When I first meet with a new client, one of the first things I want to know is what their goals for estate planning are. I get a lot of different responses, but many of them speak to one overarching theme:
“I want to make this as easy for my loved ones as possible.”
That’s a great goal. Planning an estate is easy compared to executing that plan. When an estate plan is needed, the people who execute the plan are dealing with their own lives and the pain and grief that goes with losing someone they love. If you can make that easier, you should.
There are many ways to make that process easier, but I want to focus on a really hard one today–communicating about your plan. For most of us–and I include myself here–talking about finances is something you just don’t do. This is a situation where we’re going to have to overcome that.
Clarifying your expectations
Fidelity has run a “Family & Finance” report for the last few years, and they have found some some interesting differences between parents and their adult children when it comes to estate planning. Among the examples, as reported by Time:
“Yet while more than 90% of parents think one of their children will become executor of their estate, 27% of their kids don’t know that they’re expected to take on the role. (If you’re an oldest child, get ready: 55% of parents tap the first-born for this job.)”
Those 27% of adult children are probably in for quite a surprise. And that’s probably not the only surprise: those 27% probably don’t know where the estate planning documents are or what they say. There is really no reason that these things should be a surprise.
The report goes on to point out that three-quarters of parents expect one of their kids to step in as a caregiver at some point–news to 40% of the adult children surveyed. A similar gap between parents and their children exists between expectations of their kids’ help in managing the parents’ finances. If your children don’t know that you want their help, you may well not get it.
Preventing family fights
I’ve written about ways to prevent family fights over your estate before, and communication is a big part of that. What can cause family fights? Here are some of the major issues that can cause problems:
- An unexpected distribution. Most people probably expect that the children will share in the estate evenly. If you’re doing something different–and there are good reasons why you might–letting the children know ahead of time is a good idea.
- High-conflict situations. Some families just have a lot of conflict. If siblings have an intense rivalry, appointing one as your personal representative, attorney-in-fact, or some other key role may offend the others. If that’s the case, letting the children know ahead of time (or maybe just picking someone else) might be best.
- Heirlooms. Your estate might include items of large monetary or sentimental value. You can give particular items to particular people as part of your estate plan. If you do that, you may want to have a conversation about it before even putting together the estate plan. You may be surprised to find out what your kids do (and don’t) want, and you can get a sense of what matters most to them. In the end, though, how you distribute your estate is up to you.
These are sensitive topics, and it’s hard to have these conversations. However, you need to make sure that your children (or others taking care of your affairs) are aware of what the plan is, and that they are on-board to help. Additionally, good communication can also head off some family fights about your estate. If you can get past that initial discomfort, you can make handling your estate so much easier.