Why Communicating Your Estate Plan to Your Family is Essential
Estate planning can be a complex process. If you have a thorough, updated plan in place, you probably feel confident that your last wishes will be carried out. However, an important part of the process is often neglected—communicating your estate plan to your family and heirs. Sadly, if you fail to tend to this aspect of successful estate planning, your family could still be left in emotional and financial turmoil despite your efforts to document your wishes and provide a smooth transition of wealth.
The Importance of Communicating Your Estate Plan
Successful wealth transfer is not guaranteed even with a comprehensive estate plan in place. Preparing your heirs for what will occur after you pass is a critical, and often overlooked part of the process.
The Consequences of Not Communicating Your Estate Plan
One survey of wealthy individuals found that 64 percent have shared very little information about their financial situation with their children, while another found that 70 percent of high-net-worth families fail to retain their wealth beyond the second generation. Yet another group’s research found that 60 percent of transition of wealth failures were attributed to poor communication with another 25 percent cited as due to “inadequately prepared heirs.”
These numbers illustrate a gap between planning and communication that has serious consequences for families. You probably hope to leave your loved ones a more secure financial future. If you don’t talk to your family about your estate plans and the intent of your final requests, you could leave behind family discord, emotional wounds, legal woes, and less financial gain than you intended.
Preparing Your Heirs for a Successful Wealth Transfer
Death and finances can be difficult topics of conversation. A financial advisor or attorney can assist you in preparing a communication plan if you don’t know where to begin. These professionals can even facilitate a family meeting and be present to answer questions about the legal and technical aspects of your estate plan.
Whether an attorney and other professionals are present or not, it is important to go into a family meeting of this sort with an agenda. You should strive to create a comfortable and calm but structured environment. Express your desires to your family and other heirs clearly, and answer any questions they have.
This conversation might not be easy, but having it while you are still present to clarify your intentions and wishes goes a long way toward preventing family disputes and misunderstandings after your death, when emotions are likely to be an even more significant factor.
Communicating Your Estate Plan: What to Discuss
What should you discuss when preparing your heirs to understand your estate plan? Your goals and hopes for the future of the family are an important part of the conversation, but there are also technical details to tend to.
Your discussion should include the existence and location of estate planning documents—your will, living will, powers of attorney, insurance policies, and lists of properties, investments, and accounts, among other items. You should also notify your family of the contents and locations of any safe deposit boxes and important paperwork like birth or marriage certificates. And contact information for all parties related to your accounts and estate will be very helpful to your family as they settle your estate.
Family members should have the opportunity to ask questions and express their wishes, particularly related to their roles in the estate settlement process. It is important that the people you have named to represent you in various ways throughout the settlement process are comfortable and capable of performing all related duties.
Additional Tips for Successful Estate Planning and Transition of Wealth
When your children or other heirs know what to expect upon your death, they will be better prepared to handle the legal and technical aspects of your estate as well as the emotional ones. A family meeting or even individual conversations can provide valuable opportunities to heal any existing family rifts while you are still able to speak for yourself.
Ensuring that your children and grandchildren are financially literate is another way of preparing your heirs for the estate settlement process. Understanding the legal and financial tools you have used and the reasons those specific vehicles were chosen will help avoid speculation and convey your true intent, which might not be evident when translated into legal and financial jargon.
A final action you can take to create a more peaceful transition of wealth is to create an ethical will. This can be a document, video, or audio recording. It should tell stories and lessons from your life and apply them to your hopes for the future of your family. An ethical will is not a legally binding device but, rather, a tool to convey your last sentiments as part of your overall estate plan.
If you have not yet planned for a successful wealth transfer upon your death, including communicating your estate plan to your family or other heirs, and would like to discuss doing so, Anna M. Price of Jenkins Fenstermaker, PLLC can help. You may contact Anna by phone at (866) 617-4736 or complete her online contact form to learn more and get started preparing your heirs for the future.