As parents age, children may decide they need to sit down and have a talk about the parents’ estate. They may be interested in what they are going to get for an inheritance and what responsibilities are going to come along with it. While children may have to work up the nerve to have this talk, what they often find is that the parents aren’t interested in talking at all. They shut the conversation down.
There are a few reasons for this, one of which is that some people feel uncomfortable talking about their own death. Another reason, though, is that they think it will take away the children’s motivation. They don’t want them to know what they’re going to get.
For example, a child may work hard to pay the bills and put away money for retirement. Children who have kids of their own may save money for their kids’ college funds. They plan for the future and work toward that end goal.
If that same child is told that he or she is going to get $3,000,000 when the parents pass away, though, will he or she work as hard? Will the child keep saving money, or will he or she just stop taking the responsible approach, deciding to count on the money that is coming for retirement and/or a college fund?
This is, perhaps, a legitimate concern, but parents still need to be open to talking to their children about an estate so they can all plan properly for what is to come. Communication is often a crucial part of this process and helps create an estate plan that really works.
If parents are concerned about motivation, there are tools they can use — such as trusts — to make sure it is maintained. For example, a trust could pay a child as much as he or she earns every year, meaning that a child who works harder gets more money from the estate.
As you can see, it’s important to know what estate planning tools are out there and how to create the perfect plan.
Source: American Bar Association, “Talking About Estate Planning,” Jon J. Gallo and Eileen Gallo, accessed Sep. 26, 2016