The issue of legacy planning is a thorny one. How much do you tell your children about your personal or business finances? How much do you disclose about your estate plans? Do you intend to provide an inheritance for your children and if so, when should you discuss it with them?
These are difficult subjects to reconcile and typically the answers will vary from family to family, from person to person.
There are two schools of thought about this. One theory suggests that an individual who has worked hard to accumulate whatever funds they have, has also earned the right to spend it; that they are under no obligation to leave something behind. The other theory suggests there is value in creating a legacy and passing family assets on to the next generation.
For our purposes, let’s assume that an individual has assets that he/she would like to pass on, and then they must also decide how and when to discuss it with their children.
If an individual has been involved in some form of estate planning, their children are going to be informed about the details of the estate eventually, one way or another. The question is how will they learn about those details – directly from their parents or from an estate lawyer? This crucial decision will often determine whether or not the children are harmed or helped by the specifics of the estate plan.
Communication is Key
Some parents avoid talking to their children about their estate because they don’t know what to say. But no matter how uncomfortable this subject might be for them, parents are more qualified and better suited than anyone else to inform their children about their plans. This can be accomplished in regular family councils or in one-on-one conversations, but some form of communication is essential. Inviting input from children and making the effort to understand their views will go a long way to avert failed expectations and family discord in the future.
Your Affairs Are In Order
Too often parents or relatives leave behind no plan whatsoever for the assets they have accrued and almost always, the absence of a plan increases the conflicts and costs for survivors. It is never easier when someone dies without a plan. Even if no other aspects of an estate plan are discussed, parents should let their children know that their affairs are in order. Those simple words can be a source of enormous relief for one’s children.
Also, even though it may be difficult, if an estate plan excludes or omits a family member for some reason, that individual should be informed. Similarly, if there is some inequity in the distribution of assets – one child is receiving more because they need it and another is receiving less because they don’t – that should be disclosed as well.
Surprises, disappointments and failed expectations surrounding the administration of an estate can be deeply painful for surviving children and should be avoided at all costs.
Age Appropriate Information
Obviously, the extent of information provided to one’s children about estate plans is going to depend on the age of the children. Information provided to a 14-year old is going to be different from information provided to a 40-year old. Also, it’s likely their roles could be different as well. Older children might be chosen to serve in a fiduciary capacity in a Last Will and Testament or Trust. Or they might be given Power of Attorney authority or named as an Agent in a Living Will. If children are intended to have active roles in an estate plan, they must be properly informed and prepared, and the rest of the family should be informed as well.
Clearly, children have a right to know if they are going to be impacted by an estate’s plan, but actively involving them is also a way to ensure that the estate’s wishes will be carried out as desired.
Someone who has succeeded financially in their lifetime probably has assembled a team of highly qualified advisers to assist in specialized areas such as the law, tax, investments, or insurance. To whatever extent that is feasible, children should know who these advisers are and how to contact them if ever their services are needed. In a time of crisis or an unexpected emergency, knowing who the professional advisers are – and where all the legal and financial records are stored – is an immeasurable source of comfort to surviving children.
As mentioned above, these issues are delicate and difficult at best. But the more parents and children can engage in honest and forthright communication about estate plans, the better off everyone will be, and that’s an important part of any legacy left behind.
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