Clients regularly ask estate planners for advice: “Should I discuss my current financial situation with my children? What about my plans for passing assets to future generations?” As is the case for so much of what estate attorneys do, very few answers are simple. Much depends on the relationship between parent and child (or children) as well as the maturity of the child. Over the years I have watched families that otherwise interact quite well with each other break down over issues involving money. Money issues, however, are what destroy many family relationships. And the fear of harming these relationships is one of the reasons why financial discussions do not occur in families. Fortunately, candid conversations about money are possible, and likely easier to have than you think. Here are a few reasons you should discuss financial plans with members of your family:
By keeping secrets, an estate owner may make planning mistakes. To avoid unnecessary monetary and emotional expense upon their death, parents should allow their families—or the appointed legal and financial advisors—to know the nature and extent of assets and their location.
Fewer Unnecessary Disagreements
Family disagreements can be avoided if parents openly discuss their future financial plans while still able to do so. This is important especially if the parent or parents plan to make unequal distributions upon their death. Parents sometimes wish to provide more funds for children who they perceive to have more dire financial needs. Parents may also feel that, for reasons of maturity, some children need their assets put into a trust rather than outright bequests. By explaining their rationale to their children (either in a group or individually), parents helps their offspring lessen or even avoid hurt feelings and misunderstandings.
Better Financial Understanding
Helping family members make their own plans is another benefit of financial discussions. First and foremost are their own arrangements: death and disabilities know no age criteria, so adult children need to make their own plans.
Peace of Mind
As many people are living longer lives than previous generations, offspring often reach age 50 or 60 before their parents die. Frequently this means adult children are aware of their parents’ imminent deaths before the parents themselves, and have to make decisions on their parents’ behalf. Taxes are almost always a pressing concern to individuals in these situations, so knowing if an inheritance is in the works and to what extent can allow proper generational family planning. In addition to taxes, parents and grandparents planning together can help protect assets from drug users, bad marriages, children who are mentally incapable, and so on. By discussing the overall family financial situation, you empower those who need it to receive financial assistance now—when it is needed—rather than in the future when it may not be as critical. A young family, for instance, may need financial help early in their marriage and less so later. What you ultimately decide depends on your unique situation and goals. I have had clients who give nothing substantial to their children (even when able to do so) and wait until death. On the other hand, I have had clients who provide financial assistance to their children and grandchildren and get the added benefit of seeing how they handle “money” as well as enjoy the gift while alive. Which suits you best?
About Seymour Stern
Seymour Stern concentrates his practice in three distinct and interrelated areas: business transactions, estate planning and administration and real estate transactions and land use. He has particular experience counseling entrepreneurs from start-up to transfer or sale. Through his nearly fifty years of legal practice, Mr. Stern has advised clients on various business matters including entity formation, purchase and sale of business assets, employee and creditor issues, buy-sell agreements and generational transfers. Mr. Stern provides strategic counseling for individuals and organizations in the areas of estate planning and administration, charitable giving and business continuity planning to maximize assets and meet other family and organizational objectives while reducing tax liability. He advises clients to ensure the proper disposition of assets in accordance with client’s objectives while employing tax planning techniques such as the use of irrevocable and revocable trusts, life insurance planning, lifetime gifts and charitable trusts. Mr. Stern advises clients in matters related to zoning, land use and real estate tax assessment law, as well as matters involving municipal law and regulations. He practices regularly before city and county administrative agencies and advisory boards concerned with matters of land use, zoning, and building permits and alcoholic beverage laws. He provides counsel on conditional approvals, variances and other like matters to clients in diverse industries, including residential developments, religious institutions, daycare centers, restaurants, telecommunications, shopping centers and convenience stores. You can connect with Offit Kurman via Facebook, Twitter, Google+, YouTube, and LinkedIn.