Instead of springing a posthumous surprise that can lead to conflict, communicate your financial plans and intentions to your family while you're still alive and well.
When Mrs. Jones’ will is read, it’s a surprise. She leaves her daughter, Jane, 70% of her estate, her son, Jim, 25%, and her church 5%. Jim is furious and doesn’t speak to Jane for years, mistakenly thinking she inveigled their mother into giving the bulk to her.
But the will makes sense. Jane, a mother of three, makes $70,000 a year as the director of a homeless shelter. Jim is a single lawyer who pulls down $700,000 a year. And the bad blood could have been avoided if Mrs. Jones had sat down with her children and explained her plans.
Jim may not have liked it but would have understood his mother’s reasoning and wouldn’t have been suspicious of Jane. Instead of springing a posthumous surprise that can lead to conflict, communicate your plans and intentions to your adult children and family while you’re still alive and well.
Holding a family meeting is a good way to do that. The individual or couple can share their plans and answer any questions. The purpose of the meeting isn’t intended to get input, but rather to convey your plans and reasoning clearly.
People can be skittish about sharing their estate plans with loved ones for various reasons. Wealthy people are often afraid that spilling the beans about their assets may be a disincentive for their children to keep working. Some people may trust their own children, but not their son-in-law or daughter-in-law.
But that shouldn’t prevent communication. You’re in control. How much you divulge is up to you. If you don’t want to provide a lot of details about assets and investments, that’s fine as long as you communicate the broad outlines of your plan.
Every family has its own dynamics, and what’s a good level of detail for one family isn’t necessarily best for another one.
Generally, the bigger the estate and the greater the number of players, the more complex planning and communicating can become. People who’ve been married more than once and have children from one or more marriages run a greater risk of posthumous family feuds. It’s a challenge to treat all stepchildren and children fairly and clearly explain the plan.
If a trust has been set up — and it’s often a good idea — consider inviting the trustee and your financial planner to the meeting. Besides offering an opportunity to introduce the trustee to the heirs, the meeting can cover items such as under what conditions trust distributions will be made. Your planner may help guide the discussion and explain any technical aspects of your plans.
Shomari Hearn, CFP, is the vice president of Palisades Hudson Financial Group, which provides financial and estate planning. Located in the firm’s Fort Lauderdale office and can be reached at firstname.lastname@example.org.
Palisades Hudson is a fee-only financial planning firm and investment adviser with $1.2 billion under management. It offers investment management, estate planning, insurance consulting, retirement planning, cross-border planning, business valuation and appraisal, family-office and business management, tax preparation, and executive financial planning. Headquartered in Scarsdale, N.Y., it has branch offices in Atlanta, Fort Lauderdale, Fla., and Portland, Ore. Read the firm’s daily column on personal finance, economics and other topics at http://palisadeshudson.com/current-commentary. Follow Palisades Hudson on Facebook and on Twitter @PalisadesHudson