Money is a tricky topic, especially among families. When it comes to sharing plans for how inheritances will be distributed, there isn’t one right or wrong answer; we’ve kind of seen it all here at The Prosperity People. However, based on our experience, there are some best practices to consider. Here are the most common agonizing questions we get and how we tend to answer them, with the caveat that everyone’s situation will be different, so take what works for you and leave what doesn’t resonate.
When should you start talking about your estate plan with heirs?
Let’s be honest: no one really wants to talk about what happens when they die, although it can sometimes be easier to address in the twilight years, among folks who generally feel like they’ve had a great life and no longer feel like their death would be a great tragedy. Other than that, the other big thing we see that triggers folks to want to talk about their plans is when they’re facing a dire diagnosis or have recently survived an adverse event like an accident or serious illness.
In these cases, it’s often a lot easier to start talking about what we want to happen when the end inevitably comes. But what about before that? Here are some times when it might feel like an easier topic to broach:
1. During a life milestone in the family.
There’s nothing quite like a graduation or funeral of a loved one to get us thinking about our own legacy and plans. While it might be a little dark to bring your updated Will to your niece’s christening in order to discuss it with your siblings, it can be an appropriate time to at least mention that you’d like to schedule a conversation to go over your plans so you can be sure everyone is on the same page.
2. When there’s a family member with special needs.
One of our colleagues once worked with a client who learned that she had been named custodian and financial guardian of Monica (not her real name), only upon the death of her aunt, who’d provided round-the-clock care to Monica for decades. Prior to that, she’d had very little interaction with Monica, who was moved to a group home for intellectually disabled adults; not only did she live hours away in another state, she knew very little of Monica’s life up to that point.
Had she known of this pending responsibility, she may have made different life choices that would have enabled the transition of Monica’s care to be less stressful for both her and her cousin, and she would have had a lot of questions for Monica’s mom.
When there is a family member who will need additional care or guidance, it’s a best practice to share the plans for their future care with those who are most affected as soon as decisions are made. This can also give other family members, who may be willing to help out, the opportunity to express their desire and learn more about their future responsibilities.
3. When you’re not sure who wants to handle the administrative stuff.
In some families, deciding who will be Executor and/or Trustee of your estate is a no-brainer, such as when one of your family members is an attorney or you have an established relationship with a local trust company that you want to handle everything. But one of the most difficult things we see our clients face upon the death of a parent or close relative is when no one is named and the responsibility falls to them, with no preparation. Or when a sibling rivalry is taken to the next level by one child being named and another being left out. If you’re not sure or you suspect potential conflict, why not discuss that ahead of time and make sure the person you’re naming even wants the responsibility?
We aren’t family therapists here, but we do strongly suggest discussing your choices of who you assign to do what in your Wills and Trusts with all your children ahead of time, so you can offer reassurance that the choice wasn’t due to favoritism or thinking one person is more capable than the other.
A lot of people mistakenly assume that an Executor or Trustee will have the power to distribute assets in a way that favors some and leaves others at a disadvantage, but this simply isn’t the case: the Probate Court oversees an Executor’s actions to ensure they follow the directions in a Will and when someone is Trustee, they are beholden to the direction given in the trust. A trust document may give a Trustee SOME discretion, but if abuse of powers is suspected, the local courts can get involved there as well.
How much do I really need to tell them about my estate plan?
We wish we had a one-size-fits-all answer here, but ultimately how much you decide to share about who gets what and how much is really up to you. Some people worry that heirs might feel entitled to an inheritance if they know too much too soon, while others want to make sure that every detail is hashed out and understood ahead of time. We do have one suggestion though, that we think applies in most situations: whatever you decide to share, make sure you’re telling everyone and not just some. This can make a world of difference in ensuring that relationships are preserved even after you’re gone.
Consider an ethical will
If you’re just not comfortable sharing too much about what you have and how it will be distributed once you’re gone, there is a way you can still communicate your intentions about this without having to say it to anyone’s face. Sometimes called an ethical will, consider drafting a letter or other document that shares your reasoning or your hopes for the legacy you wish to leave, to be shared with your heirs only once you’re gone.
You can use it to explain your decisions or list out the values you’d like to see carried on with your money or express hopes for how you want your family to continue their relationships once you’re gone.
These documents don’t have any legal power, but they can be a way to share your intentions more clearly, especially if the distribution of your estate is likely to surprise or disappoint anyone you care about.
Why do I need to talk about this at all?
How much or little detail you decide to share is a personal decision, but we do think it’s a good idea to at least let your loved ones know that a plan is in place and where they can find the appropriate information when the time comes.
What’s that you say? You don’t have a plan in place yet? Well, that’s just one more reason to contact us to get the ball rolling! We’ll guide you through any decisions that need to be made and help you make a plan to communicate with your heirs, in whatever way feels best to you.