STEVE INSKEEP, HOST:
Over the next few decades, around $124 trillion will change hands in the United States through inheritance. Many of those transfers run into problems. Our colleagues from NPR's The Indicator, Sally Herships and Wailin Wong, navigate some thorny questions in estate planning.
SALLY HERSHIPS, BYLINE: Amy Castoro knows how hard talking estate planning can be. It's her job to make those conversations easier. She is CEO and president of The Williams Group.
AMY CASTORO: We make sure the families are all still speaking to each other after the wealth transfers.
HERSHIPS: There's this one thing that seems to keep tripping families up - a focus on assets, not relationships.
CASTORO: Everybody focuses on estate planning. They focus on preservation of the wealth. They focus on tax strategies. They focus on growing the wealth. Yet the biggest risk is often the family itself.
WAILIN WONG, BYLINE: And by the way, if you're thinking, oh, estate planning; that's a topic just for rich people - no. More than half of the 124 trillion that's expected to be passed down does come from high-net-worth individuals. But the other half? That is coming from the rest of us.
CASTORO: I've heard it all. It could be a vase, but, you know, if you walk the dog back, you find out that it's not really about the vase. It's, did they feel loved?
HERSHIPS: Think about it. Amy says a will is a legal document. It's designed to take care of assets, i.e., who gets what and when.
CASTORO: You know, moms and dads all have an idea of what they'd like to have happen with that money. But unfortunately, more often than not, roughly 70% of the time, the transition doesn't go as planned.
HERSHIPS: The guy who founded Amy's company did a 20-year field study looking at where things break down and how to make things right. And he's got a formula for the money to go where it's supposed to and to keep everyone happy.
WONG: You should spend 60% of your time on building family trust and communication, 25% preparing your heirs - you know, teaching them to be kind, to care for others - and 10% of your time getting on the same page about the values and mission of your family.
HERSHIPS: Only 5% of your time should be spent on the mechanical side of estate planning, like figuring out those interest rates, mortgages, investment accounts, that kind of thing.
CASTORO: And yet 95% of people's time is spent on that 5%.
HERSHIPS: Lewis Osterman has seen this firsthand. He's a lawyer in Denver who specializes in estate planning. Like, a couple of years ago, he had some clients, a brother and sister.
LEWIS OSTERMAN: The biggest issue that we had to iron out was who was going to get Dad's vacuum. And...
HERSHIPS: Wait a minute. Wait a minute. A vacuum cleaner. Like a Hoover, like the kind you clean your house with?
OSTERMAN: Yeah - not even, like, a Dyson. I don't think it was a nice one.
WONG: No, it's precious.
Not the kind of problem, Lewis says, you want to bring in front of a judge.
OSTERMAN: So we went into the conference room. Sister had a lawyer. And at my hourly rate, she brought the vacuum. We put it on the table. We transferred it over to brother.
HERSHIPS: So what was the bill for the vacuum transfer?
OSTERMAN: I think it was about 3- to $4,000 in attorney time. I'm still kind of beside myself about it.
HERSHIPS: That's - wow. That is nuts.
WONG: And here is where we get into our old friend, behavioral economics, and, you know, the concept of rational actors. You know, people don't always make decisions you might call rational, especially if they're feeling stressed or emotional.
HERSHIPS: Lewis says a question a family shouldn't have to ask is, how much fighting can they afford?
WONG: Wailin Wong.
HERSHIPS: Sally Herships, NPR News.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
