Written By Gerry Kane
If you’re forward thinking enough to design an estate plan when your children are young, your primary concern is protecting them if something happens to you.
When your kids are teenagers, you still want to protect them but you have a little more to think about – their personalities, whether or not you want to choose a guardian that lives close enough to allow them to remain in their school and with their friends, how to plan for higher education with less time for investment accounts to mature, etc.
Adult children present different issues when planning your estate. One of the best ways to plan your estate for maximum benefit is to actually sit down and talk to your children – not just about how much you have and what they’ll receive, but about their attitudes toward money…about their plans and ambitions…about their values and goals…even about their relationships with their siblings.
Here are a few tips for making these conversations meaningful and beneficial for everyone involved:
1. Have Your Children Taken Charge of Their Lives?
Ask your children how they feel about money. Ask if they have a real passion in their life, a life’s purpose if you will, or if they still feel like they’re floundering. Ask how they feel about the values you raised them with. If you have children in their 20’s or even 30’s who have yet to take control of their lives, chances are they will not have the clarity to really manage even a small inheritance much less a substantial one.
Don’t go into specifics about dollars and cents when you have this conversation. Sometimes the promise of a future inheritance can make tough choices even tougher. The thought of future wealth that requires no effort can make them less motivated to achieve on their own. Why take on serious debt to go through medical school or obtain an advanced degree if Mom and Dad are going to leave them enough to get by?
2. Start Educating Your Children About The Responsibility of Managing Their Inheritance
One of the best gifts you can give your children is to prepare them for the responsibility of managing any inheritance you leave them. Leaving them unprepared to deal with the details of an estate is a great disservice to them and a good way to make sure that your estate is lost before it can do them any good.
When you meet with your estate planning attorney, have your children attend the meeting, either in person or by conference call. Make sure your attorney explains what needs to be done, how your estate is going to be planned, and what their obligations and responsibilities will be.
3. Address the Emotional Issues Surrounding Planning Your Estate
If your children are grown, planning your estate takes on a different meaning than it would if your children are younger. The fact that your children are independent can make the estate planning process a good time to reflect on your own sense of purpose and fulfillment.
Successfully passing on both your monetary assets and your intangible assets can provide a great source of meaning later in life. Giving gifts to your loved ones through planned giving programs should give everyone a sense of joy and appreciation. But that is not always the case. Hard is it may be to believe, it can actually be a destructive process and lead to discord within your family. Talking to your children about their attitudes toward any estate you may leave them will give you a good idea of how to stop any potential problems before they start.
No one wants the estate planning process to be a negative experience. But few parents really know how to address the emotional issues surrounding the process. What do you say and when? Who should be involved and how? How do you address the different needs and circumstances of your children and should the division of property be based on those needs? Many parents will become so frozen in not wanting to deal with old sibling rivalries and other potential land mines that they just don’t plan at all. Ask your estate planning attorney for advice on all these issues. They’ve definitely seen it before and may have some good advice on how to diffuse a potentially difficult situation.
Addressing all of these issues should be addressed in the estate planning process. There are no simple answers to any of these questions and every single family’s situation is different. Many people don’t want to deal with the difficult choices that are really required when you sit down to decide how your estate will be handled. Having a firm grasp of not only the financial ramifications of your estate plan but the emotional ones as well will make it easier to make the tough choices.
Call us to schedule your Family Wealth Planning Session today. We can identify what needs to be done to ensure that you answer all the questions you need to answer in planning your estate – the emotional questions as well as the financial ones. Our Family Wealth Planning Session is normally $750, but this month I’ve made space for the next two people who mention this article to have a complete planning session with me at no charge. Call today and mention this article.