By: Martin M. Shenkman, CPA, MBA, JD
Introduction/Overview: Seems logical for parents and other benefactors to talk to their children and other heirs about their plans. That avoids surprises, lets everyone know their role and responsibility, and more. But it almost never happens.
√ Question: What really needs to be communicated with the children or other heirs?
√ Answer: Most importantly, and let's deal with this first, if an heir is a fiduciary, you have to talk to them in that capacity. What do they need to do and when? Where is the key information they will need? How will they find what they need? What advisers can, and should, they call?
√ Question: Why do most people avoid doing this?
√ Answer: It is surprising and irrational to not talk to your fiduciaries, but most don't do it. The topic is viewed as unpleasant, and if you've named one child and not another, that brings up a raft of other emotional issues. Also, I suspect, many people really don't have their affairs in order, so talking to a fiduciary, such as the child who will be your agent under a power of attorney, may bring their neglect to light.
√ Question: What about talking about inheritances?
√ Answer: Very few people are comfortable doing this and this lack of communication is a key factor in estate disputes, family disharmony and causes a large portion of the estate related lawsuits. Its is very rare that this is done. The problem that it creates is lack of knowledge, which results in children and other heirs having unreasonable expectations. The surprise in the end, whether they get dramatically more or less, can be quite negative. Yes, even inheriting exponentially more than you expect can disrupt a child's life in a negative way. Being prepared is always best.
√ Question: What about when a child is disinherited or receives less?
√ Answer: That is much harder to talk about but even more important to address. Not discussing these issues in advance can result in a blow-up of monumental proportions, pit one heir against another, and more. Addressing it in advance, however difficult, is almost (not always) preferable. If the situation is really delicate, you can address it with other heirs (not the one being left out) so that they at least understand.
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