Estate Planning, Probate & Elder Law Tips, Tricks, News, Upcoming Events & More
How to Talk to Your Children About Your Estate Plan
As a parent, you know all too well that awkward conversations come with the territory. There’s no avoiding telling your kids about the birds and the bees and—whether you like it or not—you’ll one day have to walk them through puberty. As they grow, all kinds of tricky adult subjects come up, and as they start their own families, they will no doubt lean on you for advice they are uncomfortable searching for elsewhere.
Guiding your children through life’s many discomforts is a part of parenting, and this is as true when they’re young as when they’re fully grown. One (potentially) awkward conversation all parents need to have (and yet which many neglect) concerns estate planning. Talking to your kids about what needs to happen should you suffer severe injury or death is no more fun than talking to them about where babies come from, and yet it is just as important. Your children’s well-being depends on them knowing how to carry out your last wishes, and the longevity of your life’s work depends on you teaching them best practices for managing their inheritance. Here’s what they (and you) need to know.
The Estate Planning Conversation: 3 Topics to Address with Your Kids
1. The How and Why
Building an Estate Plan involves executing all kinds of “documents”: a Last Will, a Durable (Financial) Power of Attorney, a Medical Power of Attorney, a Directive (a/k/a “Living Will”), perhaps a Trust, and more. This, in turn, means you will also need to appoint loved ones to a number of roles: Executor, Agent for your Financial and Medical Powers of Attorney, Trustee, etc. Each role carries immense responsibility, and merits a thoughtful conversation. Most often, it’s your children who shoulder the administrative duties required of your Estate Plan, so it is crucial that they understand the scope of their responsibilities.
The best way to provide this information is to involve them in the estate planning process. Not only does this ensure your kids understand the nuances of your plan, but it also allows them to weigh in, ask questions, and seek clarification—all of which pays dividends in making sure your assets end up where you wish, and your loved ones feel cared for long after you’re gone.
Tax Planning is a cornerstone of Estate and Retirement Planning. Organizing your affairs sometimes means shuffling assets between nonqualified accounts, individual retirement accounts (IRAs), Roth IRAs, investment accounts, trusts, and so on. And, the unknown future of the estate tax exemption that is likely to change significantly in the near future makes your Tax Planning even more important to address. Therefore, tax considerations are important in light of their potential impact upon you and your loved ones. They sit at the heart of this, and while you may find this obvious, your 35-year-old child may not.
If your assets are to go to your loved ones rather than the tax collector, you need to talk to them about asset distribution and how best to reap continued tax benefits.
3. Your Sentimental Logic
As important as it is that your children understand the details of your Estate Plan and any responsibilities they have been assigned, it is even more important that they see its sentimental logic. That is, they need to know you built your plan as an act of caring.
An Estate Plan is, fundamentally, a tool to ensure your and your loved ones’ continued well-being. While it is easy to assume that this intention is communicated by the mere fact of having a plan (and sharing its details with your children), the opposite is often true.
When you fail to explain what your life’s work means to you, and why you have made the decisions you have, you leave your family vulnerable to misunderstandings that can breed conflict and resentments.
Accordingly, you need not only share the mechanics of your plan with your children, but the thinking behind it, as well.
To learn more about talking to your children about your Estate Plan or to address any other matter related to the subject, do not hesitate to reach out to the Law Firm of Blanche D. Smith either by calling (936) 301-0111 or using the contact form on our website.