Posted by Alicia Waltenberger.
Estate plans usually focus on the “what/when/how/whom,” but the “why” can be just as important.
Shakespeare’s King Lear divided up his kingdom while he was still healthy in body and mind—making his wishes clear to the assembled daughters so that “future strife may be prevented now.”
Sadly, I’ve seen a fair amount of strife among family members who were caught off guard by a deceased parent’s will—strife that might otherwise have been prevented with some careful estate planning.
Documents such as wills and trusts are written in cold, sometimes impenetrable legalese. Unless a personal letter is attached, explaining the rationale behind the terms and conditions, beneficiaries can wind up feeling hurt or confused as to the intentions of the deceased.
Carving up your kingdom
Your estate may be less than kingly but if you own any assets at all, you have a royal duty to focus on how they are to be distributed on your death—what stuff goes to whom, and when, and how.
Once you’ve decided on all that, it’s a good idea to share your wishes with your family, preferably in person. That way you’ll have an opportunity to answer their questions and to explain the logic behind certain provisions.
Such as, why you want your child’s inheritance to go into a trust they can’t access until age 30. Measures are frequently put in place for the protection of your child or dependent, not because you don’t trust them. A trust can contain a framework to help protect assets for your child, to promote certain values or to safeguard the trustee in some way. However, don’t take it for granted that he or she will know why you set the conditions you did.
Divesting yourself of rule
Sometimes a business goes defunct after the owner dies; sometimes it passes on to the next generation. If you own a family business, and like Lear, need to divest yourself of rule, your estate planning concerns are compounded.
By dividing your business into equal shares for each child, you may be giving too much control to someone without business knowledge. It is unrealistic to assume that your children all have the same interest in, or aptitude for, running a small corporation.
When conversation is just too difficult
I’ve had clients who for various reasons were averse to sharing their net worth with their kids. If you are similarly reticent, you may at least share the basic provisions, information on how to access your assets, and how they will be distributed, though you may choose not to disclose their value. A common mistake is failing to put someone else’s name on your safe deposit box, the place we keep all those important documents like wills. Likewise, assigning a contact person for each account, so someone knows, for example, where your life insurance assets are held. You may also consider passing on this information to your agent named under a power of attorney.
If your children are still young, conversations about your legacy may not be appropriate. As the mother of young children, I have elected guardians for them in the event both my husband and I die, and have spoken to those guardians about the distribution of our assets. What we have discussed with the kids is where they would like to live if anything happens to us.
King Lear famously disinherits his favorite daughter at the start of the play, an extreme example of strife in estate planning. Even if your will does not contain any dramatic surprises, your family members may feel more secure if they know what to expect after your passing. Dealing with an unexpected or ambiguous provision—or worse, the confusion of having no will at all—can strike a double blow in the aftermath of losing a loved one.
A few words on paper, or better yet, in person, can avert potential discord.