Most people believe that estate planning is simply completing a document, such as a will or trust. However, it is a more intricate process. Estate planning occurs in three steps: first, the creation of the documents; second, ensuring that assets are properly titled and beneficiary designations are up-to-date, and third, making sure that all of the people involved in the plan, who we call helpers, understand their roles and your intentions.
A family meeting, often occurring over the holidays when all the family is together, is a wonderful opportunity to share relevant information surrounding estate planning. This will ensure that persons who are appointed in helper roles understand their duties and the choices you have made. For example, if you have chosen unequal distribution of assets, or if you have a blended family, or if you have a beneficiary with substance abuse or gambling issues, it is important to discuss those issues and bring them to the forefront.
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Here are some tips for a family meeting:
• Address personal property separately. We strongly suggest that our clients have a discussion with family about tangible property, such as jewelry, memorabilia, etc. Check to see who would like what, and if there is no conflict, put that on paper. If there is conflict, then you should make the decision about who gets what. Create lists of personal property, such as jewelry, artwork, china, etc., and designate which items go to which child. This alone will eliminate a great deal of conflict.
• Clearly identify gifts versus loans. Parents often help their children with gifts and loans, particularly if they are experiencing financial distress. It is the parents’ decision whether these are gifts or loans. It is particularly important to be clear whether monies given to a child are a gift or a loan, and if a loan, how much is due, what is the interest rate, what has been paid, and so forth.
• Choose your fiduciaries wisely. Your fiduciary will handle affairs if you are incapacitated or deceased. It is not a good plan to default to the oldest child, or the child who lives closest. A better plan is to appoint the person best suited for the role. This may mean appointing a committee of two or three people, but also understand that committees can lead to conflict and the lack of ability to move forward. Explain to your children the roles that they will be filling and why you have chosen them.
• Where are your assets located? Discuss the nature of your assets, even if you do not reveal the value. Explain the nature of your plan; whether it be a trust, a will, beneficiary designations on accounts, etc. Tell those people who will be in charge, such as successor trustees and financial agents, where you keep important papers, and be sure to create an inventory of your assets, and keep it up to date, so that it is available to your helpers.
• Share your end-of-life wishes. Talk about end-of-life healthcare decisions, what type of extraordinary care you might desire, preferences between cremation and burial, and so forth. The more the people who make these decisions know, the better decisions they will make.
The goal of this meeting is to demystify your estate planning. Be transparent in terms of what you are doing, what you are trying to accomplish, your goals for your family, and anything else relevant.
Louis A. Silverman is founding partner of Silverman Law Offices in Tempe. A board-certified specialist in estate, trust and probate law, he can be reached at [email protected] or 480-491-3216.