Should You Tell Your Adult Children What’s in Your Estate Planning Documents?

February 17th, 2016

Building wealth takes time, a lot of hard work and patience, which is why estate planning is an important stage in any person’s life.

Properly planning how your assets will be distributed after your death helps ensure that your legacy will be protected. It is the duty of financial planners to help individuals create an effective estate plan, as well as identify the right time at which their clients should share the documents with their children.

Why Should Parents Tell Children about Their Estate Plan?

The following are the most important reasons to involve children, especially adult children, in a parent’s estate planning strategy:

  •  Involvement in estate planning creates a rapport between parents and children. It’s also a good way in which the wealth planners can interact with the children of the estate holder in the future. It gives an insight to planners about the needs and thought processes of the heirs, i.e. people to whom the client’s assets will eventually belong, and helps planners gain the trust of future generations.
  • Legal and regulatory frameworks in certain countries also require financial planners to share information with the children of the estate holder, especially those who are above 18 years of age. Thus, if the information for estate planning documents is not shared with children who are above a certain age, then privacy issues are most likely to arise.
  • The most important reason for sharing estate planning documents with kids is that the documents will eventually be have to passed on to the estate holder’s future generations too. Moreover, sharing relevant documents is really important in case a covenant for life estate in favor of children is included in the estate plan.
  • Sometimes there are special circumstances regarding the succession planning of family business or the existence of a family trust. Where such matters are in play, the family estate planning information is shared with the children, and the planners then determine the appropriate time and extent to which the information should be shared.

What Should You Tell Children about Estate Planning?

When investment and estate plans are taken up by parents, they need to tell their children about the complete details of the plan and any relevant documents, in a timely manner. This makes division of property, asset distribution and other similar decisions a whole lot easier.

The following estate planning documents are typically prepared by financial advisors or estate holder:

Will: This legal document specifies the inheritance of assets in case of death of the client. Everyone should have a will, whether that person has considerable assets or not, and it’s quite easy to change the will as circumstances demand. The planners should, in consultation with the clients, determine the time and manner of sharing the will with children to make the division as harmonious as possible.

 Power of Attorney: This legal document gives another person an authority to make decisions for someone else. Power of attorney can be used for property decisions, medical decisions or other similar matters. Normally this document is used by estate holders to empower someone to make decisions on their behalf if their kids are less than 18 years of age, in case of their own death or absence. Children need to know about such arrangements in advance.

What Should Clients Not Tell Their Children?

Parents should share information regarding the estate planning and relevant documents with the children. However, it’s not advisable to share the exact terms and conditions of the wills and trusts with them. Planners usually advise parents that the exact contents of the will should be read after the probate is received, because the value and condition of the estate might change during the parents’ lifetime.

How to Share Details of Estate Planning Documents

While planning your estate and the necessary documents, it’s crucial to involve a financial expert with in-depth experience of wills, probate, trusts and wealth management. Every family has its own methods of sharing information about wills and trusts, life estate and other critical issues with children.

Consulting a financial expert can help ensure that you get the best tailor-made advice on how you should approach children on the subject of estate planning, and what specific information should be shared with them. They can also answer any questions that your children may have, in a satisfactory manner.

In consultation with the estate planner, family office advisor or legal expert, the parents can determine which method can be used to share details regarding the estate and legacy they wish to leave behind. This can be conducted at a family dinner, an informal gathering or a formal meeting at the planner’s office.