PART I
Deciding what to tell your adult children regarding your estate plan brings to mind one word: AWKWARD Without question, this is a bothersome issue for our clients.
However, don’t let yourself worry too much. This is not a black-and-white issue and there really isn’t a ‘one size fits all’ approach to making this decision. Instead, the focus should be on your own values, the personalities of your children and other descendants, and a few other factors. Here are a few general suggestions to help you work through your own unique situation:
• Are you providing for your children equally in your estate plan?
If the answer is no, then it might be worthwhile to share that information with them privately and in advance. That way, there will be less likelihood of conflict between your children after you are gone (even if the short-term tradeoff is that they are angry or disappointed with you). On the other hand, if you are providing for your children equally, you may be less concerned with sharing this information with them in advance because of the identical treatment, or, if you do tell them, you probably don’t need to elaborate beyond that general information.
• Is your estate plan making gifts to charities, grandchildren, or non-family members?
It is important to communicate your ‘big picture’ values regarding money, providing for future generations, charitable giving, or anything else that is important to you (even if your estate planning documents have already mandated some level of adherence to these values). Making your children aware of how your values have affected your estate plan can help them to understand and accept the plan. If you are still uneasy, remember: at the end of the day, their inheritance is the result of your hard work, and explaining your values to your children will educate them on the purpose behind your estate plan as well as help them respect and honor your wishes going forward.
• Have you created trusts for your children, or made the gifts outright?
If your children are receiving their inheritance outright, then that is one factor that may make you more comfortable with sharing the details of your estate plan with them. On the other hand, if they are not receiving their inheritance outright, it may be even more important to explain to your children how the estate plan has been structured (i.e. through the use of a trust) to protect your child’s inheritance from creditor issues or divorce, to protect eligibility for government assistance, or to control spending habits
Add it all up, and there are some very important factors to consider. But no matter what you decide, there are a few across-the-board, ‘at a minimum’ recommendations that apply to nearly every client and what they should tell their adult children:
(1) That you have an estate plan and where those documents are located.
(2) Who your key advisors are (lawyers, accountants, financial planners, etc.).
(3) What immediate steps to take if you die immediately.
These apply especially to any children that you have selected as your initial or first contingent (i.e. after your spouse) appointees under your will (“personal representative” aka “executor”), trust (“trustee”), or powers of attorney (“attorney-in-fact” or “patient advocate”, depending on the type of power of attorney), but you will promote ‘fair treatment’ among your children if they all know the answers to these questions.
As I blogged about in my March 17th post “When a Will and Trust Don’t Tell the Whole Story: Filling in the ‘Personal Details’ Gaps” (Link), we have a document to assist you with memorializing that information in writing. But verbally sharing that information in advance is still the most proactive approach, as the more your children know about what to do logistically when you die, the easier (for what it’s worth) the process will be at that time.
If you have any questions about this issue or estate planning in general, please do not hesitate to contact me or another one of our estate planning attorneys here at Cunningham Dalman. In Part II of this blog post, I will be covering the additional considerations when your estate plan includes more complex planning items such as high-value estates and business succession planning.
