Sharing your estate plan with your children now keeps them informed and helps to prevent hurt feelings in the future.
Deciding who you include on your estate plan is personal, but choosing to explain the thought processes behind your decisions to your children can prevent possible resentment and confusion in the future. While it’s never easy to talk about death or finances, doing so can help your family understand your motives and even ask questions.
Here we cover the who, what, when, where, and why of talking through your estate plan with your family — and how to get started, with the help of a real estate attorney.
Who needs to know
That’s up to you. The only person who absolutely has to know the details of your estate plan is the executor of your will. Those inheriting any part of the estate should also be kept in the loop. Aside from those immediately involved, it’s up to you to determine who else needs to know about your plans. Generally children, grandchildren, siblings, or anyone else named in your will should be part of the discussion. While it may be easiest to gather family together for one big conversation, you certainly don’t have to do it this way. You can speak with your children or those receiving the bulk of your estate first, then move on to others. Whether or not to include anyone married into the family is completely your decision, and depends on your relationship with them.
What they need to know
After determining who you are telling about your plans, sit each person down and clearly outline the details, and take time to answer all of their questions. U.S. Bank’s Private Wealth Management says that it isn’t necessary to share specific dollar amounts, but it’s important to explain how and why the wealth is being distributed. Aside from explaining distribution, you may want to explain why you made certain decisions. If you’re donating a large part of your wealth to charity, explain why that organization or cause is important to you. If you’ve set restrictions on when heirs can access money, explain your thought process. If furniture, jewelry, or other valuables are going to one child over another, explain why. This can prevent hurt feelings in the future, if you’re not there to explain your motivations. It also gives your children time to process any emotions they have about the estate.
When to have the conversation
While it may be tempting to put it off, this conversation should be had as soon as your estate plan is in order, and your children are of an appropriate age to discuss it. We never know what will happen in the future, and it’s better to have the conversation as soon as you can, as uncomfortable as it may be. If your children are too young to discuss financial details, start with the basics. Tell them a plan exists, they are taken care of, and any broad details you think they are old enough to hear. If they’re very young and you’ve designated a guardian in your will, try to explain the concept to them in simple terms.
Where to have it
This conversation is best had in person. Gather everyone in your will for a family discussion. It can happen in one conversation or a series of meetings, depending on how many questions your children have. If your family is spread out around the country or the world, you can explain everything in a letter, then have them call you with questions. Or, try a family Skype or FaceTime call.
Why it’s important
LegalZoom says an “estate plan does no one any good if no one knows where it is.” It’s important to inform your children that an estate plan exists, when it’s updated, and where it is.
Tell your children who you’ve named as executor to prevent any confusion or arguments. They should also know the name and contact information of your family attorney, so they will know who to call when it’s time to go through your estate.
If you have a living will, it’s even more important to speak with your children. They should know who your power of attorney is in case of an emergency. Similarly, you should discuss any end-of-life-care decisions so they’re not surprised in the hospital if you do or do not want to be resuscitated or donate your organs, for example.
Another reason to discuss your estate with your children is to pass on your philosophy about wealth. If you have specific wishes for how they spend the money, now is the time to share. Mention that it’s important to you that your grandchildren go to college, or that you hope the family invests it, or takes a vacation. Perhaps donating to charities is important to you and you hope your children will find causes they’re passionate about too. Share your general philosophy about money with your children during this conversation
A conversation around your estate is especially important if your wealth will not be distributed equally. Children will be hurt and confused if one receives more than the others, and could take it out on each other. If there’s a reason they’re receiving unequal wealth—maybe one cared for you while you were sick, or you gave a substantial amount of money to another to help during a rough time in their life—make sure you discuss your reasoning and explain it’s not about choosing favorites. Your children may be upset, or even angry with you, but it gives them the chance to ask questions and get over their anger sooner, rather than being hurt and resenting you if they find out later.
Attorneys with years of estate planning experience can help. They’ve seen hundreds of families go through this conversation, and can talk you through some best practices. Sometimes it even helps to have the attorney in the room during or after the discussion to answer legal questions. At ALA, we can help put together an estate plan you’re comfortable with, then guide you through the discussion with your family or be on hand for any questions before, during or after. Get in touch today.