You would probably be hard-pressed to find a family that would rather sit around the table discussing their estate plans than going out to eat, enjoying a vacation together or just about any other activity they could do together as a family. No one likes to think about their inevitable mortality, or as I sometimes call it (tongue in cheek), “their will maturing.” But, we all know that it is just that – inevitable. Proper estate planning can be an immense blessing to a family at a time of great loss. Although most people think about protecting an inheritance when we talk about estate planning, that’s not all it can provide. A good estate plan can help surviving family members by reducing stress, anxiety and potential conflicts.
Below are five of the most common emotional roadblocks I’ve seen family members face when trying to establish a successful estate plan.
Step #1: Discussing Death
Talking about one’s own mortality isn’t a particularly fun thing to do, especially in the company of a partner, spouse, children or grandchildren. But the reality is, not discussing it doesn’t keep it from happening. In my experience as a financial planner, I find the older a client gets, the more they realize the importance of having the discussion of their financial situation and what they would like to see happen with their estate “once they’re gone.”
Finding the right time is important… this isn’t a Thanksgiving dinner discussion. But having the discussion shows how much you love and care about your family. If you’re a parent or grandparent wanting to discuss your plans, for example, we offer clients a “survivor’s guide” that can help can help not only lead the discussion, but provides a document that survivors can refer to when the inevitable happens. The point is to not just cover the topic of “money” but to effectively communicate your overall wishes.
On the other hand, if you’re an adult child of an aging parent and haven’t had the discussion before, it’s important to set aside some time to empathetically discuss the topic. Again, discussing death is not fun, but having an active discussion of what your parents’ would like to happen “when their will matures” is a way to honor their wishes, show that you truly care, and reduce much of the stress when it occurs. Chances are pretty good that your parent(s) have already thought about it, and may just may not know how to best start the discussion.
Step #2: Assessing Assets
In order to craft a successful estate plan, you need to account for every asset. And if you’re well-established and have lived a long life, you’ve likely accumulated quite an estate. But it can be overwhelming to think about assessing each and every account, property, car, painting, piece of jewelry and so on. But it doesn’t have to be all that difficult.
I suggest creating two lists, one for financial assets and one for physical assets. As you think of things you own, start jotting them down on to the respective list and note who the intended beneficiaries should be for each account or item.
Generally, it is pretty easy to name beneficiaries on most financial accounts. If you work with an advisor, have them help you review the beneficiaries on all your accounts. This includes bank accounts, brokerage accounts, CDs, annuities, etc.
Physical assets are just important to assess as financial assets, but naming beneficiaries can be a little more tricky. I’ve seen just as many misunderstanding and ill feelings among beneficiaries of an estate over who gets “mom’s jewelry” or “dad’s fishing pole.” This is another reason that creating a well thought out “survivor’s guide” for your estate plan can help beneficiaries to your estate understand your wishes and avoid fighting (trust me, something you may never have thought would happen while you were alive, but happens way too often after a death).
Step #3: Working With an Attorney
Many people are intimidated about working together with a lawyer. If you’ve worked with a trusted attorney in the past, this may not be an issue for you. But for those who are in need of working with a lawyer for the first time, the search can be intimidating, nerve-wracking and confusing. But estate plans can be complex, and you need to make sure you’re drafting one that does what you intend it to do, which may include tax-benefits for your loved ones, protection of your assets and control over how those assets are disbursed.
If you’re apprehensive about hiring an attorney, asking friends and family or other trusted professionals for referrals may be a reassuring step in the right direction. And if you find one who isn’t listening, speaking over your head or you just have a bad feeling about them, don’t be scared to pick up your things and go. Developing an estate plan that addresses your needs and concerns is far too important (and potentially costly) to settle with the wrong professional.
Two other thoughts on working with an attorney. First, the lawyer you used for your will when you were younger, for your last real estate transaction, for your business or for other legal matters, may not be the best attorney for your estate plan. Personally, I’ve found that attorneys who specialize their practice in “elder law” may be able to craft wills, estate plans and powers of attorney that contain language that’s missing from those done by other legal firms. Second, if you have a trusted financial planner, don’t be shy about asking them to attend at least the first meeting with you and the attorney. Having your financial planner there may help you be more efficient, gather some of the important financial documents faster, answer specific questions about your accounts easier and provide their insight after the meeting as to their feeling about the attorney and their approach.
Step #4: Deciding Who Gets What
It isn’t always straightforward or easy to figure out “who should be left with what.” Even happy families with “no issues” need to be realistic about the future – what’s the likelihood a surviving spouse may remarry, what happens if a child who is a beneficiary dies unexpectedly, what if there’s a divorce in the family, etc. And things can get even harder to discuss for families who may be struggling. Do you leave the child who is battling addiction a large sum of money, or do you give the majority of your wealth to the more stable child and put money in a trust for the other? If you’re currently not talking to one of your children, do you disinherit them officially through the will? There’s no shortage of emotional decisions to be made around who should get what, but you can’t let that stop you from pushing forward in determining who will receive particular assets in the event of your passing – or else you may lose control of who receives what altogether.
Step #5: Paying For an Estate Plan
Establishing a successful estate plan doesn’t come cheap. But if that’s keeping you from pushing forward in creating one, it may help to think of it as establishing a legacy for your family and leaving a gift to your beneficiaries. Taking the time to work with a professional now can help save your family members from costly tax obligations or other fees associated with dividing up your property.
Final Thoughts: Remember WHY You are Creating an Estate Plan in the First Place
Discussing an estate plan is no walk in the park, but it may be easier to address when you think about what it truly is – the gift of passing on a legacy in a tax-efficient manner to your loved ones. Take your time working through the emotional roadblocks discussed above, and keep moving forward in developing a successful estate plan now to protect your family in the future.