PERU, Ind. — Polly Dobbs is dead serious when she says the time to execute a succession agreement is when everyone is breathing and still has their marbles. As an attorney at Starr Austin and Miller LLP in Logansport, she has had clients who realize their family fortunes might be in peril.

"The first thing I ask them is if their children are emotionally and financially prepared to manage their inheritance," she said. When she sees spouses roll their eyes and chuckle, she helps them talk about how they can prepare the next generation for the responsibilities entailed by increased assets.

While rules against perpetuities in Indiana and other states work against multigenerational inheritances, Dobbs and other estate-planning attorneys say those laws often are unnecessary because the laws of human nature tend to work against long-term wealth preservation.

Backing that opinion is research from the Boston College Center for Retirement which shows nine of 10 family fortunes will be gone by the end of their children’s lives – a new twist on an old Chinese proverb that wealth never survives three generations, or the American version of "shirtsleeves to shirtsleeves" in three generations.

"Communication is the key," Dobbs said. "Many older people are of generations that believe talking about money is bad manners. Disputes between heirs are a sure way to deplete estates, but they can be avoided with early recognition and conflict resolution."

One of the best ways to break the ice, according to Dobbs, is simply tell stories about family history and how assets were accumulated. "Once the dam is broken, frank discussions about family money and expectation of heirs’ behavior are more likely to happen spontaneously," she said.

She and other estate planning attorneys sit down with clients to wade through legal, tax and related issues associated with farm succession planning. These include:

•Minimizing death taxes

•Leaving children’s inheritance in a trust, or creating an LLC to achieve goals of keeping the farm within the family

•Creating the mechanisms to maximize the benefits of the law that allows decedents to pass $5.25 million of assets free from estate and generation skipping taxes, and married couples to pass $10.5 million; farmers are cautioned to get accurate estimates on the current value of their holdings, since the value of farms continues to be on the rise

•Treating all children fairly – but not necessarily equally; this might include implementing a plan that allows the child who is managing the farm to have control of day-to-day decisions and be provided with a reasonable salary for services rendered, while dividing net profits equally among all the children

•Implementing a customized farm succession plan that meets the specific needs of each farm family

For example, some might recommend doing some gifting during the farm owner’s lifetime in order to reduce the size of the taxable estate at death. In other circumstances, lifetime gifting might not be advisable.

For more information about estate planning, interested readers can go to www.starrausten.com and download a free booklet titled Tell me About Estate Planning.