Money and mortality can be touchy, or even taboo, subjects among families, so it’s not surprising that 16% of adult children don’t know whether their parents have estate plans in place. However, avoiding these discussions not only adds to the discomfort but can create larger issues down the line. Here’s how you can start a dialogue and protect your kids (and your legacy) from the consequences of poor communication.

Why It Matters

It Ensures Your Wishes Are Fulfilled

Should your children expect to maintain the family business? Who is your power of attorney? Springing these decisions on your kids, who may not want or be able to take on the responsibilities, can lead to your estate being handled differently than you envisioned. Talking to them early on about your wishes will help you get their buy-in or make any necessary changes.

It Minimizes Unnecessary Taxes

You want your children to benefit from what you’ve left behind, so they need to know how your estate will be treated from a tax perspective. Whenever you choose to have an in-depth conversation about your estate, take the time to look at each account and what the tax implications are. This will help ensure that your kids make smart investing and spending decisions when you’re gone and that your hard-earned money won’t be consumed by taxes.

It Eases the Burden on Your Children

End-of-life issues aren’t easy to discuss, so 80 million American adults avoid these conversations in the first place. However, this can have a long list of negative consequences. Having an estate fall on your children unexpectedly may lead to mismanagement or bad investments, which is one reason many Americans lose portions of their inheritance. On the other hand, if your children expect to inherit more than you’ve planned, they may make unwise decisions about their current finances.

When to Have the Conversation

Home Instead developed the “40-70 Rule” to encourage families to have open conversations about finances before a crisis occurs. The rule suggests that by the time you reach 70, or your kids reach 40, you should have a discussion about everything regarding your finances, legacy, and end-of-life plans. This should also include

arranging meetings between your children and any key external members with whom your kids may need to work closely in the future, such as your financial advisor.

What About Your Will or Trusts?

Wills, and sometimes trusts, are key to securing people’s legacy, but they’re only one part of the conversation. Rather than springing critical responsibilities on your children after you’re gone, take the time to walk them through what they should expect. Why did you make one child your executor and not another? What should your child know about the tasks associated with the role? For the sake of your children and your legacy plan, don’t let your documents do all of the talking.

Having the Conversation: Things to Know

Start Slow

While your kids should eventually get the details about what they can expect after you pass away, you don’t want to overwhelm them, so consider starting with the simplest or most important items. For instance, one of your first steps may be letting your children know where they can find all essential documents and accounts.

To help get the conversation started, consider following these additional tips:

  • Pick an environment where everyone feels comfortable.
  • Wait to discuss during a period of calm, not amidst or right after a crisis.
  • You likely are having this conversation out of genuine concern. Be honest and open about these intentions.
  • Explain why this conversation is so important.

Be Wary of Emotions

Discussions on money and mortality are difficult, and we all handle them differently. Emotions can run particularly high if decisions about the distribution of your belongings may polarize your family members, so it’s often helpful to provide context for your decisions. Whether discussing inheritances or other aspects of your estate plan, always explaining the “why” can help diffuse any emotions or fears.

Don’t Stop Discussing

Informing your kids about your legacy plan shouldn’t be a one-time conversation. For more productive, less taxing conversations, and to avoid overwhelming your kids, start by laying the groundwork, and then slowly provide more information as they become more financially literate.

Need Help With Your Legacy or Estate Plan?

With our holistic approach to financial planning, we can help you get your legacy and estate planning documents in order so those tough family discussions feel a bit easier. Connect with us today to learn more about what we can do for you