Talking to Your Family About Your Estate Plan

Talking about death and disability with your family is difficult. It is one of the reasons that people put off planning their estate in the first place. But once you have gone through the step of crafting your estate plan, it is important that the people involved in the plan understand how it works.

If you have a 20-year-old estate plan, your circumstances have changed. So have a lot of laws. If you told your 16-year-old granddaughter you were going to leave her your piano, but your Will was written before she was born, she might not get the piano. When estate planning documents are not updated, your family members might all have different ideas about what you wanted.  This could result in both conflict between your beneficiaries and a disposition of your assets that is different than you wanted. But if your intentions regarding your estate were made clear in an updated Will or trust, and you have met with your family to discuss your wishes, this can be avoided.

The first step to minimize these problems is to communicate your intentions thoroughly in your Will or trust and keep it updated. We also encourage our clients to write a letter of instruction to their beneficiaries that is not part of their Will or trust to explain their goals and values. Remember that passing along wealth is different from passing along the values, work ethic and generosity that enabled you to acquire, grow and share that wealth in the first place. That is a life-long project. But those final instructions can be meaningful and important. 

If we prepared your estate plan, you have put careful thought into which assets go to which beneficiaries and why. You have thought about what risks each beneficiary faces, and what you will do to mitigate that risk. You probably have a relationship with a financial advisor and a CPA that understands your family and your values, and with whom you would like your family to continue to work with.  When those details are first revealed to your beneficiaries after they just attended your funeral, it can create misunderstanding, conflict, hurt feelings, and even litigation.   

No matter how goof of a job you do in writing, nothing can clarify your thoughts like a conversation. You don’t have to talk about numbers. How much you reveal to your beneficiaries about your estate depends on the circumstances. Ages, personalities and relationships will dictate the scope of your discussion. Some people bring in their children and go over every details of their assets. Others are much more private. The numbers are likely to change. And you don’t want to unintentionally have a negative effect on your child’s work ethic or give your child a sense of entitlement by showing them large numbers. What we want your beneficiaries to understand is the structure of the plan. When your family doesn’t appreciate the rationale behind your estate planning choices like the use of lifetime trusts, this lack of understanding can lead to conflict and resentment among family members. Most of our clients use lifetime trusts, and it is important that their beneficiaries understand how the trusts work, what protections the afford, and their level of access to the assets.

I have had several meetings with beneficiaries who did not like the fact that their parents left assets in trust, left some of their wealth to a charity, or left certain assets to someone else. But more often than not, they appreciate the insight into their parents’ thinking and planning. Many have even come back in to do a new estate plan themselves. And even when they didn’t like their parents’ plan, at least they were prepared. Leaving $1M in trust to a relative with income to be paid out monthly for life is a blessing. But it may not feel like a blessing if your beneficiary was expecting an outright distribution.

Families can be forever damaged over who gets the farm, the beach house, or even grandma’s dining room table. The china and silverware that nobody uses can even cause problems. Sometimes it is a good idea to have this discussion around your kitchen table. But I am always happy to be involved in the conversation, so I can explain any technical issues. I always encourage my clients to bring their beneficiaries back in so we can explain their roles. Preventing big problems in the future is always worth a little discomfort now.