Commentary: Do's and Don'ts: Talking With Your Family about Your Estate Plan
Let's address the elephant in the room. Every single one of us is going to leave this world some day. Many people among us have a plan for how they'd like their estate handled upon their passing.
Let's address the elephant in the room. Every single one of us is going to leave this world some day.
Many people among us have a plan for how they'd like their estate handled upon their passing. These folks have an estate plan not only because it maximizes the amount of wealth that's transferred to your heirs, but also because it can save your loved ones from a substantial amount of additional stress.
That's well and good, but in our opinion, one critical piece of estate planning is often overlooked: communicating this plan to said loved ones.
There are several excuses as to why people avoid this conversation. "It seems morbid to discuss death before it occurs" and "I don't want to upset anyone because of how I've chosen to divide my assets" are the two we hear most often. While these are understandable, we implore you to consider the additional emotional and financial stress a surprise in your estate plan can wreak on your loved ones.
If you're unsure how to have this conversation, consider the following Do's and Don'ts:
• Do schedule a meeting for a reasonable time. We understand it's tough to get the entire family together, but just because everyone made it to your son's 40th birthday party doesn't mean that's the right time to discuss this topic.
• Don't feel like you have to invite everyone to one meeting. If it makes more logistical sense for you to have multiple meetings with your loved ones, rather than having all parties in one room, do so. But be sure your message is consistent from meeting to meeting.
• Do understand that the best distribution isn't always "equal." This is critically important when choosing how to divvy up your assets, as well as describing how and why things will be distributed. For example, you may have a vacation home that you'd like to split equally among your three children, but only one has the means to actually take care of it. It may be in everyone's best interests to leave the vacation home solely to the one who can take care of it, and choose non-real estate assets to leave to the two others.
• Don't introduce the document as an estate plan. Position the estate plan to your family as your "legacy plan" with the intention that your life can be celebrated even in your absence. Putting a positive spin can help soften the subject for more sensitive family members.
• Do establish trustees for family members who aren't ready to understand this discussion. Some may be too young; some may be too immature or irresponsible. If you're concerned about your loved ones not fully comprehending the situation, it may be best to temporarily leave these assets in the care of a trusted third party.
• Don't underestimate the power of planning. While this conversation is likely to be emotional, emphasize that having a plan in place will likely prevent your loved ones from feeling additional emotional and financial stress during a time of grief.
• Finally, do consider working with a financial adviser or estate planning specialist. These professionals can provide objective feedback as to how your assets should be bequeathed to your loved ones in a tax-efficient manner.
By Bruce Helmer and Peg Webb, financial advisers at Wealth Enhancement Group and co-hosts of "Your Money" on KLKS 100.1 FM on Sunday mornings. Email Bruce and Peg at firstname.lastname@example.org . Securities offered through LPL Financial, member FINRA/SIPC.