Be Transparent with Your Children About Your Estate Plan
52% of adult children don’t know where their parents keep their estate documents, and 58% don’t know the contents. Parents’ mortality is an uncomfortable topic, but avoiding it can mean children do not know
- Where to find important financial documents
- How to pick up the reins of a family business
- The location of scattered assets
- What debts are owed
Without transparency, heirs may be surprised at the distribution of assets or confused about how to share assets they inherited jointly. This can result in permanent family riffs. Parents and their adult children need to communicate openly and regularly about the parents’ estate plans in order to maintain harmony when a parent dies. To smooth your passing for your children during a time they are already distraught, be sure to share the information they will need about your estate.
Location of Important Estate and Financial Documents
Be sure your children know where your estate documents are located. This is the minimum. They should also have the contact information of the attorney who prepared your estate documents. If nobody knows about these documents, for all intents and purposes, they do not exist.
Also be sure your children know where to find deeds, leases, bills, stock papers, vehicle titles and all other important financial documents. This will save them many headaches and avoid the tragedy of your children never finding some of your assets, like that vacation house you bought overseas.
The following you may want to share with your children now or you may want to leave these lists with your financial documents to be read after your death.
- Make a list of all your financial accounts including location, account numbers and online passwords. (You may just want to give the password to your executor.)
- Make a list of all your major assets. Do not forget about life insurance policies, pensions and stocks and bonds along with any needed account numbers.
- Make a list of your credit cards, creditors and the details of the accounts.
Identity of the Executor or Successor Trustee of the Parent’s Estate
The executor or successor trustee of an estate is in charge of carrying out the wishes of the deceased which may include selling and distributing property. Their identity should be a surprise to no one, particularly the executor or successor trustee themselves. Have a discussion with your children about who you plan to appoint as your executor or successor trustee. You may be surprised to find that one or more of your children has a strong objection that can cause problems later.
Powers of Attorney and Advance Health Care Directive
Sometimes parents become incapacitated and can no longer manage their finances or their health care. It makes sense to speak with your children about financial power of attorney and an advance health care directive at the same time you discuss your estate with them. Should you become incapacitated without a power of attorney and advance health care directive in place, you cannot be assured your wishes will be carried out. Avoid placing a huge burden on your children, and plan for your finances and health should you become incapacitated. Provide your children with copies of these documents.