A recent article in The Wall Street Journal offers great advice for those approaching the golden years and thinking about estate planning.
As we age, it becomes more and more important to think about late-in-life planning, including how your wealth and possessions will be divided among your heirs, who will become the guardians of young children, and who will make health care and financial decisions for you if you become incapacitated.
Unfortunately, many older Americans think that it’s perfectly fine to simply make these estate planning decisions, fill out the necessary documentation, and forget about it.
This is not the case.
Estate planning is a process that must be discussed with children and other family members and heirs. Making decisions about your wealth and possessions, health care, and funeral arrangements without telling your family can have disastrous consequences down the road.
Many people feel embarrassed or uncomfortable talking about money and death. In addition, most would like to avoid the unpleasantness of telling a family member that they won’t be inheriting their favorite family heirloom. However, you can only speak for yourself while still alive. After your death, or if you become incapacitated, your family will have to proceed using only the information you’ve given them and any relevant estate planning documents expressing your wishes. Without any information or explanation from you, your family could become confused, hurt, or angry because of your decisions.
Broaching these difficult subjects can help prevent confusion, tension, or at worst—an all-out family feud—after your death. Some of the things that you should discuss with your family include:
- The state of your finances: You shouldn’t keep your family in the dark regarding assets that can be used to care for you later in life. If your family doesn’t know about assets, it is less likely that they will be used for your benefit later in life (For example, should you become incapacitated, your family needs to know about assets that can be used to provide you with in-home care). In addition, if nobody knows about hidden assets, the assets could wind up being claimed by the state as abandoned after your death.
- The house: Your house may be your greatest financial asset and can cause a lot of friction after being passed on—especially if you have more than one child. One child may want to live in the house, while another wants to sell. Then, there are the complexities of how much the house should be sold for and how much each child receives from the sale. To avoid these problems, it helps to sit down with family and discuss how you would like your heirs to handle the house.
- Your will: Without guidance from you regarding how you made your decisions, it is much more likely that family members will feel hurt or slighted by your decisions. In addition, family members in the dark and angry may be more likely to bring the matter to court to fight over aspects of the will. Discussing your decisions as a family will give you the opportunity to voice your reasoning and will give your family the opportunity to come to mutual understanding and agreement—preventing both hurt feelings and a potentially lengthy and painful court battle.
By discussing all of the elements involved in estate planning with your family and other heirs, you will make it much more likely that your wishes will be honored by your heirs after death, without hurt feelings or a court battle.