Because we are reluctant to discuss wills, many families only learn what their loved ones want to happen with their property after funeral services, and grief has made everyone fragile. A recent article from Success, “Will Power: Why Transparency in Estate Planning Matters,” explains how family members can share their wishes with loved ones during difficult times.
People not used to dealing with large sums of money may not have plans for tax-efficient wealth transfer. This includes parents who have devoted their lives to saving for retirement and need a plan both to use their accumulated wealth and pass it on to the next generation. Without an estate plan, inheritances could be diminished or lost entirely to taxes.
For beneficiaries, knowing they may be receiving an inheritance should lead to advance planning. Inherited IRAs, for instance, need to be inherited and retitled correctly, or the entire amount could be subject to taxes. Anyone expecting to inherit assets should speak with an estate planning attorney to learn what steps they need to take beforehand.
Discussions about inheritances and last wishes are opportunities for families to connect on a deeper level than planning a Thanksgiving menu. Providing ample time to have these discussions can also allow families to work through any issues before it’s too late.
These are not easy conversations. They may not be possible for every family. Another option is to create a personal message via video or write a letter explaining your intentions. Whichever way you decide to communicate your wishes, it doesn’t need to be an overly long message. A simple explanation of what you’ve decided and why may be enough.
When you create an estate plan, start by inventorying all your assets, checking how they are titled and finding out which assets have beneficiary designations. Assets like life insurance policies, investment accounts and some bank accounts with beneficiary designations pass directly to beneficiaries and are not included in your probate estate. Check on beneficiary designations to make sure you’re not leaving a surprise present to a college pal you haven’t spoken to in three decades—unless you want them to receive a surprise.
Be especially careful if you decide not to give your heirs equal distributions. This can often lead to litigation against the estate, assets lost to legal fees and damaged family relationships. Your estate planning attorney will have strategies for how you might distribute your assets to be fair to all of your loved ones.
Surprises are good for birthday parties but bad for estate planning. Revealing a hidden secret in a will after you have passed will shadow your legacy.
If you haven’t updated your will in more than three or four years, now is a good time to tackle this task. Include your new, up to date will in a folder with other documents, including Power of Attorney, Living Will, Healthcare Proxy and other estate planning documents. Ensure that your executor knows where the folder is, so it can be accessed in case you become incapacitated or pass.
Having an estate plan created by an experienced estate planning attorney, who will be able to guide you through the process, is a gift to the family. You’ll enjoy the peace of mind of knowing you did the right thing.
Reference: Success (Sep. 12, 2024) “Will Power: Why Transparency in Estate Planning Matters”