Should you tell your children about their inheritance?
The question of whether to tell the children about their inheritance is the subject of ongoing debate. Many people express concern that this information might reduce a child’s work ethic or make them feel otherwise entitled, killing their motivation to seek a career and a “normal” life. Depending on the child’s temperament, this might be a legitimate point. On the other hand, inexperience and lack of understanding about wealth can result in a quickly-lost inheritance, only because your heir didn’t know what to do.
The best path for most of us is a “happy medium,” sharing your plan in general terms with your heirs, without necessarily telling your heirs the dollar values. You might even entrust some heirs with some responsibility for investment and entrepreneurial opportunities now before they inherit anything. This way, they begin to share your guiding values, and they are therefore better prepared to handle, manage and even grow their inheritance when they ultimately receive it.
Communication now prevents conflict later
You have put careful thought into which assets go to which beneficiaries and why. But, when the details of a plan are sprung on people, especially during a time of grief, differing opinions can create conflict. If your family unexpectedly discovers upon your death that there is a significant amount of money to be distributed, and you haven’t shared your rationale behind the decisions you’ve made, then you’ve set the stage for conflict and infighting, and possibly even a costly and lengthy lawsuit.
To overcome these challenges, frame your estate planning around your guiding principles, communicate your intentions thoroughly in the trust, and share your vision clearly with your trustees and beneficiaries while you’re still around to explain things. By attaching your values to your estate planning and involving your family in the process, your estate plan now becomes a family plan, minimizing the risk of conflict.
Part 2 of 4 - Holiday Estate Planning