Sarah Duey
I once had clients with only one daughter. They created a living trust for only their grandchild without ever telling their daughter why.
As the trustees, we worked with this daughter, because her child was still a minor. There were hard feelings — a lot of wondering why her parents had skipped her in their estate planning.
Grieving our loved ones is hard enough without adding extra emotions. Not talking to your family about your estate plan has the potential to create chaos and make your family members and beneficiaries feel unprepared.
You want to be sure your family is aware of your estate plan and what roles they’re going to play in the events of your incapacity or death.
In this article, we’re going to discuss some of the basics of estate planning, what types of things you should communicate to your family about beneficiary designations, and how to go about updating your family on a regular basis.
Your Estate Plan and Picking Powers of Attorney
An estate plan doesn’t speak to only your after-death wishes; it helps determine how you’ll be taken care of during your life if you’re incapacitated. Estate plans include powers of attorney who step in to take care of you in the event you’re incapacitated, a will and sometimes trusts.
If you haven’t chosen a healthcare power of attorney, these considerations might be helpful:
- Choose somebody who’s going to be the best person, geographically, to help you. While oftentimes that could be your spouse, if you’re single or childfree, you might choose a sibling or close friend.
- Before you make anything final, you need to talk to this person to ask if they’re comfortable with this responsibility.
- Identify your wishes for your care. Healthcare power of attorney gives power, but not instruction. You’ll want to establish a living will to specify what your end-of-life choices are – for example you don’t want to be on a ventilator or feeding tube.
- Share the power of attorney with your doctor. You want your medical professionals to be in the know as well.
It’s always a good idea to revisit your choices every few years to ensure you still have the right people in place.
Approach financial powers of attorney in a similar way:
- Choose somebody who can be there to take care of your bills and finances and ensure they’re on board and ready for the responsibility.
- Pick a trustworthy person. Unfortunately, that isn’t always your children or family members. Give hard thought to your kids’ situations and whether they might make good choices. Unfortunately, I’ve seen way too many abuses and oftentimes it’s close family members. The National Council on Aging reports that 60% of elder abuse cases1 are close family members or spouses.
Putting those powers of attorney in place is critical. If you don’t plan proactively and become incapacitated, your loved ones will have to go through the courts to get conservatorship or guardianship to be able to help you.
Crafting and Communicating Your Estate Plan in the Family Meeting
Estate planning and communicating it to your family happens on a spectrum. On one side is the logistics – here are where the documents are, here are the passwords. On the other side is legacy planning – here are my values and here’s how I want you to continue my legacy.
Wherever you fall on that spectrum, it’s your responsibility to communicate that to your family. And that’s where having a series of regular family meetings comes in.
You don’t have to run these meetings yourself – you can utilize a facilitator. You also don’t have to dive into specific numbers or amounts you’re leaving to specific people.
A facilitator is especially helpful if you anticipate there might be some conflict or concern over the way you’re setting up your estate. A good facilitator would be your financial advisor, but if they’re not comfortable with the task, ask them to recommend somebody.
The goal of these meetings is to give your family enough information to minimize chaos if something happens to you.
The first thing to do is to set an agenda that outlines what you’re going to talk about. You don’t want your family to be confused. Be clear: “This meeting is to talk about my estate plan.”
At the minimum, share:
- Where your estate planning documents are located
- Passwords
- Information for your financial advisor, estate planning attorney and CPA
- Contact information for any other professionals to call
- Powers of attorney
Some people are very open and want to share all the details, whereas others decide they want to share the bare minimum. But keep in mind that the more you share, the better off your family will be.
After that initial meeting, set a cadence of regular meetings. These don’t have to dive into estate planning specifically, but you can tackle other topics while also weaving in estate planning. These meetings have the potential to bring your family closer together. It also can reduce feelings of overwhelm – this is difficult information and takes time to sink in.
The meetings can move toward preparing your heirs for their inheritance. First, talk to your children about wealth, financial planning and asset protection planning – how you expect them to manage it, how you make your financial decisions so your heirs can learn from you. One idea is to start having them work with you to manage some of their inheritance.
For example, in his book “A Spectrum of Legacies,” Mark Weber wrote about one family who gave each adult child three $5,000 gifts. The first $5,000 could be used for anything, the second $5,000 would be invested, and the final $5,000 would be contributed to a donor-advised fund with the child’s name on it. To keep the process engaging, they added an incentive: The child who managed the investment account the best won an additional $5,000 at the end of a three-year period.
The children had to share how they were investing and what they were learning on a regular basis. In addition, each child had to share how they were spending the donor-advised funds – to what organizations and how their gift might make an impact. Each child “owned” one of the categories and led that part of the family meeting. The parents felt this was a great way to teach their children about managing wealth, and it also gave them a platform to talk about other topics, such as estate planning.
While that might not be a feasible competition for every family, it’s just an idea to spark some creativity of your own. You can make these meetings interesting.
Since life changes or new policy could impact your estate plan, communicating your plan is never one-and-done.
What About Your Parents’ Estate Plan?
You’ve done everything you need to do, but realize you have no idea what’s in your parents’ estate plan. The best way to approach this is to simply say: “Tell me about your estate plan.” If you find out they don’t have an estate plan, ask them if you can introduce them to an estate planning attorney who can help them identify their goals and start the process.
Explain the risks of not having an estate plan – emphasize that as their child, you don’t want to have to go to the courts to get guardianship or conservatorship to be able to take care of them. Explain to them that without an estate plan, the state is going to decide how their financial assets will transfer.
If you have siblings, include them in the conversation. You don’t want to be seen as trying to get information they’re not privy to and create a negative situation.
The Last Word: Communication Is Key to the Estate Planning Process
Communication is the key to estate planning. The more we communicate, the better the transition will be. It’s up to you to make that happen but know there are resources and great people to guide you throughout that process. Your financial planner or estate planning professionals can help you do that. Reach out today to schedule a consultation.
“Get the Facts on Elder Abuse” National Council on Aging, 23 Feb 2021. https://www.ncoa.org/article/get-the-facts-on-elder-abuse
