We all know that we should avoid conversations about politics and religion during holiday get-togethers. Few people realize that these family gatherings can be an ideal time to discuss estate planning and healthcare wishes.
Having an estate plan prepared by an experienced estate planning attorney can feel nowhere near as challenging as having conversations with adult children about your intentions. However, not having the conversation is a major mistake. The big wealth transfer between generations has led to a rise in litigation over inheritances, according to an article from The Wall Street Journal, “Hash Out the Inheritance Now, or Fight Your Family Later.”
Typical fights? The child who stayed in their hometown to care for Mom versus the one who left to live out their dreams on the opposite coast. The biological children of the first spouse to die versus the spouse and step-children in a blended family. There’s plenty more. However, they all result from a lack of candid discussions before parents die.
A study by a financial services company found that a third of Americans state they have no plans to discuss their inheritance with their family. This refusal to have open discussions leads not only to litigation but also to lost family relationships.
Members of all generations need to hear from their parents and grandparents what they were thinking when they created their estate plan and decided how to distribute their assets. This is especially true when heirs will receive unequal inheritances, or when treasured belongings will be passed down. Even when the conversations are uncomfortable, the results are long-lasting.
For one family, a mother told her granddaughters she wanted them to inherit her diamond rings. She expressed her wishes but never put them into her will. Everything was left to her second husband. Her son knew where she kept the will but never asked to see it. Had he reviewed the will, he would have had an opportunity to remind her of her promise. She could have amended her will to include these bequests, or even better, she could have gifted the rings personally to the girls.
Blended families are particularly vulnerable to estate battles, making it even more important to have the inheritance conversation before their parents pass. Solutions include creating a trust, having specific provisions in the will and properly titling accounts and real estate assets to ensure that the property passes to the heir of your choosing.
The inheritance conversation is not a one-and-done discussion. Once children are mature enough, it’s good to start talking with them about financial matters. Business owners need to discuss succession plans, especially if their children are in the family business. Unexpected events can occur at any age, so waiting until retirement is on the horizon is not a good idea.
These discussions don’t need to happen all at once. Conversations can be started by referencing a news story, an article you read, or the experiences of a friend. This can lead to a family meeting once the topic has been introduced. If family members live far apart, meeting via video might have to substitute. The important thing is to have ongoing discussions in whatever way works for the family.
Finally, one way to avoid surprises is to give heirs all or part of their inheritance with warm hands, that is, while you are still living. This gives parents peace of mind knowing that their children have already received their inheritances.
Contact our office to update or start your estate planning. Book a call today.
Reference: The Wall Street Journal (April 6, 2024) “Hash Out the Inheritance Now, or Fight Your Family Later”
