Death and money are never easy to discuss, particularly when they are tied closely in the same conversation. That being said, facts are facts, and we all have to prepare ourselves and our loved ones for what happens after we pass.
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Right now, the baby boomer generation is getting older and should be informing their children about what to expect when it comes to their inheritance. While each family might be different in the particulars, there are a few key topics to discuss regardless of circumstances.
Here are five things boomers should tell their children about their inheritance:
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Whether The Estate Plan Accurately Reflects Current Wishes
Communication is crucial during estate planning. Without it, there can be confusion as to what your wishes actually are and if they have been updated to meet your intended desires.
“Boomers need to talk to each other about having a will, a trust, or both — and if those documents accurately state their wishes,” commented William London, a partner at Kimura London & White LLP.
“The children should understand who the trustee, the executor, and power of attorney agents are,” London continued. “Surprises down the line cause family strife and more costly litigation. Telling the truth now can mean calm later.”
Explain The Reasons Why
It’s not just the who and the what that matters, but the why as well. Make sure that when it comes to what you leave behind, you inform your kids as to your reasoning behind your decisions.
“Yes, your heirs need to know what they will receive — IRA, Roth, brokerage, trust, real estate or business equity,” noted Jason Hester, a managing Partner at Balefire. “But help them understand why you set things up this way and what will be required of them. Ensure they know where the assets are held, how the assets are held, who the advisors are, and what your intentions were behind any protections or restrictions.”
Distributions Are Not Always Equal
Everyone might be under the assumption that they are going to get an equal share of what you leave behind. If this is not the case, bring that to light ahead of time to avoid conflict amongst your children later.
“If the inheritance is not to go equally among the children or is to have specific requests (such as the family home to a child), Boomers need to communicate the reasons both in writing and face to face,” London advocated, noting that this eliminates the potential for disagreement, bitterness and lawsuits are a parent’s death.
Prepare Them to Lead, Not Just Receive
According to Hester, the greatest inheritance is not the assets — it’s the ability to take the family to another level.
“By shifting the focus to living a life of significance with is given, provide your heirs a clear path for stewarding the family mission,” explain Hester, who described how his company emphasizes “…creating plans that clearly define how much is enough for lifestyle needs, fuel ambitions to thrive in growing assets, set a multigenerational vision for remaining healthy as a family, and maximize the influence and impact of your family in your community.”
Timing and Process
London stressed that inheritors need to understand that inheritance is not immediate.
“There are years, if not months, of probating, if there is no trust. If there is a trust, distributions may take time or may even be subject to contingencies,” London pointed out.
“Advance notice makes for proper expectations and prevents excessive worry,” shared London. “It is often not easy to have frank discussions of inheritance-although they are among the best gifts Boomers can bestow upon their children.”
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This article originally appeared on GOBankingRates.com: 5 Things Boomers Should Tell Their Children About Their Inheritance
