“The Talk”
I’m not referring to “the talk” with your teenage children about sex, but rather the “parent and adult children talk” about the parent’s estate plan. Have you had this conversation? Most people have not.
My sister Lori is coming to town this weekend from Washington for a high school reunion and we are finally going to sit down (probably over a cocktail) and go over my mom’s estate plans. Fortunately, her documents are current as she wrote them out and gave me the detailed instructions a few years ago. I admit that I have not reviewed them thoroughly as I don’t want to imagine her not being with me. I decided with my sister coming to town, this would be the perfect opportunity for us to review everything together and have “the talk.”
I was recently reminded that there can be sibling feuds over what mom and dad really wanted, the decisions they made or what they would have wanted after they died. Much of this can be avoided if parents and their adult children have a grown up discussion about their legacy decisions. If you don’t know what to cover during the discussion, I have included some key items below.
Items to Review
The only thing constant in life is change, so it is incredibly important that all documents remain up to date. Think about everything that has changed over the years since your parent’s drafted their will, not only in your life, but also in your parents’ and your siblings’. Any marriages, divorces, or new grandchildren?
Depending on how long ago the will or trust was drafted, the changes could be even more dramatic. Some parents will leave equal shares to all kids no matter their financial circumstances. Other parents will choose to leave more to the child that is struggling financially than their other children who are more financially sound. If using this approach, the will or trust should be updated periodically to reflect the children’s financial situation.
Imagine using this approach and having a child who was once (at the time documents were drafted) well off is now experiencing financial hardship, yet no updates had been made to the will or trust. The child could receive a proportionally lower share of their parent’s inheritance due to lack of revisions.
Children may be surprised or disappointed to find their parents are giving a large share to a church or charity. These decisions are taken much better if the parent explains their intentions ahead of time to their children.
You may also discover you have not updated critical estate planning decisions – perhaps current beneficiaries have predeceased you or an executor or Guardian is no longer your first choice.
After death, the executor of a will is often left scrambling to find investment account information. This can be very stressful and confusing, so it is extremely helpful to run a fire drill for the executor. As uncomfortable as this may be, you will be much more prepared when the time comes and there will not be any surprises.
These conversations provide great clarity and understanding to a parent’s life. Chances are the children will learn quite a bit about their parent’s from this conversation as well. Also, the children may provide their parents with an idea or two which can benefit them.
As a financial advisor, I like to bring this up to our clients because many of us have not had this conversation. It’s time to step up and arrange “the talk” as it is a win/win conversation for everyone.
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