Talking to family members about estate planning and legacies can be difficult and even painful. These discussions, however, are an important way to share your choices with your children and prepare them for their financial futures. Here are a few suggestions on approaching this tricky topic.
Build on the casual conversations you’ve already had with your kids about what matters to you most. When children are familiar with their parents’ values, they’re more likely to have a good idea of what to expect from their parents’ estates.
Kids who grew up in the same family don’t always have the same knowledge and attitudes about money. Conversations about estate planning can become part of larger discussions designed to help teach them how to manage and become comfortable with their legacies.
If your estate plan does not treat your children “equally,” for whatever reasons, it’s best to share that information well in advance and to communicate it privately to each child. If you can discuss these provisions and the reasons for them ahead of time, there is less likelihood of conflict between siblings after you’re gone.
Not telling them may avoid conflict now, but it could sow seeds for deeper conflict and resentment down the line. Provide a clearer understanding of what assets they’ll be taking on to prevent misguided expectations.
If you have a substantial net worth that’s under the radar – perhaps in the form of land or business ownership – your children may be unprepared for what they will inherit. Your advisor can help heirs learn more about both the financial and the emotional aspects of managing inherited wealth. Your advisor can also help you consider different options, such as giving more to your children during their lifetimes to possibly reduce the impact of a sudden inheritance.
Perhaps the strongest reason for not discussing estate plans with family members is fear – fear that children will be angry or disappointed, will build too much on their expectations for an inheritance, or will be resentful of other heirs. Although these conversations can be difficult, remind yourself that they’re an important step in providing clarity about your financial legacy – which is ultimately in everyone’s best interest.