Texans need to start talking to their children about estate planning. Baby boomers (those born between 1946 and 1964) account for 36% of the Texas workforce and with many members of this generation on the verge of retirement, an enormous amount of capital is soon to change hands. Indeed, with the oldest boomers turning 75 in 2021, the process has already begun and so if youâ€™re a baby boomer and you havenâ€™t spoken to your children about estate planning youâ€™re falling behind.
Addressing estate planning with dependents and loved ones protects your familyâ€™s financial future as much as it looks after the harmony of family relationships. Explaining how you plan to distribute your assets helps children plan their own finances; likewise, talking through your intentions provides an opportunity for beneficiaries to voice concerns or articulate preferences. However uncomfortable it may be to talk about estate planning, this discomfort pales in comparison to that which can arise in the absence of doing so.
Three Steps to Starting the Estate Planning Conversation
- Think Ahead and Prepare
Facing your own mortality and addressing the subject with your children is demanding work and so it helps to get it right the first time. By preparing the subjects you aim to address and by anticipating points of sensitivity you go far in ensuring the conversation achieves its intended purpose: maintaining family unity. Essential topics to think about ahead of time include:
- The location of important physical and digital documents.
- Who you intend to appoint to the roles of executor, financial power of attorney, and medical power of attorney (and what these roles imply).
- How you plan to pay for long-term care.
- How you intend to distribute your assets (and any other end-of-life wishes).
- What your children need to know about their own estate planning.
Clearly, there is more on this list than can be tackled in a single conversation and this is important to note. Donâ€™t expect to get through everything in one sitting; instead, plan several chats and organize them in consideration of everyoneâ€™s comfort. This means thinking both about what to talk about as well as where and how to chat.
- Organize a Gathering
Once you have put thought into all you will need to address when talking to your children about your estate plan, it is time to gather everyone together. Some families prefer to meet in person over, say, dinner while others are more at ease connecting over Zoom from the comfort of their own home. Likewise, some families will invite their advisors to the conversation while others prefer to keep things private. Your choice should reflect concern for everyoneâ€™s comfort and should be open to revision.
When navigating your first meeting it often helps to focus more on listening and less on speaking. Once you have said enough to introduce your concerns and wishes, it is important to hear your loved onesâ€™ responses. Not only does this help correct oversights, but it provides new information and ensures the process feels collaborative.
- Plan Your Next Meeting
You canâ€™t address all your estate planning concerns in a single sitting and it wouldnâ€™t be a good idea even if you could. Walking your children through your estate plan is an opportunity to teach them a great deal about financial planning and so it is worth taking your time. Whatâ€™s more, you canâ€™t assume that just because they are bright, they will know how to distinguish a qualified from a non-qualified account, probate assets from non-probate assets, or how to manage tax-free distributions from a Roth IRA, for instance.
Working through your estate plan in successive conversations takes the pressure off any one encounter and provides an opportunity to pass on a little bit of wisdom. Whatâ€™s more, it helps children plan their own estates which, as adults, is something they should be thinking about, anyway.
As you work through tackling the tricky subject of estate planning, it helps to speak to an experienced estate planning attorney. Not only can they explain the bureaucratic details but they can also ensure you donâ€™t overlook any important points and can provide insight into approaches that have worked for other families in the past.