Money can make people do crazy things. Here is how your estate plan could effect the relationships in your family.
Fact Checked byMatthew Schwartz, CFP®, CRPC®
Back in 1994 a hilarious film called “Greedy” starring Michael J. Fox and Kirk Douglas hit the big screen. It all played off a dysfunctional family’s desire to inherit the fortune of their rich uncle. I won’t spoil the movie but it quite perfectly illustrates the worst parts of human nature when it comes to inheriting money.
While we all love to believe that our families would never act that way, the truth is money can make people do some crazy things. So how do we avoid the crazy and open up communication?
Let's look at three tips for bringing family into your estate planning process.
Time and time again people procrastinate and procrastinate about making an estate plan. In our last blog we hit on some of the top excuses for not getting started.
If you want to bring your family into the conversation you have to first commit to the process. Sometimes in order to do that we need to understand what happens if we don’t.
If I don’t decide...who does?
When families and individuals decide to not decide on getting an estate plan what they don’t realize is that they in fact have one already. It’s the state’s plan. Meaning, you have died intestate. Which sounds like an awful disease, and it practically is.
When an individual dies intestate a local probate court then has to decide how to distribute your property. While they follow state intestacy laws that try to mimic the final wishes of the average person, your actual wishes remain unknown.
This process is public and contestable. This opens your estate up to claims from people outside the family and creditors. On top of that, the outcome is open to debate. An extended court process simply drains your estate in legal fees and end up making your greatest beneficiary the probate process! Studies have shown that cost for this process can cost anywhere from 3-7% of the estates value.1
So instead of letting the state decide it’s time to decide on what type of plan makes sense for your family.
We have certain items from our years growing up in our homes that hold a special place in our hearts. In the same way, our children have certain things within our homes that hold sentimental value.
A great way to make sure you know what those things are is using actual sticky notes! Once you have an estate plan started or established let your family know and invite them to share a couple things that are important to them within the home.
Take an evening and hand out the sticky notepads asking your kids to write their initials on the page and stick it to some of the items they want to be able to inherit from you. After they are done, have them share what the items were and what makes them special. It can help illuminate memories or stories you may not even know.
Privacy is important to most of us. That sense of privacy extends into our relationships with our children. For many, the idea of walking through all the details of the estate and how much is in it can seem overwhelming and invasive.
It also can paint an inaccurate picture today for your children’s tomorrow by giving them the sense that your assets will be their assets so they don’t need to save or work as hard. A parent’s nightmare.
So instead of diving into the nitty gritty hitting an overview of the estate plan can be helpful. Focus on things like…
Who will facilitate the administering of the estate?
Where will a copy of the estate plan be kept?
Who was designated the Power of Attorney for health care and finance?
What are you desires for the advance health care directive?
Avoiding how much everyone gets and how much will be received is wise in many cases. If however there is a family home or cabin that a specific child has shown interest in it can be wise to disclose that to the family so there are no surprises.
While we may not all be passing on millions that could lead to all out madness as in the movie “Greedy”, what we do have is worth having a plan for.