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 can be very helpful to make sure the people involved in the plan understand how it works. Failure to keep your estate plan updated or communicate effectively with your family could result in both conflict between your beneficiaries and a disposition of your assets that is different than you wanted. We also understand, however, that discussing your estate plan with your family is not always an option.
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 you to write a letter of instruction to your fiduciaries and beneficiaries that is not part of your will or trust to explain your goals and values. Remember that passing along your 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 who understand your family and your values, and with whom you would like your family to continue working. 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 good of a job you do in writing, nothing can clarify your thoughts like a conversation. Everything that we learn from you and your estate plan itself are confidential. We will only disclose the information that you authorize. But we encourage our clients to bring the key players in their estate plan back to meet with us so we can explain their roles. You don’t have to talk about numbers. How much you reveal 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 detail 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 beneficiary’s work ethic or give your beneficiary 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, this lack of understanding can lead to conflict and resentment. Most of our clients use lifetime trusts, and it is often helpful for their beneficiaries to understand how the trusts work, what protections they afford, and their level of access to the assets.
We 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.
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 we are always happy to be involved in the conversation, so we can explain any technical issues.
Preventing big problems in the future is always worth a little discomfort now.