Do you have a financial plan - one that includes your estate planning?
Without a solid, well thought out plan dealing with distribution of assets, disagreements can happen. In my experience as a professional planner I have seen conflict, disagreements and hurt feelings that could have been avoided.
No one likes to think that greed could drive wedges into otherwise good family relations, but it happens all too often.
A Financial life planner who specializes in Estate Planning will ensure the distribution of your financial assets are clear. Good planning also allows you to clearly explain your wishes to family members. Although it might be challenging, planning for your death is an essential component of sound financial and personal planning.
These tips will help make the process easier:
- Consider your options, carefully
While your money is yours to do with as you wish, you do need to think of the consequences of decisions as they relate to your Will.
For example, should a beneficiary without children be entitled to more money (because their children need to go to college)?
Should a daughter who has worked hard and is financially comfortable receive less than her more needy siblings?
To avoid conflict, it’s common for parents to divide their financial assets equally between their children. Unfortunately, this simple strategy can lead to even more complications!
If a child gets divorced, the beneficiary’s spouse might be entitled to half the inheritance (or what is left). Is that what you want?
If parents don’t like their son or daughter-in-law, they could set up a trust as a way to control who ends up with the money. For example, a trust can specify that when the adult child dies, the money goes to their grandchildren.
- Do your due diligence
I heard a story of a family that had five adult children. Each of the children was the beneficiary of a valuable painting as part of their inheritance. It turns out the parents didn’t think to have the paintings appraised and it was later discovered that one was a fake.
The child who inherited the fake painting felt he should be entitled to one quarter of the value of each of the other four siblings’ paintings to make up for his loss. One sibling disagreed. To this day, over 20 years late, the brothers have not spoken.
Developing a thorough financial plan with a professional should have caught the mistake before it turned into decades of conflict.
- Talk about your plans
You’ve worked hard and you want to do what’s right. And size of estate doesn’t matter. This is the one time in your life when you need a professional to walk you through the forest of options.
This is also the time to talk about your wishes - without worrying about hurting someone’s feelings. And sometimes an uncomfortable subject will come up. Remember, it’s always better now, while you can make decisions and have time to think through options.
Who gets what can sometimes be interpreted as who loved who the most. Now is the time to explain your wishes to your children.
If you’re writing a Will, and you chose to make a significant charitable donation to an organization, now is the time to explain your reasoning to your children, or other beneficiaries.
Having an open and honest discussion with them now allows them to ask questions, and seek to understand your decision. With a little foreplanning you can protect them from further heartache.
There is a lot to think about when it comes to financial planning, and you should speak with a financial planner before making any final plans. Even if you don’t anticipate complications, now is the time to sort through your options and have time to make sound decisions.
As Ben Franklin famously said, “an ounce of prevention is worth a pound of cure”
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