Have You Talked with Your Children About Your Estate Plan? Start Here

Damian Winther, CFP® CSRIC™
Jan 19, 2021 10:21:00 AM

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Creating an estate plan that dictates the distribution of your assets is important so that your family will be financially taken care of if something happens to you. If you have one, you've likely spoken to your financial planner about your estate plan – but have you talked to your family about it?

Keeping your family in the loop about your legacy is a hugely important part of estate planning, and it's not always easy or comfortable. But there are several crucial steps you should take to start and guide the conversation.

#1 TELL THEM THAT A PLAN EXISTS

Even the most well-defined and thoughtfully developed estate plan doesn’t do any good if your family doesn’t know that you have one. Estate planning is very personal, so while you may not feel comfortable sharing all the details with your children, you should at least let them know that you have a plan and tell them where to find it. You may also want to let them know who your attorney is and who you have named as your executor.

We often think about estate planning in terms of inheritance and the distribution of assets after death, but it also includes end-of-life issues like preparations for medical expenses and decisions about what will happen if we become incapacitated. These may be uncomfortable conversations, but talking to your children about your plans and wishes in advance of a crisis can ensure that they understand your preferences. Additionally, it helps avoid confusion if they need to make decisions on your behalf.

#2 ESTABLISH EXPECTATIONS TO AVOID SURPRISES

Conversations about death and money are often fraught with emotion, leading many people to put off talking to their adult children about their estate plan. Remember that your decision about how to disburse your assets is yours alone, and you are not obligated to tell your children about your plans. But surprises, especially after the death of a parent, may lead to hard feelings and resentment.

Some situations have the potential to cause hurt, friction, and conflict in a family. This is especially true if you leave a larger portion of your estate to one child than another, or give a significant portion to charity. Whatever the case, having the conversation now allows you to explain why you’ve made certain decisions. Take the time to explain your motivations and your values, while also using this opportunity to better understand what your children need or want.

#3 ANSWER QUESTIONS ONE-ON-ONE OR AS A GROUP

Depending on your circumstances, you may be able to speak with all your children together. But if that is difficult, meet with each of your children individually.   Whatever you decide, it’s best to have the conversation before any crisis or urgent need to act. Again, don't surprise them. Schedule the meeting and let them know that you want to talk about retirement and estate planning. Encourage them to ask questions and be ready to answer honestly. 

Let them know that your goal is to have a positive conversation to help them understand the plans you have made.  We’ve all seen examples of people forced to make end-of-life decisions for a parent when they don’t know (or agree) on what mom or dad would want. We’ve heard tragic stories of families who no longer speak to each other due to disagreements or disappointments related to a loved one’s estate, which is the last thing any departing loved one wants. The more difficult you think the conversation may be, the more critical it is to have the conversation as soon as possible.

At Birchwood Financial Partners, we work with our clients to help them feel empowered and knowledgeable about the financial decisions they make each and every day.  Get in touch with us here if you're interested in learning more about our team, our processes, and our services, as well as the clients we serve.

Note that neither Birchwood Financial Partners, Inc. nor any of its employees give legal advice; please consult with your attorney for your specific situation.

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Investment Advisory services offered through Birchwood Financial Partners, Inc. an SEC Registered Investment Advisor.

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