Many American households are missing a critical step in estate planning: having conversations with family members about how wealth will be transferred when someone dies, according to financial planning experts.
Lorne Maltenfort, national director of private wealth planning at Wells Fargo, said estate planning has two essential components. The first involves preparing and putting documents in place. The second, which is often overlooked, consists of the discussions that need to happen among family members. Maltenfort told FOX Business that the process should shift from "documents to dialog and then dialog to action in order to prevent these pitfalls or gaps in wealth transfer."
The estate planning process typically begins with creating an inventory of assets and drafting the necessary documents, along with understanding the plan's goals and objectives. However, Maltenfort emphasized that "it doesn't end with a signature, it ends when the assets are transferred, retitled, confirmed and, most importantly, understood." He noted that breakdowns in understanding often occur because people assume family members grasp the plan rather than actively coaching them through it using methods like visual representations of how wealth transfers. Waiting until after a death to clarify the plan can be problematic, as Maltenfort pointed out: having these conversations during grief, when family members are vulnerable, means they may be uncertain about whether the plan is in place, what tax implications exist, or whether distributions are fair and equitable.
Maltenfort suggested that reluctance to discuss estate planning stems partly from viewing wealth transfer as simply a matter of money. Instead, he recommended focusing conversations on shared family values, legacy, and financial security rather than specific dollar amounts. This approach addresses concerns parents have about over-promising funds that might be depleted by long-term care expenses. Financial advisors can help by using estate plan documents to create hypothetical scenarios showing how dollars will transfer, which can prompt necessary family discussions about whether distributions to heirs or charitable causes are appropriate.
For savers and their families, having clear conversations about estate plans before a death occurs can prevent confusion, disputes and uncertainty about how assets will be divided and distributed.