Estate Planning CI Brightworth Private Wealth

Welcome home, kids: Now, let's talk money and wills

When you think about holiday family gatherings with your adult children, you probably picture an exchanging of gifts, ample food and lots of lively conversation. But it may also be a good time to discuss your estate plan and articulate your wishes.

The holiday season is a time for families to come together, share memories and create new ones. Amid all of the gift-giving and other celebrations, holiday gatherings may be one of the few opportunities to share important financial information with your adult children at the same time — as you’re all together. The holidays present a unique opportunity for parents to speak with their adult children about a difficult, emotional subject: money.

One of the most important conversations involves plans for your estate — where assets will end up when one or both parents pass away. If you feel the time has come to broach this topic, find an hour or two to pull everyone together for a conversation. It may also help if you give a heads-up about your planned discussion, so they’re prepared for it. Since you know your children best, use your discretion.

Here are some tips for speaking with your adult children about financial and estate matters:

You don’t need to provide specific inheritance amounts

While this may seem counterproductive, there are good reasons to avoid disclosing the details. One is that you and your spouse/partner don’t know how long you will live. The longer you do live, the more money you’ll need to pay for lifestyle needs, long-term care and other expenses.

If your children believe they stand to inherit a specific amount — especially if it’s a large sum — it could impede their own plans and ambitions. They may decide to save less money or lose the drive to achieve their goals — neither of which meets the set of values you probably desire to pass on.

In addition, the children could begin to influence your spending decisions. For example, would you choose a mid-range nursing home instead of a better one, knowing this expense will impact their inheritance? And, finally, if your adult children share information about their potential windfall with their spouse, the spouse could use this information to their advantage in the event of a divorce.

Which of your children will make health care and financial decisions?

Consider letting the children know which one of them has been designated to make key financial and medical decisions in the event you and your spouse/partner become incapacitated. Prepare some rationale in case you’re asked why you designated that specific child to have decision-making authority.

The person charged with the financial responsibility needs to have access to key data, such as legal documents, financial statements, policies and computer passwords. Place this information in a sealed envelope for your child(ren) and instruct them to open it only when needed, if you desire to keep your financial affairs private until then.

For your health care agent, make sure you discuss with them your wishes for food, water and life support, and provide them with the signed health care power of attorney document. If something happens to you, this health care document needs to be quickly accessed.

How will children receive any inheritance?

Let your children know how they will receive any inheritance; will it be outright or in a trust? A common reason to establish a trust is to help protect any assets from an unfavorable event, such as a divorce or lawsuit. If you believe one or more of your children may not manage a lump-sum inheritance wisely, that’s another reason to establish a trust. A trust can also help ensure your money is passed along to any grandchildren if the adult child dies prematurely.1

Share information about insurance

Your adult children are likely the people who will care for you later in life, or coordinate your caregiving needs. They need to know information about your medical and long-term care insurance and what to do if there are gaps in coverage. For example, will long-term care insurance cover all your nursing home expenses, or will you need to use personal funds to supplement the cost?

Also, provide children with all life insurance information, including the companies that issue the policies and contact information for your insurance agents.

Gather information about professional advisers

Make a list of all people your children will need to know and contact in the event of your death or inability to act on your own behalf. These include attorneys, financial planners and accountants, as well as the insurance agents mentioned above.

Take their questions

While it may be difficult for a parent to share this personal and sensitive information, it’s even more difficult for most children to discuss their parents’ eventual demise. But it’s much better to provide them with information and answer any tough questions while you’re alive and mentally healthy. A lack of information and clarity now may cause confusion and possible conflict among family members down the road.

It may not seem like the right time to discuss this topic, especially if your house is filled with playful grandchildren and everyone wants to enjoy this special season. But the goal is to help your adult children understand how their future will be impacted once you aren’t around. So, consider finding a sliver of time to help them understand your financial and estate plans, and how you’ve prepared to make life easier for them for years to come. Of course, if it’s absolutely not feasible to discuss these matters during a holiday gathering, find some time soon after so you can share your plans promptly and proactively, and put your mind at ease.

 

1 https://www.investopedia.com/articles/investing/101215/how-trust-funds-can-safeguard-your-children.asp


ABOUT THE AUTHOR

Lisa Brown

Lisa Brown

Partner

Lisa is the Practice Area Leader for Corporate Executives at CI Brightworth and is the current chairwoman of CIPW’s Business Development Committee. In addition to serving clients, Lisa has published three books, Girl Talk, Money Talk. The Smart Girl’s Guide to Money After College; Girl Talk, Money Talk II. Financially Fit and Fabulous in Your 40s and 50s; and CI Brightworth’s first book, Building Your Wealth Inside Corporate America. Lisa has been featured in The New York Times, The Wall Street Journal, YahooFinance, CNBC.com, and many more. A frequent speaker at seminars across the country, she also produces a podcast series, Taking Stock with Lisa Brown, with regular financial content for busy professionals, in under 30 minutes.




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