Tips for Reviewing Your Estate Plan with Your Children
Everyone’s estate is unique but family dynamics, especially around money, often follow known patterns that can create resentments or devolve into broken relationships. Speaking frankly with your children about the estate plan now and structuring the plan to be fair and equitable can avoid anger and needless complications after you are gone.
Ways to Communicate Your Estate Plan
You can communicate your estate plan in many ways, but the key is to inform all of the children at the same time. This structure avoids resentments and beliefs that one child has influenced you at another’s expense. Also, communicate the plan before it is finalized so that your children can have input into the process or provide information that you might not know. For example, one child might be anticipating a divorce but hasn’t shared that news yet, or is planning to adopt a child. By discussing the plan before it is complete, it allows you to make adjustments without the need to restructure the entire plan.
Options for communication include:
Thorough Conversation with your Estate Planner Present
Whether by phone or in person, include your lawyer in the process and have him or her take the lead in the conversation. Having counsel present your plans and offer opportunities for input takes what could be a difficult conversation and makes it manageable. Your lawyer can describe your estate, answer questions and request feedback in a matter of fact way that helps to keep everyone calm and on the same page.
Present the general structure of your estate plan to your children in a letter. Explain how you plan to distribute your assets, options that you might include, such as funding your grandchildren’s education, and a request for input. Include the timeframe for your next appointment with your lawyer, i.e. in 2 weeks, so that your children understand how long they have to respond.
Ask your estate planner to create an estate plan summary, normally a 3 to 5-page document, which explains the structure of your plan but without dollar amounts attached. Have your attorney send a group email to you and all of your children so that everyone receives the information at the same time. This letter should include an opportunity for input by your children prior to finalizing the documents.
Through a Mediator
For complex estates, especially involving family businesses or other joint ventures, discussing your plan with your children and a mediator brings an impartial party to the mix. After meeting with the parties separately, the mediator brings everyone together for discussions on the most equitable and appropriate way to manage these complex assets.
Estate Planning Tips to Help Keep the Peace Later
To keep your children connected after you are gone, there are several ways to structure your estate plan that helps avoid anger and resentment. These tips are offered as options to support healthy sibling relationships now and for years to come.
Equal and Outright
Whenever possible, portion your estate equally among your children and do not use trusts to limit access or attempt to control how the money is used. This is the only way to avoid resentments later. You can’t predict how life will turn out for any of them, so an equitable distribution places their future in their own hands. The exceptions to this tip are under-aged children and adults with special needs who will need support throughout their lives.
Make the Beneficiary a Trustee
If you need to create a trust for a child, name your child as a co-trustee of his or her own trust at a certain age, such as 25 years old. This structure allows your child to participate in investment decisions and learn how to manage their funds.
Stagger Trust Distributions
Another way to help your children learn how to manage their inheritance is to stagger the distribution of assets. This would mean giving them control over an ever-increasing portion of your estate at set age intervals, such as 25, 30, and 35 years so that they begin to handle their inheritance.
Make your Child a Co-Trustee
Many trusts name a primary trustee and a co-trustee. For competent adults, naming them as co-trustees of their trust is another structure that allows them to understand their inheritance and how best to benefit from it. This is great practice for when the trust ends and they receive the remaining assets outright.
Do not Make One Child the Beneficiary of the Other’s Trust
Giving one child control of the other’s trust is almost guaranteed to create resentments and conflicts. To keep peace in the family, name an outside trustee for situations where a younger beneficiary has not yet come of age or is an adult who needs a trust to help manage his or her affairs.
Give your Child a “Remove and Replace” Option
You can’t anticipate how a main trustee will perform over time, or how that person will behave toward your children. If you create a trust, don’t leave them with a bad trustee but instead give your children the limited power to remove and replace a trustee with another qualified trustee.
Include a Mediation Requirement
Ask your estate planner to include language that if there is a dispute, your children must first attempt to resolve it through mediation. This avoids the emotional and financial damage caused by a lawsuit, results in a faster resolution, and is successful approximately 85% of the time.
Whenever finances are involved, emotions can run high, and this is especially true when the situation is part of an estate plan. The best ways to minimize this anxiety, upset, and drama is to discuss this plan with your children prior to finalizing it and to structure it in such a way that it avoids creating resentments after you’re gone.
Life Counsel & Planning understands these challenges and will help you navigate them. We will work with you to establish a comprehensive estate plan that meets your current needs and avoids family turmoil later. Contact us today to schedule a free consultation to learn exactly how we can serve your unique needs. You may call us at (904) 638-2345 or request an appointment through our website.