ESTATE AND GIVING
How to have a valuable family conversation about your estate.
Talking to family members about estate planning and legacies can be uncomfortable. 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 to help you broach this tricky topic and set your heirs up for better success.
Communicate your values about money in a larger context.
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.
A few ideas to get the discussion started: how do you feel about the value of education, hard work or integrity of character? What philanthropic causes are most important to you and why? What are some of the life experiences that have helped shape who you are?
Evaluate your children’s money skills.
Kids who grew up in the same family don’t always have the same knowledge and attitudes about money – while some may have a real interest (or education) in financial decision-making, others may not be at the same level of readiness and responsibility. Conversations about estate planning can become part of larger discussions designed to help teach them how to manage and become comfortable with their legacies.
Remember, you have flexibility around how and when you pass on your wealth. If your heirs are ready now, you might wish to share part of their inheritance while you’re still alive, allowing you to provide guidance and enjoy their development as stewards of your wealth. If you’re less confident in their financial responsibility, you might consider using a well-structured trust to better ensure your intentions for the wealth are abided by.
Dispel misguided expectations about what they’ll inherit.
Perhaps you’ve quietly decided to leave all your assets to a charitable organization. Or, on the other end of the spectrum, you’d like your children to take ownership of substantial wealth you’ve kept under the radar – perhaps in the form of land or business ownership.
Whether your kids will be inheriting nothing, significant wealth, or something in between, providing a clearer understanding of what they'll be taking on will prevent misguided expectations. Though the conversation may be uncomfortable, discussing it now can help avoid further discord down the line.
If you are planning to leave your kids a large inheritance, consider including them in a conversation with your financial advisor, who can help heirs learn more about the financial and the emotional aspects of managing inherited wealth. They 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.
If your kids’ inheritances will look very different, communicate it early.
Ultimately, how you choose to share your wealth – and with whom – is entirely up to you. But if your estate plan doesn’t treat your children equitably, it’s wise to share that information well in advance and communicate it privately to each child. If you can discuss these provisions and the reasons for them ahead of time, there’s less likelihood of conflict between siblings after you're gone.
In addition to having an in-person conversation with your heirs, it may also be wise to include your rationale in your will. This can help safeguard against possible claims of attorney drafting errors or other grounds for contesting the document.
Set apprehension aside.
Perhaps the strongest reason for not discussing estate plans with family members is fear – fear that children will be angry or disappointed, that their expectations for their inheritance are inflated, or that they’ll 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.
Raymond James and its advisors do not offer legal advice. You should discuss any legal matters with the appropriate professional.