If you encourage everyone to get involved from the beginning, they won’t feel overwhelmed by mountains of unfamiliar forms and records and won’t lack the confidence to speak up to busy and perhaps impatient professionals. If this hasn’t been happening all along, for whatever reason, it’s not too late. The inheritance process can take months, and any information heirs can digest will help them learn the language involved, gain at least some money-management skills, and increase their self-assurance. Many banks, investment firms, and independent financial gurus have websites and YouTube channels that can help smooth the way, and of course there are loads of books on the topic. Help the women in your life find a few that work with their style of learning and jump in—then be there to answer any questions they may have.
Appoint an executor, corporate trustee, and one or more individual trustees
It can be a good idea to have a co-trustee for each family member to avoid potential conflicts of interest. Trustees chosen by the family are often close confidants or trusted advisors to the family members, and families can often identify more than one of these individuals in their circle. However, be aware that assigning co-trustees can result in delays as the various parties must work together to agree upon a course of action.
Co-executors may also be chosen; this lets them divide up the work, consult and support one another, and keep each other “honest”—but again can also lead to disputes that, in divorce or other worst-case scenarios, can drag on for years in probate court. Hiring a professional executor or corporate trustee is a way to avoid this while also relieving family members of the burden of dealing with a sudden deluge of responsibilities. Only you can decide which approach is best for your family.
Make a plan
McKinsey estimates that an unprecedented amount of wealth—about $30 trillion—will be passed on to women by 2030, and while UBS Global Family Office reports that 63 percent of family offices consider supporting the transfer of wealth their main purpose, only 42 percent have a strategy and governance framework in place for actually doing that.
Talk with your advisors about making sure formal succession plans are in place. This roadmap should cover questions like: What are the estate needs of both passers and receivers of wealth in terms of wills, medical directives, life insurance, and tax shelters? What real estate should stay in the family? How will it be distributed and how will transferring it affect your heirs? What kinds of trusts and limited partnerships should be formed, and what assets should be transferred as gifts? Formally working all this out well in advance can help everyone involved plan for the future and make getting up to speed easier in the event of an emergency.
Two important caveats: First, set a calendar date to revisit your formal strategy at least every one to two years, as it may need to change based on life events, the age or health of the parties involved, and income and market forces. Second, even if everyone uses the same wealth management firm, each party should consider having their own advisor or be covered by different team members to ensure everyone’s interests are represented equally, minimizing the potential for any perceived conflicts.
Gather your documents
Once a plan is agreed upon, put all the pertinent paperwork in one place and tell everyone where it is kept. This dossier should include account statements for bank, 401(k), ROTH, 529 and other financial holdings; computer and customer-service passwords; investment information; historical tax filings (or at least the contact information for the CPA firm that files your taxes); medical directives and powers of attorney; property agreements; mortgage documents; pre- and post-nuptial agreements; insurance policies, and so forth, as well as the contact info of any third parties such as lawyers, trustees, asset managers, accountants, , and anyone else who may need to be contacted regarding family finances.
Make sure everyone who might inherit has official access to these documents, and double-check that companies won’t ask to verify anyone’s identity using information they may not be able to access. If you are hesitant to do this or worried the information may fall into the wrong hands, one option is to keep these documents with your estate attorney or a trustee, with instructions on when to release the information.
Include an at-a-glance bullet list, arranged alphabetically by category, of which institutions hold your assets and liabilities, such as loans, and mortgages, as well as cash, brokerage accounts, retirement accounts, and any alternative investments, in private-equity or venture-capital funds, for example; the location of safe-deposit-box keys and combinations to any safes; beneficiaries of any trusts, and so on. Ownership can become a labyrinth of information; make it easy for your heirs to find the exit. Tools like Nokbox and DGLegacy can assist with storage and organization.
Getting everyone up to speed can be a daunting task, but it is well worth the effort. It will not only ease the transition for your heirs, but also give you peace of mind knowing you’re paved the way for them to successfully maintain the wealth you’ve worked so hard to build.
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