They’re your assets and your estate plan and you want to keep it private. Why would you want to share your plan with your family?
If your family is like most families, your children will at some point start believing that your assets are theirs. In these economically troubled times which brings much anxiety over money, a child’s natural reaction is to protect his or her inheritance. On the other hand, a parent’s instinct in this situation is to put off such discussions until later, much later. Your marriage to Thor or Bambi after a death or divorce could further increase your children’s concern over their inheritance.
In anticipation of their inheritance, your children may expect either an equal or a greater share of your estate when you kick the bucket. For example, consider a family farm/business in which some members of the family have been working for years and others have not. The children not involved in the family farm/business may expect an equal share of your estate, including the family farm/business. On the other hand, the children who have worked the family farm/business for the last thirty or forty years may expect to receive the entire family farm/business plus an equal share of the rest of your estate. Somebody will not be happy either way.
While it is common to divide your assets equally, there are many reasons why you would not want to leave equal shares of your estate to your children. Situations for an increased share may include a family farm/business in which some members of the family have been working for years and others have not, or a child who is more attentive to you and your needs. Situations for a reduced share may include poor money management skills, addictions, marriage to a predator or poor life choices.
Regardless of whether your distribution is equal or unequal, if your decision is different than your children’s expectations, there may be conflict. Springing such an unwelcome surprise upon your children while they are grieving after your death, may create ill will, open old wounds or resurrect sibling rivalry.
In these situations, the anger of the children who believe they have been cheated out of their inheritance would be directed at their siblings. There may be accusations of undue influence which forced you to benefit one sibling over another and could result in court proceedings. Is this what you want?
It is very hard to tell your children that they are going to be getting a reduced share or cut out of your estate. However if you do, their anger and disappointment would be directed towards you as opposed to each other long after you are gone. This may be difficult to do, but in the long run it may be a better course of action.
Another way you can blunt the force of a reduced share or disinheritance of your estate, is to prepare a family values statement, which is sometimes called an ethical will. In the family values statement, which is generally a separate document from your will or trust, you can describe your values, what you are doing and the importance to you of having it done that way. This family values statement can then be held as part of your legacy for future generations.
You could even video your family values statement as a lasting memory to your children or grandchildren. Not only would this help explain why you did what you did, it would help reduce the possibility of litigation after you are gone. The video would clearly show your competency and that you were not unduly influenced or under duress.
By: Matthew M. Wallace, CPA, JD
Published edited January 4, 2009 in The Times Herald newspaper, Port Huron, Michigan as: who gets what shouldn’t come as a surprise.