Discussing Your Estate Plan At A Family Meeting

With Thanksgiving and the holiday season approaching, it’s a good time to consider sharing the broad outlines of your estate plan with your adult children.

Many clients have asked over the years if discussing their estate plan with their children is a good idea, and my answer has been that it depends entirely on family dynamics. Usually, the default position for most parents has been not to discuss their estate plan unless there was a compelling reason to do so.

Having engaged in several meetings with the clients’ entire family around the table, I have seen the benefits family meetings can bring. Consequently, I recommend that the parents’ default position should change, in other words, the family should have that meeting unless there is a compelling reason not to. This article identifies some of the reasons family meetings make sense.

One of the primary benefits to getting children around the table sooner rather than later is alerting them to the need for necessary future action. For instance, planning for many elderly couples calls for building into the plan a high degree of flexibility, which often occurs in what is known as disclaimer planning. But legally effective disclaimers must be completed in a certain way and within a specified time. It’s best if both the surviving spouse and at least one child are aware that receiving professional advice on disclaimers is necessary shortly after the death of the first spouse.

Another example is beneficiary controlled trusts, which most estate planners strongly encourage today to protect a child’s inheritance against divorcing spouses, creditors and opportunists. These trusts work wonderfully, but only if the child leaves the assets in trust and removes them only when needed. Once an asset has been removed from the trust, it no longer enjoys any asset protection. At a family meeting, the children can be made aware of the need for timely advice regarding disclaimers, and it’s possible to impress upon them the importance of leaving the assets in trust for as long as possible so that the parents’ carefully drafted plan is not upended by a simple mistake made because the child was unaware of the ramifications.

Second, whether children are receiving equal or unequal inheritances, sometimes it is a good idea for them to get some notion of what they have coming so that there are no big surprises later. After you die, the chance to explain is over. You may have deep-seated reasons for allocating your estate in a specific way, and discussing those reasons now may be the better alternative than not discussing them at all. If you do nothing, you risk children being taken by surprise and resorting to litigation, which results in everyone losing in the end.

The third reason is closely linked to the second, and has to do with family dynamics. In certain situations, such as unequal allocation among children or where a spouse in a blended family leaves the bulk of the estate to their surviving husband or wife, the children may harbor suspicions as to whether the deceased spouse really intended that result. It’s common for many children to jump to the conclusion that the deceased parent was coerced or manipulated. In reality, the truth is far less dramatic, and the deceased spouse really did want what the estate plan called for. Sometimes it’s vital for the child to discuss the plan with the parent so that the child can hear directly from the parent that yes, this is what the parent wants. It’s easy to imagine the worst, but hearing directly from the source defuses a lot of presumptions that are misplaced.

Of course, family meetings are not for everyone. In some families, the risks of discord outweigh the potential benefits, in which case a family meeting is best avoided.

In sum, family meetings offer an opportunity for educating your children. This education can entail explaining important steps to take or not take after the death of one or both parents, explaining the reasoning behind your estate plan decisions, and taking proactive steps to quell misplaced suspicion or skepticism that tends to arise in some very common family situations.

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