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There’s no getting around it—talking to your loved ones about estate planning can be awkward. It’s understandable! Talking about the inevitable with family members can bring up unwelcome feelings about their death, and adding money to the conversation means you’re bringing up two socially taboo topics in the same breath.
Awkward or not, talking about estate planning with your loved ones is an important task that you don’t want to leave until it’s too late. It may be an uncomfortable conversation, but it’s much less stressful than playing the “guessing game” while your family deals with the grief of loss.
In this blog post, we’ll discuss the importance of pushing through that initial discomfort to sit down and have a conversation with family members. We’ll also talk about some common conversation killers that often prevent family members from bringing it up at all.
Conversation Killer #1: Talking about money is a social faux pas.
Americans are startlingly opposed to talking about money. According to the Atlantic, “Only 17% of parents with an income above $100,000 a year had told (or planned to tell) their children how much they earn or their net worth.”
It can be a hard hurdle to overcome, but talking to family members about your (or their) estate could help reduce taxes that may have to be paid at death and preserve the estate’s value. Proper estate planning can ensure that your or your loved ones minimize your estate tax bill by as much as the law will allow, so it's critical that each person makes the final decisions over their estate while they're of sound mind.
Conversation Killer #2: My family isn’t wealthy enough to worry about estate planning.
An estate plan is created to help prepare for the transfer of your wealth and assets after you are gone. A common misconception is that you have to be old or wealthy to have one—but nothing can be farther from the truth!
While you may not have a sprawling mansion in Beverly Hills, you do have an estate. More than likely, it’s a compilation of assets—assets of which you may not even be aware are included! This might include vehicles, a house, land, other real estate, a business, checking and savings accounts, investments, life insurance, furniture, jewelry and other personal items. When talking with your loved ones about your estate, you should acknowledge these valuables and provide clear direction on how they should be distributed upon death.
Even people with modest estates can make preparations for their assets. An experienced attorney and life insurance professional can assist with proper document preparation and counseling including:
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Drawing up and executing a will—Providing written instructions on the distribution of assets after death, as well as guardianship, if necessary.
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Creating a power of attorney—A power of attorney gives written authorization to an agent who will act on behalf of an individual for private, business and legal matters.
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Designating a guardian—Designating guardianship over minor children and beneficiaries.
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Implement a life insurance policy–Structuring and putting in place a life insurance policy that meets your specific needs based upon your current health.
Conversation Killer #3: Dealing with the estate after a death won’t be too complicated.
People who have accumulated sizable assets may be concerned about preserving and increasing their financial estate once they're gone or become incapacitated, so estate planning may be more complex. Some details may include:
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Making provisions for future financial support for those who may be unable to provide for themselves, who have longstanding debt, or who are going through the dissolution of a marriage.
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Naming an executor who will manage to the directions of the will, and may even act as a guardian for minor children if so designated.
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Acquiring life insurance to provide monetary support for your loved ones to pay off debts, replace your lost income, and cover estate taxes, if due. Obtaining long-term care insurance is also well advised, as it prevents erosion of your estate.
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Creating the appropriate trusts to preserve and also insulate your estate from taxes.
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Obtaining buy-sell insurance if you own a business. This type of insurance structure includes life insurance to fund the agreement between owners of a company, providing the dollars at death for the surviving owner to purchase the business from the heirs of the deceased owner.
Implementing a will is of the utmost importance with any estate planning, as it will ensure your assets are not subject to probate, which will happen if you die intestate (without a will). At that point, there will be no certainty of carrying out what you may have wanted for your loved ones. In fact, the state will appoint someone connected to the courts to decide how your assets are distributed. This person would also decide who will become guardians of minor children.
When someone dies unexpectedly—or even expectedly—there are a lot of details that need to be in place to avoid the family having to navigate the very complex process of dealing with the estate while mourning the passing of their family member.
It is important to keep in mind that estate planning is not just about money. Millionaires are not the only ones who need to have a plan in place—everyone should have an estate plan created. The main point to remember is that estate planning will give you and your loved ones peace of mind knowing that your wishes will be administered and your assets will go to the people you want them to go to!
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