In Part I of this blog post, I covered the general considerations for all estate planning clients in deciding what to tell their children in advance. In the second installment of this blog post, I wanted to cover the additional considerations when your estate plan includes more complex planning items such as high-value estates and business succession planning. A few suggestions on these items to help you work through your own unique situation include:
- Is the value of your estate going to be significant?
‘Significant’ is a relative term, but if your estate planning involves considerations related to estate taxes, credit sheltering, or any other details above and beyond the typical family will or revocable living trust, then there are a few extra factors to consider. On the one hand, it is probably not advisable to share the details of your estate plan if it would complicate your children’s lives (e.g. tax issues, marital issues, lifestyle changes, etc.). On the other hand, it is important to prepare your children (even if they are not aware at this point) for receiving a large inheritance. Accordingly, discussing these issues with your estate planning attorney are important, as he or she can assist you with planning strategies to reduce the impact of an unexpected inheritance as well as referring you to a financial planner that can assist you and your children down the road.
- Is a family business one of the assets in your estate plan?
If the answer is yes, then you are probably familiar with the phrase “succession planning” and the extra steps and strategies that must be considered. As a result, because this situation involves more of a ‘process’ than an ‘event’, it is highly advisable to not only share the details of your estate plan with your children but also setup a forum to discuss the plan with the entire family (regardless of whether some children are not involved in the business). This forum could be a single meeting or series of meetings for you to explain how you addressed the business in your estate plan and any changes (e.g. leadership, ownership, etc.) that will occur during your life, as well provide your children with the opportunity to openly discuss operational, financial, and legal issues. And in most cases, your estate planning attorney should be more than happy to assist with preparing for (and even hosting) the meeting. Overall, by doing this, you will hopefully be able to get everyone ‘in the loop’ and allay any fears and concerns that your children have.
After factoring in these issues and the more general ones covered in the first installment of this blog post, I want to reiterate that there are some very important factors to consider. But again, no matter what you decide, please keep in mind those ‘bare minimum’ items that should be shared with your children (i.e. that you have done estate planning and where those documents are located, who your key advisors are, and what immediate steps that your children should take when after you die).
As always, 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.