Last week, I introduced the concept of writing an ethical will as a way to communicate the intangibles you’d like to leave your heirs. One of the reasons I mentioned for doing so is to explain why you are dividing your assets a certain way. I’d like to talk more about that today.
I read a sobering article recently about the negative and even tragic effects of windfalls on people’s lives. You can read the full article here, but the gist of it is that most people, when they receive a large sum of money, not only blow through it very quickly, but end up in worse circumstances than before they received the windfall.
It’s wise to consider this fact when creating your estate plan, and add conditions to your gifts such as requiring the recipient to make contributions to a specific charitable organization, or maintain a steady job. You can also set up your gifts in trusts and choose stable, reliable people or institutions to administer them.
Then, in your ethical will, you can explain to your heirs exactly why you have set things up the way you have. If you write letters to each heir communicating personally and lovingly what your intentions are for both the gift and the recipient, in a very real way you could prevent tragic circumstances from occurring down the road, once you’re not around to do anything about it.