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Caring For Generations

Inter-generational Estate Planning Thought Partnerships

by | Jun 26, 2024 | clients' legal issues, Directives, estate and tax planning, Estate Planning


The well known business adage “shirtsleeves to shirtsleeves in three generations”, portraying a cautionary tale of how successful wealth creators risk having their life’s work squandered by heirs, was the impetus for a study by researchers at the Northern Trust Institute. Is “fear-based” planning, characterized by multiple restrictions on heirs, really effective they wanted to know? Might an approach characterized by confidence and trust be a better way to prepare the younger generation to manage wealth successfully?

“It is important for elders to open the door to having open conversation about the responsibilities, challenges, and obligations that accompany wealth,” the authors conclude, offering three important cautions:.

  1. It is important for both parents to be on the same page when talking to children about money.
  2. The younger generation should be empowered to pursue their own financial success.
  3. As children age, they should be introduced to the parents’ financial advisors and encouraged to pursue their own age-appropriate financial planning

This is in sharp contrast to “carrot-and-stick” estate planning, the authors stress, in which restrictive and overly prescriptive trusts are designed for the purpose of forcing certain behaviors by heirs. Instead, begin by reflecting on your ‘why’, the authors recommend to wealthy parents, understanding your own “money story”. What mistakes have you made? What values do you hold most dear?

“In many families, conversations about wealth are informal and infrequent. Family dynamics and diverging views are left to develop into problems,” the authors lament. Instead, Northern Trust advisors recommend setting aside specific times to facilitate family discussions. Ideally, family members work together as “thought partners”.

Starting conversations with adult children early definitely smoothens the transition of wealth, and, at Geyer Law, we try, wherever possible, to bring together family members of different generations to share values and wealth transfer. One aspect of this earlier involvement in planning by younger family members, our Indiana estate planning attorneys have found, is the increasing interest in “impact investing”, with charitable beneficiaries expected to achieve certain social and environmental goals.

In the best of all possible scenarios, just as the Northern Trust study showed, optimum estate planning results when inter-generational thought partnerships are created.

– by Cara M Chittenden, Attorney at Rebecca W. Geyer & Associates