When it comes to talking about your will, it’s not just about the money. It’s about what you do with it, who benefits, and how your family reacts to and copes with their loss:
- Sixty percent of Americans do not have a will and have not completed their estate planning.
- While probate is necessary in certain situations and jurisdictions, a will simplifies the process.
- If you die without a will and do not have beneficiary designations in place, the intestacy laws of your state (rather than your personal wishes) determine property distribution. This includes bank accounts, real estate, stocks, securities and other assets.
Starting this conversation with your kids can be difficult, but failing to discuss your will can add confusion and conflict to an already difficult time for your children. Despite it being an uncomfortable topic, there are ways to ease into a productive exchange.
Why Discuss Your Will?
Won’t the Kids Get the Information After I’m Gone? Yes, but knowledge beforehand allows your children the time to assimilate the information while circumstances are calmer than upon your death when emotions tend to run high. Discussing your estate plan with your children also allows you to assure them that your estate is in order, your financial arrangements completed, and that your plan for distributing your assets is in place and follows your wishes. Discussing your will gives your family more time to grieve and heal without infighting over their inheritance or your final wishes.
The Unexpected Produces Unexpected Consequences: The loss of a loved one and a large, sudden inheritance changes lives and clouds even the most stable minds. If you leave large sums of money, informing the recipients ahead of time lets them know what’s coming and allows them to properly plan for the best way to use the money. Without a plan in place, it is much more likely that a beneficiary will impulsively spend exorbitant amounts of money out of grief.
Clear up Confusion: Fighting over an inheritance is, sadly, an all too common occurrence. If you leave money to charitable causes, old friends, or distant relatives, be sure to inform the kids so they do not consider these claims on the estate as fraudulent.
Make Your Wishes/Reasons Known: If you are leaving more money to one child because of disability, bankruptcy or unemployment, or less to another who enjoys greater financial success, let the others know it’s your decision and you were not pressured to do so.
Evaluate Your Children’s Financial Skills: You hope you taught them well: save for a rainy day, balance investing with spending, pay yourself first. Take the time to evaluate their spending and saving habits without bias and make sure they have the money management skills to make the right choices or a financial advisor who can assist them. You may also consider establishing a trust to pay out over time.
How to Start the Conversation:
Choose a Comfortable Time and Place: A family holiday dinner may seem logical because everyone is already gathered together, but talk of death and its aftermath only dampens a celebratory time. In general, it may be best to avoid birthdays, vacations, anniversaries, and other special occasions. Set up a time and place just for this conversation, and announce the purpose of the meeting ahead of time. A casual opening line may be something like, “A friend of ours passed away recently and his kids are suing each other over his estate. We don’t want any of you doing this, so let’s talk about how to avoid this situation.”
Stay Calm, React Rationally: Close the door on drama and keep your voice low and level. Don’t react with anger or frustration if your kids do; it only increases the level of intense emotion in the room and obscures the reason for the meeting in the first place. Maintaining a steady, calm tone helps to cool tensions and keep the conversation on topic.
Direct Your Children to the Documents: It’s one thing to tell them what they inherit, but it’s another to have the paperwork already prepared. Complete your will early, update it regularly, and make sure your attorney and financial advisor have current copies. Discuss your finances once a year with your children and inform them of any changes.
Have a Trusted Advisor as a Guide: Bringing a CERTIFIED FINANCIAL PLANNER™ or attorney to the meeting ensures that the agenda moves along, legal questions receive answers, and emotions and egos remain controlled. These professionals have experience handling these discussions and can make a great addition to your team.