Should You Share Your Estate Plan?

You have been raised in a family who does not talk about money. You have been taught that money matters are private and not to be disclosed to others, not even parents, children or siblings. They’re your assets and your estate plan and you want to keep it to yourself. What reason would you have to want to share your plan with anybody else?

If your family is like most families, your children or other loved ones will at some point start believing that your assets are theirs. The financial roller coaster we have been on over the last decade has brought much anxiety over money. Your marriage to Thor or Bambi after a death or divorce could further increase your children’s or other loved ones’ concern over their inheritance. Their natural reaction is to want to protect that inheritance.

On the other hand, your instinct in this situation may be to put off such discussions until later, much later. You have set up an estate plan. They will find out about the plan when the time comes. Why does anyone else need to know about it now?

In anticipation of their inheritance, your children or other loved ones may rightfully or wrongfully expect either an equal or a greater share of your estate when you kick the bucket. I see this all the time. For example, consider a family farm/business in which some members of the family have been working for years and others have not. Those not involved in the family farm/business may expect an equal share of your estate, including the family farm/business. On the other hand, those 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. In any event, somebody will not be happy.

On the other hand, I do occasionally see an estate where a beneficiary believes they should have received less than they were given. In those cases, the beneficiary gives away part of their share to other beneficiaries.

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 or other loved ones. 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.

What about the family dippers? These are the children who have always had their hand out to you and dipped into the family financial bucket. They may have good jobs, but never seem to have enough money, usually as a result of poor money management skills or poor life choices. I have handled more than one estate in which the dippers had been dipping into the family financial bucket for decades for hundreds of thousands of dollars, and then taught their children to do the same and ask grandma or grandpa for money “because they really need it.”

Is it fair that the dippers have received more than the other beneficiaries during your lifetime? You can put an advancement clause in your will or trust to account for all of these lifetime gifts. The dippers would receive a smaller share of your estate after your death because they have already received much of their inheritance early. However, in almost every case in which I have been involved and in which the dipper was unaware of the advancement clause until after death, the dipper believed that they were being cheated out of their inheritance. They thought that their advancements should not be counted or should be discounted. It might not be a bad idea to let the dipper know during your lifetime that you are keeping track of these lifetime gifts and that you are considering them early inheritances.

Regardless of whether your distribution is equal or unequal, if your decision is different than your loved ones’ expectations, there may be conflict. Springing such an unwelcome surprise upon your loved ones while they are grieving after your death may create ill will, open old wounds or resurrect sibling rivalry.

In these situations, the anger of your beneficiaries who believe they have been cheated out of their inheritance would be directed at your other beneficiaries. There may be accusations of undue influence or duress which forced you to benefit one beneficiary over another and could result in court proceedings. Is this what you want?

It is very difficult to tell your children or other loved ones 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.

A good workbook you can use to create your ethical will is called The Wealth of Your Life: A Step-by-Step Guide for Creating Your Ethical Will, by Susan Turnbull. Susan is founder and principal of Personal Legacy Advisors, LLC, a firm that advocates non-binding personal legacy documents as a component of estate and philanthropic planning. This workbook does a great job of walking you through the process of putting your thoughts down on paper.

You could even video your family values statement as a lasting memory to your children or other loved ones. 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 by others or under duress.

You may want to share your estate plan with your loved ones during your lifetime. If you do, you may increase the likelihood that you can stay in control of your assets while you’re alive and well, provide for you and your loved ones in the event of your mental disability, and when you’re gone, give what you have to whom you want when you want the way you want, all at the lowest overall cost to you and your loved ones.

By Matthew M. Wallace, CPA, JD

Published edited July 30, 2017 in The Times Herald newspaper Port Huron, Michigan as: You should share your estate plan

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