It may be difficult to talk to your family about your death, but leaving them in the dark about your estate plan is not a good idea. Here’s some advice on what to do.
A good estate plan, designed by an estate attorney or planning professional, is likely to contain all the elements needed to prepare your assets for transition to your heirs. The problem is most plans don’t effectively prepare the heirs to receive and manage the assets. Mistrust, miscommunication, and a lack of financial literacy are often cited as the top causes for the breakdown among family members post-transition. As a result, 70% of estates are lost to mismanagement following their transition to heirs. But whose fault is that?
While you can’t control all the decisions of your heirs after you die, leaving them with little or no guidance is bound to lead to problems. Your will and trusts might be clear on how your estate is to be distributed, but they can’t clearly communicate your vision and goals.
Why parents avoid the topic
For many families, money and issues surrounding their wealth are taboo topics. In many cases, parents feel their children aren’t mature enough to discuss financial matters. Some parents are reluctant to disclose the size or makeup of their estate or their intentions for its distribution, for fear of instilling a sense of entitlement or encouraging their children to change their own future plans. Regardless of whether those concerns may be well-founded, short of a thoughtful and well-planned discussion with heirs, they are more likely to become a self-fulfilling prophecy.
Getting the conversation started
Leaving a legacy is as much about transferring family values as it is distributing assets. The only way to ensure your heirs live in harmony with each other, and with your vision, is to have a conversation with your children early and often. At first, it may be uncomfortable for everyone involved. Still, once your children understand the importance of their responsibilities in managing your legacy it becomes a family affair, which can get everyone on board.
Here are some guidelines for starting the conversation:
Decide on what to share
At some point, your heirs should have a complete understanding of your plan, including how much they can expect to inherit. Depending on the age or maturity of your heirs, you may want to parcel out the information, starting with what happens to your estate when you die. It’s not all about money. Most importantly, you want to share the principles that guided you in preparing your estate plan. Having conversations about family values and beliefs about money is essential for laying the foundation. The financial details can wait until you get the sense they can see beyond the money.
Pick the right time
The next time your children are together for a family gathering would be the best time to start the conversation. If it is too difficult to schedule a family gathering, you can have conversations when you happen to be together. You don’t have to have the entire conversation at once.
Individual or group
When you unveil your plan and vision, check with your children about how they feel about it. Ask for their input. It’s important to make them feel they are active participants. You will also be able to uncover any concerns or misapprehension that should be addressed now, so they don’t fester and become major problems later.
Review documents
If you plan on naming one or more of your children as executors of your estate, it would be important to thoroughly review all pertinent documents, including wills and trusts, power of attorney, and medical directives, parents are more comfortable having more casual one-on-one conversations with their children, while others prefer a more formal group setting. It could be a combination of both, especially in situations where you might be treating your kids differently.
Get their feedback
Discussing these documents will help further convey your wishes about how you want things to happen. You should provide your children with the name and number of your estate attorney and any services that need to be contacted upon your death or if you become incapacitated. They should also know the location of passwords to financial accounts.
It’s not easy to talk to your family about your death. However, the alternative – leaving them in the dark – almost always turns out badly. Many families enlist the help of their estate attorney or financial advisor to facilitate the discussion and ensure that both the tactical and emotional components of estate transfer are given equal attention. Alpine Bank Wealth Management has a team of trust and estate professionals who welcome your inquiries about estate planning.
Products of our Wealth Management service are not FDIC insured, may lose value and are not bank guaranteed.
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