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Intergenerational Planning: Get Clients Talking Now

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NEW YORK -- Clients and their children need to start talking about how to prepare for long-term care during retirement and inheritance before problems and conflicts arise – and advisors can help start the conversation. That’s the message Bob Mauterstock, CFP, delivered at IMCA’s New York Consultants Conference here on Monday.

“It can get very complicated, but these are issues that need to be discussed,” Mauterstock said.

Many clients spend a lifetime building assets, but aren’t prepared for issues like the costs of long-term care, Mauterstock said.  Many haven’t properly planned for worst-case scenarios and aren’t aware of the potential costs.

“I’m a very big believer in long-term care insurance,” said Mauterstock, author of Can We Talk? A Financial Guide for Baby Boomers Assisting Their Elderly Parents.

Another oft-ignored issue clients and their children encounter is how to portion out the inheritance once they’re gone. For example, Mauterstock said, clients and their children often aren’t prepared to deal with questions such as what to do with a favored vacation home. Inheritors often become divided over whether to sell the house or keep it because it has sentimental value.

There’s also a question about how assets should be divided. Parents may want to give a larger financial inheritance to one of their children because there’s a need, yet it can come as a rude shock to siblings if one child receives more than others.

Mauterstock told advisors of one client who made the inheritance performance-contingent.  The client’s assets were divided based on their children’s W-2, with the higher earners receiving a greater portion of the inheritance.

Mauterstock recommended that parents and children discuss these and other issues ahead of time, especially if parents do not intend on dividing their assets equally. Doing so can help avoid conflict and hurt feelings.

“The key is the conversation, the communication,” Mauterstock said.

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