Estate Planning Tip: What To Tell Your Children About Your Estate Plan
Did you know, children of baby boomers are due to inherit more wealth than ever before? It has been estimated baby boomers will inherit $12 trillion from their parents, and they will leave an additional $30 trillion to their own children over the next 30 to 40 years. Phelps LaClair, with locations in Gilbert and Scottsdale Arizona knows how healthy estate planning will benefit your children, instead of harm them.
Inheriting even a modest amount can be life changing for your children, either good or bad. So how do you prepare them? Do you tell them everything or nothing? Every family is different, but here are a few pointers.
- You’re In Charge: First of all, remember your Revocable Living Trust is a private document and you have no legal obligation to tell them anything (this is not always true for an irrevocable trust). Legalities aside, there may be some practical and emotional reasons to open up a little.
- Put Their Mind at Ease: At some point, our kids start noticing we’re getting old! Somewhere along the way, your children may begin stressing out about whether you have your affairs in order. They’ve likely heard a story from friends about families being dragged into ugly court battles, and nobody wants that. Therefore, it usually makes sense to at least tell your family that you have a well-designed estate plan in place, and all is in good order (if that is not true, please come see us!). Even if that’s all you tell them, it goes a long way to putting their mind at ease.
- Do You Tell Them More? Because you know your family better than we do, we can’t answer if it’s best to tell them more than the basics of having an estate plan. However, here are some things to consider:
- If one of your children is the successor trustee of your Living Trust, they ought to know so they can be prepared when the time comes (more on that topic next month).
- Consider the age and maturity of your children. If you worry that telling a child too much will either terrify them or demotivate them in life, less is more. Then again, not talking to your children at all about future inheritance can leave them unprepared to handle even a modest amount. Sometimes it’s better to prepare them now when you are able to express your desires and do some hands-on legacy training.
- The Apple Doesn’t Fall Far From the Tree: The old proverb is not always true, but we believe the most effective way to teach your children about views and values on money, is to be an example and role model. Many parents show their value in family relationships by spending money on family retreats or a vacation home. If kids see you being charitable and helping others, chances are they will do the same with the money they inherit. If they see you cutting out coupons, your frugality will likely rub off on them as well.
- Don’t Forget We Are Here to Help: Let us know if we can help with these tough discussions. Whether it be facilitating a family meeting or just making sure your Living Trust is up to date, we are always at your service.
Contact Phelps LaClair today to discuss ways to help with great communication about you and your loved ones future.
Images used under creative commons license – commercial use (8/18/2017) Evil Erin (Flickr)