As the saying goes, “a parent’s job never ends,” so even if your kids are grown and living independently, it’s still important to plan for their protection should something happen to you.
Estate planning is never easy, no matter your age, but it becomes even more critical as you near retirement. A well-thought-out estate plan helps you establish your legacy, enables you to streamline the transfer of wealth to your children or loved ones, and provides your family peace of mind during an emotionally fraught time.
Communicating your plans regarding your estate to your family ahead of time is the best way to ensure that your children (and your legacy) will be financially secure in the future.
But how can you broach this challenging conversation? Here are four things you must communicate with your adult children (or loved ones) about your estate plan.
1. Where Your Important Financial Documents are Located
You can save your loved ones time and energy by having all your important documents in a central location.
Ensure that your family can find necessary items such as healthcare directives, insurance policies, medical records, credit card statements, investment information, bank accounts, etc.
When choosing where to store these important papers, make sure the space is:
- Accessible (to those that need it)
A great way to secure these documents is by holding them in an at-home safe deposit box. Remember, not all of your documents are physical—more likely than not, most of your financial information will be digital. So, be sure you know where you bank, your financial custodians, etc. A good way to keep track is to make an ongoing list of accounts, logins, and passwords that are easily accessible for you and your loved ones.
In addition to knowing where everything is, giving your children access to these items is essential. Whether it’s a physical key to a safe or electronic passwords and logins for your digital estate planning needs, ensure the right people can access these documents when needed.
2. What Your Children Can Expect to See in Your Will
One of the most polarizing parts of planning your estate is the distribution of personal belongings.
Prevent arguing and high-strung emotions by sitting down with your children and having this conversation ahead of time.
Be open and transparent on how you want your possessions to be allocated and why you’ve chosen that route. For example, if one child is receiving more than the other, let them know and explain the reason behind your decision.
You don’t have to divide your estate evenly, but you must do so equitably.
3. What Role Your Children May Play in the Future of Managing Your Estate
Will your children be expected to maintain your rental properties? Manage the family business?
Let your kids know their part in your estate plan in advance to better prepare them for the new role. More work-intensive positions, like the power of attorney and personal representative, will require longer conversations.
Let’s look at some of the other important roles you’ll need to allocate to family members.
Your trustee acts as the legal owner of trust assets. The trustee is responsible for handling trust assets, taxes, and distributions according to the terms of the trust.
Power of Attorney
Your power of attorney can act in your place should you become incapacitated. They can step in to make financial, medical, and other major life decisions if you can no longer do so. Keep in mind that this is a living document and void at death.
Your personal representative is the individual who will be responsible for settling your estate and guiding it during transfer.
4. The “Why” Behind the Plan
Estate plan conversations are an excellent opportunity to assuage fears, create understanding, and strengthen family ties.
Explain Your Estate Plan Decisions
As you give your children roles and allocations, describe how what you’ve learned through your financial and life journey influenced these decisions.
Adding context and understanding to these topics can help prevent future fighting and encourage harmony. In addition, passing along what you’ve learned throughout your life journey is a large part of leaving your legacy.
Worries will naturally come to the surface during these important discussions.
Rather than avoiding these anxieties, try addressing them directly. Ask your children for more details so that you can get to the root cause of their worry. This back and forth demonstrates that you care and are customizing your plan with them in mind.
Answer Any Lingering Questions
Before ending the conversation, ask your kids to bring up any final unanswered questions. If they don’t have any at the time, leave the door open for further discussion later. It’s important to remember that these conversations can be draining, so your family members may need more time to process them.
Ways to Start the Conversation
It can feel uncomfortable trying to bring up estate plans with your kids.
Try these conversation starters to ease into the discussion:
- Let the topic come up organically
- Reference a friend or article
- Use a story or anecdote
- Bring up your financial planner
Choose the method that feels most comfortable to you. The end result of having a fully informed family is what truly matters.
How to Craft the Perfect Estate Plan
It’s easy to feel overwhelmed when thinking of all the assets, health policies, and finances you need to put in order. Don’t be afraid to ask for help.
At Goepper Burkhardt Wealth Management, we specialize in serving retirees and pre-retirees. Our experienced fiduciary advisors can assist you in designing and implementing a comprehensive estate plan with your family’s specific needs in mind.
Before sitting down with your kids, it’s always a good idea to carefully review your plan first. We can help you analyze your current financial situation, provide tips for family finance discussions, and offer personalized estate advice to help ensure your children are always protected.
Don’t hesitate to reach out to us to get started.