As a Houston estate planning attorney, one of the questions I often get from clients is whether they should tell their children about their estate plans. In many cases, the parents fear that telling their children about their estate plan will cause some strife within the family, especially when one of the children is provided more in terms of inheritance or in responsibility in managing the parents’ estates after they die. However, it is important to speak to your children about your estate plan in order to ensure that everyone is on the same page when it comes time to administer the plan, either after you die or after you become incapacitated and can no longer make financial or healthcare decisions for yourself.
Time recently had an article on their website titled “The Hardest Part of Making a Will: Telling Your Kids What’s In It”, which gives a few ideas to help you overcome the challenges you may face when having this important conversation with your children or other family members. Listed below are some of the suggestions from the Time article:
Communication. Make sure your children are familiar with your values, and how those values translate into your overall financial objectives during life and after death. Your children likely already know many of these values, but having a conversation with them will help cement these values in their minds and will help explain how and why you are making certain decisions about your assets and who will be responsible for managing your estate after you die.
Evaluate Your Children’s Money Skills. Often, parents have one or more children who are adept at managing money and who would have no problem managing a large inheritance. Other times, there are children who struggle with managing money and who may need assistance in order to preserve their inheritance for themselves and their children. Having open, honest conversations with your children about these issues may help to begin a dialogue that will show your children why they may or may not need help in managing an inheritance.
Unequal Inheritance. If you plan on leaving one of your children a larger share of your estate, it is a good idea to have this discussion up front with all of your children in order to avoid any hurt feelings or discord after you die. For example, if one of your children is a wealthy doctor and the other is a school teacher who has less wealth, it may make sense to leave more of your estate to the child who is a school teacher, who is more likely to need and benefit from the additional wealth. However, it is important that your other child understand the reasons behind the unequal treatment so he or she does not feel as though you are favoring the other child for personal reasons.
Prepare Your Children for Large or Unexpected Inheritances. Many parents, especially older parents, feel that it is in poor taste to discuss money or other financial topics with any other people, including their children. However, you do you children a disservice by not having a discussion with them about your financial position, which may leave them in a position of inheriting a large amount of wealth that they are unprepared to manage on their own. By having a discussion with your children about your estate plan and level of wealth while you are still alive, you can help your children prepare and learn more about the financial and emotional aspects involved in managing inherited wealth. In some cases, it may also give rise to other strategies that may be used, such as giving more to your children while you are alive and you can see them enjoy some of the gifted wealth during your lifetime.
While having discussions with your children about your estate and level of wealth may seem uncomfortable and even a little painful, you can avoid many issues that may arise after you are gone by dealing with them ahead of time.