3 Mistakes People Make in Creating a Family Wealth Plan

Everybody makes mistakes.

However, some mistakes are more expensive than others. In creating a family wealth plan, a mistake could mean the difference in thousands of dollars for your family. Here are three common mistakes in creating a family wealth plan.

 1. Thinking a Simple Will Can Do It All

A will is your first line of defense in creating a family wealth plan. It gives you an opportunity to avoid lengthy time in probate and can provide clarity for your wishes and desires. However, it is not a cure-all. Simply having a will does not mean you are maximizing your ability to create generational wealth. A well-constructed will can create a solid foundation to build upon, but you may need more than that to protect yourself and your family as you accumulate wealth over time. 

 2. Not Thinking Through Your Gifts

According to a study at Ohio State, 35% of all inheritances are squandered on day-to-day expenses and quickly disappear. If members of your family are more spenders than savers, you may want to strategically time your gifts to ensure they have the greatest effect possible. For example, a trust can distribute gifts over time while protecting the principal. This can avoid a quick liquidation of the assets and even ensure that funds are used for a special purpose.

 3. Signing Forms You Do Not Understand

I admit, reaching out to an attorney for the first time can be a daunting task. Sometimes, you like the ability to solve problems in your own home by ordering something online. However, when it comes to your family wealth plan, it is important to consult an expert. Many times these documents are full of legal-speak that can mean the opposite of what you think it means. In order to make sure the words on the paper match your intent, consult an expert to specifically craft a your family-wealth plan.