Estate Planning Arizona
Estate Planning

Estate Planning Arizona: How to talk to your family about your plan

(Source: MarketWatch): Paul A. Merriman – No matter how good we are as investors, savers, planners and personal financiers, other people are almost always affected by our decisions and actions, our successes and our failures, something to think about when doing your Estate Planning Arizona.

Quite often, the people most affected are those we care the most about. Our children and grandchildren, our spouses and partners, sometimes even our parents, all have an interest in our finances.

This has been on my mind lately as my wife and I have been revisiting our estate plans in preparation for seeing our attorney. After we’ve made our decisions, we believe we owe our families an explanation of what we’re doing and why.

We’re still discussing how to have those conversations in the best possible way.

As I’ve counseled thousands of investors over the decades, I have observed that people are uncomfortable talking about financial matters, even to relatives who have a legitimate right to know what’s going on.

The topics are many

  • What is in your will?
  • Are we (or are you) living within your means?
  • Who should make health-care decisions for you when you can’t?
  • What about other end-of-life options and choices?

How do you actually, really, in real life, sit down with your heirs and explain what’s in your will? If you have a “blended” household with multiple generations (or for that matter if you live with one or more roommates), how do you peacefully negotiate the division of expenses and responsibilities? How do you have a successful family financial meeting?

While there are no magic answers that make this easy, you can nudge the process toward success if you take the time to think carefully about what’s most important to you.

For much of this discussion, I am indebted to Cheryl Curran, my longtime friend and former colleague at Merriman Wealth Management (where I no longer have any affiliation except as a client).

A few years back, Cheryl did a lot of thinking about tough family conversations and distilled those thoughts into an excellent little e-book, available for free download. It’s called “The Transparent Legacy”, and I thoroughly recommend it.

As Cheryl suggests in her introduction, most crucial family conversations, even when they seem to be about money, are really about values. This is good news, because, as it turns out, talking about “values” is much easier for many people than talking about money. She wrote:

“When is something more valuable than something else, and why? For example, is it more important to live longer or to live more comfortably? Is it more important to spare yourself the discomfort of talking about your wishes for a funeral or more vital to spare your adult children the job of having to agree among themselves about what you would have wanted?”

In my mind, Cheryl hit the nail on the head when she expressed one of her own strongest values: “Relationships matter more than money and more than things.”

When it comes to retirement, 60s are the new 50s

My wife and I know that our kids and grandkids have a legitimate interest in knowing what’s in our estate plan. How will we tell them? When we consider relationships, it’s easier to see a path forward.

For example, should we meet with each heir separately to focus on just one important and unique person at a time? Or is it better to gather them all in one place so everybody hears the exact same message in the same words?

And what of the specific bequests in our wills? Our kids and grandkids have widely different circumstances and stations in life.

  • Should we make one-of-a-kind gifts to each child and grandchild, according to what we believe would be best?
  • Or do we emphasize “fairness” and leave equal shares to each person? (Cheryl’s book details a real-life case in which such an arrangement — without a conversation about it ahead of time — left a lot of unintended bitter feelings.)

Good arguments can be made for either of those choices. One way out of the dilemma is to think about which route is more likely to foster continuing goodwill among our heirs after we are gone.

There are many other important conversations we should have with our loved ones.

Spouses and partners should openly discuss their spending, their savings, their retirement dreams. Parents should discuss family values with young ones.

Money-related talks can start before grade school and progress through college and even to the potentially stressful financial topic of “the wedding.” (This last topic provides an excellent time to repeat a lesson you should have been teaching your kids all along: the difference between what you want and what you need.)

Cheryl’s book also includes a great essay on the importance of conversations between grandparents and grandchildren.

Her book emerged partly in response to difficulties she and her brother encountered after the sudden and unexpected death of their father.

Though he had assured them that he had a will, all they could find were his notes on a legal pad describing what he had intended to do. Nearby was the business card of an attorney he was planning to contact for help — but who he never called.

Had their father executed a will and had a frank conversation with them about his wishes, they might have avoided a lot of unintended consequences — and saved thousands of dollars and many months of hassles with the California legal system.

For me one of the most helpful pieces in Cheryl’s book is a “sample letter” written by a father to be distributed to his heirs after his death. My wife and I will do something like this, and I believe it may be remembered longer, and have more lasting impact on our children and grandchildren, than whatever we leave in our wills.

Though sometimes it can be tough, having conversations like these can be one of the greatest gifts you can give your loved ones.