Talking about the taboo topics of money and death in one conversation is not most people’s idea of a good time. Many may say that talk of death makes them uncomfortable, and to discuss money would simply be impolite. Yet, when it comes to your family and their future, these connotations should be set aside in order to foster a candid conversation about your estate plan with your kids. Whether you have teenagers nearing adulthood, or a couple of self-sufficient thirty-year olds, it is important to talk to your kids about your estate plan. Here are a few tips on how to broach the subject…
Set the stage. Once you’ve decided that you would like to have this conversation with your kids, give them some forewarning about the discussion to come. It is important that you speak with the whole family—whether through conversations with individual children, or with everyone together. Individual conversations provide the opportunity to address each kid’s reactions, feelings, and opinions independently and with the full attention they deserve. On the other hand, a group discussion may be best in ensuring that everyone receives the exact same information. You also must determine whether to include the spouses of your kids in this conversation. If you think that your daughter’s husband is a lousy guy and may seek her inheritance money in a divorce lawsuit, you probably don’t want to include him. Yet, if you include one kid’s spouse, the others’ spouses should probably take part in the conversation as well.
Additionally, understand that this discussion may spark strong emotional reactions. You should try to lead the conversation as calmly as possible and if anyone does become upset, explain your goals and emphasize that everything was done with your family’s best interests and future in mind.
Most significantly, this conversation should be held before the estate plan is put into effect. Don’t wait until a time of crisis or when your health declines to talk to your kids. Moreover, having this discussion will give your kids a realistic expectation of your estate plan, a much better alternative than surprising your kids about their inheritances when you’re no longer around to explain your choices to them.
Inform your kids what your estate plan says and why. Discuss what items each child will receive (art, furniture, jewelry) from your estate as well as whether you plan to pass your house to one of your children, or intend for them to jointly own it. And if you have a family business, discuss your plans for its succession or continuance after you’ve passed.
It is up to you whether to discuss the specific amount of money each of your children will receive. Most people shy away from including numbers in this conversation, but doing so can have benefits, such as enabling your kids to prepare for whether they will need to support you in the later stages of your life or will be financially able to buy a house or begin saving for their own kids’ college with inheritance money.
It is important to explain your choices to your children as well. For example, if you want the proceeds from the sale of your house to be donated to charity, you can tell your family which charitable foundation you have chosen to benefit and why. Or, if you have decided to appoint one of your children as the executor of your estate, explain why and what this role will entail. Maybe you’ve chosen your oldest son to serve as executor because he has more financial knowledge than the others, lives closer, or is better organized.
Lastly, make sure your kids know whom your attorney, financial advisor, and insurance agents are and where important documents pertaining to your estate are kept.
Discuss what will happen if you become incapacitated. Let your kids know if you’ve executed an advance medical directive or a power of attorney and how these documents will work if you ever become incapacitated. It is crucial to communicate your decisions regarding long-term care arrangements and life support before the need for such decisions actually arises. Doing so will allow your family to prepare for the unexpected and remove any difficult and controversial questions about your desires should an unfortunate situation occur.
Build some education into the conversation. Because discussing your estate plan will inevitably involve talking about money, you can use the conversation as an opportunity to discuss financial concepts with your kids. Young adults will likely show interest in and benefit from a conversation about things like investment strategies and how to maintain a good credit score. They may be in the earlier stages of their careers, and therefore may have just begun to invest in a retirement plan. You can have a conversation with them about the various pros and cons of different retirement savings options. And, talking about your estate plan may incentivize your kids to start thinking about their own and begin planning early.
Pass on family values. By having a conversation with your kids about your estate plan, you can help develop a common philosophy for how the family’s legacy will be carried on through future generations. Let your kids know what principles are important to you and how you hope they will apply them with their inheritance.
Creating an estate plan is one important step in preparing yourself and your family for the future—talking to your kids about this plan is essential as well. We at Snyder Law can provide guidance on having this conversation with your kids. Let us help you protect your family today and in the future.