Let’s examine a few key elements to effectively sharing your estate plan with loved ones.
Prepare
Good estate planning discussions begin with good financial planning discussions. While children are young, discuss important basic financial planning principles with them like saving for things you want to buy, managing debt properly, good cash flow and spending habits, appropriate risk-taking, and basic stock and bond investing.
It is never too late to have these discussions. If your children are already adults, have these discussions with them now. You can also discuss these principles with your grandchildren. Of course, you will always need to cater the discussion to the child’s or grandchild’s life stage and level of financial experience and responsibility, but good financial planning communication paves the way to good estate planning communication.
Plan
Your adult children need to know what to do if certain things happen. Explain to them that in the event of disability, you have documents such as a health care power of attorney, living will and durable power of attorney. Tell them where you have these documents stored, how they can get these documents activated, and who will be serving in these roles to make health care and financial decisions. Provide your adult children with copies of these documents for their records.
Do the same thing regarding your will and/or trust document and tell them who will be serving as executor or trustee. Provide your adult children with the names and contact information for your financial and estate advisors.
Inform
The most important part of communicating an estate plan to children is communicating your family legacy. Tell your children and grandchildren your story. Share with your children how you built up your estate, your spending habits, your work experience, your financial stewardship habits, the financial mistakes you made, your charitable giving priorities and, most importantly, your values regarding how to handle money.
Based on your adult children’s life stages, level of experience and maturity in handling their finances, share with them details on how assets will be distributed or held in trust upon your death. Explain your reasoning for the structure and if distributions will be equally or unequally distributed. Adult children are more likely to be accepting when they have heard the reasoning from you during life as opposed to wondering after your death why you planned your estate the way you did.
Not all adult children are in a place to be able to appropriately handle the information regarding your estate plan. If you are in a position where these conversations are too difficult to have during life with adult children or if you have a disabled or financially irresponsible child, then consider leaving a written statement of your family legacy story to include your values, hopes, fears and intent for what your estate plan provides to your children. This letter can be stored with your will or trust and read after death. This will ensure that you are able to share with them your values and the reasoning for your estate plan.
The importance of sharing your estate plan by preparing, planning and informing your mature adult children far outweighs most fears that you may have that are preventing you from doing so. In the end, the more your adult children understand about how your plan is set up, who will be involved, how to access what they need, and your estate and financial values, the stronger the likelihood is that your planning goals will be fulfilled.
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Roger A. James, Jr., JD, CTFA
