Estate planning is, without a doubt, a difficult task. If you have a complete, up-to-date plan in place, you may feel confident that your final wishes will be honored. However, that's not always the case. In some cases, even if you document your preferences and enable a seamless succession of wealth, if you neglect this part of efficient estate planning, your family may still be left in emotional and financial distress. The best way to avoid that is simply and openly discussing your estate plan with your family and heirs. In the rest of this article, we will go over some of the most important reasons why communicating your estate plan to your family is crucial. In addition, we will also provide you with some tips on how to have these difficult conversations.
The Upsides of Estate Planning
Before we get into reasons why communicating your estate plan to your family is crucial, we want to first focus on a slightly easier question: "why should you plan your estate?" The first reason is apparent; if you die without a will or a trust in place, your estate will be administered according to the laws of the state where you lived. However, this way doesn't always reflect your true wishes. On the other hand, by putting together a detailed estate plan, you can decide precisely how your possessions will be distributed after your passing.
Moreover, you can help your heirs with the emotional burden of making these difficult decisions by themselves. However, conflicts in the family regarding inheritance don't only happen in situations where there's no trust or will in place. Sometimes, even with a present plan, families still argue about inheritance. This is especially true if they don't understand why their late family member made their choices. While you can't control what happens after you pass, you can try to help your heirs understand your decisions by discussing your estate plan with them.
The Consequences of Not Communicating Your Estate Plan
It's not uncommon for families, especially those on the wealthier side, to avoid talking about finances and plans. Even when family heads take all the necessary retirement planning steps and set up an estate plan, they often forget to discuss it with their family. Due to the lack of communication within the family, most heirs end up inadequately prepared. This leaves them more likely to experience financial troubles and lose what they inherited.
However, even if you're not particularly wealthy, setting up an estate plan and communicating it to your family is still crucial. The conversation will provide you with an opportunity to explain your asset distribution, beneficiary treatment, and other significant decisions, as well as the reasoning behind them. As a result, will or trust contests can be reduced if not eliminated.
Communicating Your Estate Plan to Your Family: What to Discuss?
So, we mostly covered why communicating your estate plan to your family is crucial. Now onto the following question: "what exactly should you discuss with your family?" Well, you should start by discussing the existence and location of all your estate planning documents. This includes your will, living will, insurance policies, properties, bank accounts, and investments. Moreover, use this opportunity to notify your family about the contents and locations of any safe deposit boxes and crucial documents such as birth or marriage certificates.
However, keep in mind that you may decide to change your estate plan at any point in the future, just like you would update any part of your retirement plan for whatever reason. If you decide to change who will inherit which assets, make sure you communicate that change with the family as well.
How To Discuss Your Estate Plan?
The first thing you should remember when discussing your estate plan is not to put it off. It's a good idea to start talking about inheritance at a young age. This will get your family used to asking honest questions and having meaningful conversations.
Then, be open and honest with your family whenever you have this conversation. Be transparent with your guardians, executors, trustees, agents, and other trusted family members and heirs. Moreover, let them ask questions and express their wishes. By being open when talking about your intentions and desires, you can, in many cases, help ensure they'll be met.
Changes To Your Estate Plan
As we already mentioned, you can, at any point, decide to change a part of your estate plan. You can choose to distribute your assets differently or add more beneficiaries to your trust. Alternatively, your estate plan may also change if you decide to open up a new account in the meantime, purchase another property, or in any way change your assets.
For example, many retirees decide to leave their life in the city and move to a more rural area where they can purchase a new property and enjoy their hobbies. If you're looking for something like that, New Hampshire is a great choice for retirees. By moving after retirement, you can find your place in a close-knit community of a small town and still have everything else you need nearby.
Another Thing to Consider
Even when you're done planning and communicating your estate plan to your family, there's still one thing you can do to increase the chances of your family respecting your wishes. This is to create an ethical will. An ethical will can be a written document, a video, or an audio recording. It should include personal anecdotes and lessons from your past, as well as your goals for your family's future. While it's not a legally enforceable mechanism, an ethical will is a means to transmit your final thoughts as part of your entire estate strategy.
Making decisions about your estate might be exceedingly tricky. Moreover, communicating your estate plan to your family can feel even harder, but it's crucial you do it. Don't put off this conversation, even if your decisions may surprise them. By discussing everything openly and honestly and making your heirs feel heard and understood, you will help them avoid conflict and contest in the future. This will also ensure your last wishes are carried out.