Technology has given us greater control in many areas of our lives, from managing our health to planning vacations on the fly. Yet some industries, including that of financial services, have been slow to utilize digital tools or encourage their clients to do so. This has exacerbated the already significant challenges around estate planning, most notably the generation gap among older principals and their millennial and GenX heirs. The younger generations receive and process information differently; they also prefer to communicate in different ways. If you are still relying on reports from your financial advisor, know this: your children and grandchildren will one day be using such tools to manage your estate, especially if it saves them a phone call to said advisor. Meeting them where they stand now can help them avoid pitfalls, and possibly financial ruin, in the future.
When it comes to managing and passing down wealth, going digital solves a myriad of problems. For example, there are all-in-one solutions that make it easier for you to monitor your portfolio in real time (and possibly jump on investments even before your financial advisors) and manage the maintenance of physical assets such as homes and collectibles from anywhere in the world. You can also give loved ones and other trusted parties access, forming a communications hub that facilitates the sharing of information. As mentioned above, one of the biggest barriers to successful estate planning is the lack of communication between principals and heirs, which often leaves the latter in the dark about the size of their inheritance and lacking the skills to manage it. This places them at risk for poor decision-making, especially millennials who came of age during the Great Recession and remain distrustful of financial institutions.
Digital tools allow you to give them insight into your investment decisions and your process around them. More importantly, it promotes transparency among the people who are most likely to contest your estate or battle amongst themselves. For example, it would be very hard for a spouse to prove that you intended to disinherit a child when that child had access to your finances, or to argue in favor of selling your prized art collection when a series of messages demonstrate your intention to keep it in the family.
Finally, keeping track of your finances in real-time will remind you to review your estate plan every few years – something that many people, including HNWI, neglect to do. Covid-19 has been a real wakeup call in that regard, given the rapidity with which it killed or incapacitated people from all walks of life. There are also a number of factors – from changing tax codes to major life events like divorce, remarriage, the loss of an heir through estrangement or death, or the birth of a new one – that if not addressed can impact the value of your estate.
There are some caveats to going digital with estate planning. There will be less physical (paper) evidence of your wishes, and you cannot assume that your family will be able to get into your devices and find (or figure out) your passwords. Instead, make sure a neutral party has knowledge of, and access to, all of your accounts. Another concern is identify theft, so when choosing digital tools make sure that stellar security tops your priority list.
Information may be the most valuable commodity of our time, but only if it is accurate and shared in a timely fashion. Transitioning to a digital platform is an imperative for anyone seeking to educate their heirs on how to preserve and grow their wealth. It can also help strengthen your relationships with your heirs, as well as their relationships with each other.