One of the more difficult conversations for family members to have is talking about estate planning. There are several reasons for this, including the reality of our own mortality and that of our loved ones. In some families, it is an unspoken taboo to talk about money. Many parents don’t want their children to know how much they have or how much their children will receive after they die for fear the kids may become lazy or entitled or that they won’t understand their parent’s intentions for their estate. And so, no effort is made to create meaningful and beneficial dialogue.
Unfortunately, statistics indicate that this lack of communication has significant financial repercussions. A study published by NASDAQ demonstrates that an estimated 70% of wealthy families will lose their wealth by the second generation, and 90% will lose it by the third. The money might be frivolously spent, poor investment decisions made, costly estate fees, taxes that could have been potentially avoided, court expenses generated through family dissension, probate, and other reasons contribute to the eroding of generational wealth.
Openly talking about your estate planning strategy, intentions, and how you hope your estate will be managed can provide your heirs with a roadmap of how to proceed when you pass on. Being transparent in your communication is key, especially when tackling these sensitive topics. This transparency gives your family a sense of empowerment in being about to carry out your wishes and solidifying a plan for their family’s financial future instead of leaving the separation of wealth to the courts.
If passing on values is important to you as a parent, particularly if financially motivated, starting a dialogue sooner rather than later can help your family prepare in the event you or your spouse becomes incapacitated. Understanding what topics to discuss when talking with family is critical, especially the common estate planning mistakes and necessary strategies to pursue. Here are 7 estate planning topics to discuss with your family over Thanksgiving dinner.
- Where the will is kept, and if there is no will yet, one should be written
A Gallup News poll finds that less than half of adults in the U.S., 46%, have a will that identifies how they want their money and estate to be managed after they die. The significance of not having a will in place is costly, stressful, and a headache for the surviving family members after you are gone because your estate goes to probate court. It is expensive, tedious, potentially frustrating, and requires patience because it can be drawn out, and family members may argue over assets.It is helpful if the family members know where the will can be located should something happen and who the executors of the will are that will oversee the administration of the estate. - What are the assets, and how are they titled
Compile a list of all of your physical assets, digital assets, copyrights and patents, and bank accounts and store them where the executors of the will and trustees of the trusts can easily access them. - Choose powers of attorney
A power of attorney is a trusted individual who is in charge of managing your financial and real estate interests, your health care concerns. You may also want to consider having a living will or heath care power of attorney should you become incapacitated. If there is no power of attorney designated, your family may experience time-consuming and costly delays. - Identify possible tax implications of making certain decisions
When it comes to estate planning, federal estate tax law is complex and is constantly evolving. Consider consulting a financial professional to learn how estate taxes may impact you and your family. - The impact of giving and creating trusts
Another avenue parents can consider, along with a will, is creating trusts, like a living trust, as a management tool for distributing their wealth after they are gone. Doing this is beneficial because you generally avoid going to probate court. For anyone who has experienced probate and all that goes along with it, this is a vital step in showing your family how much you care about them to think about the financial and emotional burden they would face down the road. - Consider discussing long-term healthcare options
We all like to think we will be healthy until our health takes an unexpected turn; however, roughly 70% of people age 65 and older will need some type of long-term care during their lifetime. Having a set plan and family members knowledgeable of your wishes should you become incapacitated can help to alleviate obstacles, unnecessary costs, and stress should that day come. - Setting up a meeting with a financial professional for you and your loved ones
Estate planning is complicated and regularly changing based on federal law and regulation. It is critical that you seek the help from a financial professional to ensure you aren’t forgetting anything in your estate planning, making unnecessary mistakes, and aligning your strategy with your financial and charitable goals.
How to get the conversation started
Even when you have an idea about what you want to discuss, initiating the conversation can still be difficult. The Thanksgiving dinner table brings family together in good spirits and, eating provides a sense of comfort. As conversation naturally flows between family members, this could be an opportune time to carefully weave in some estate planning topics.
While estate planning is not a comfortable topic to discuss, encouraging family members to meet collectively with a financial professional, as a mediator, and someone who can paint a clear picture of what to expect, can be highly beneficial.
So, along with the turkey, ham, mashed potatoes, and casseroles consider serving up some Thanksgiving estate planning topics as well.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
This article was prepared by LPL Marketing Solutions
Sources:
Talking About Estate Planning – Tips from Fidelity
How Many Americans Have a Will? (gallup.com)
Power of Attorney: When You Need One (investopedia.com)
Questions to Ask Your Estate-Planning Attorney (investopedia.com)
Long-term care statistics 2022 (singlecare.com)
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