Thinking about your estate, setting up your estate plan, and carrying out your wishes is not the entire process of estate planning. You really must take this process one step further.
You need to take the still more difficult and under-practiced step: discussing your estate and your estate plan with your heirs and loved ones.
It does not take much imagination to appreciate why this step is so easily skipped. Estate planning conversations can be tricky, even contentious, and the subject matter can be a bit morbid. Well, such conversations need not be all that bad and the payoff can be well worth the effort.
In case you missed a practical take on this topic in Forbes last month, titled “Seven Reasons To Tell Your Kids What They Will (Or Won't) Inherit,” here are those seven key points to ponder:
- Avoid surprises like disagreements, misunderstandings or assumptions that range from miniscule and awkward to disastrous.
- Refine your approach by taking into account your loved ones’ opinions or needs you might not have considered (or, conversely, double-down on the plan as originally conceived.)
- Save taxes by starting early, making gifts rather than just bequests and skipping that much more beneath the estate tax ceiling.
- Adjust expectations, either your own or those of your heirs; for example, by reminding them of gifts made in life to one heir but not another and how that may affect your overall plan.
- Explain your reasoning.
- Anticipate disclaimers, that is, the would-be heirs ready to disclaim whatever inheritance you had planned to send their way; how else can it be used?
- 7. Promote family harmony.
Only you know the needs, strengths and weaknesses of your heirs and loved ones. By planning and executing your estate planning conversation(s) with them, you will be preparing them for a future without you and to be good stewards of the fruits of your life’s work.