By asking this question, you are half way there.
Why?
There will always be a reason not to have this talk about estate planning and parental finances with your children.
From an early age many of us learned that the certain things were not polite matters for discussion, such as politics, religion ... and money.
For better or (and sometimes) for worse, politics and religion are front and center everywhere you turn.
Money and estate planning, on the other hand, are typically only safe when part of public discourse.
This can be a mistake.
In particular, Baby Boomers who have not told their heirs about their estate plans should not wait for the perfect moment.
It rarely comes around and the opportunity is lost.
Forever.
This was the subject of a MarketWatch article titled "How to tell your kids how much money you're leaving them."
According to the article, a recent survey found that 72% of parents experience at least some reticence when it comes to discussing financial matters with their children.
That feeling, while very natural, is not in anyone's best interests.
And disorganization and miscommunication can be costly.
Some more obvious costs can be measured in dollars, as when heirs miss important tax deadlines and other opportunities sorting through the voluminous files and overflowing banker's boxes.
Less obvious costs are equally more difficult to measure.
These costs manifest themselves in hurt feelings and confusion, as children struggle to understand the estate planning decisions of their parents.
By the way, what do we call disgruntled heirs?
Plaintiffs.
Here are some thoughts for Baby Boomer parents who want to start the process:
Decide how you want to communicate.
This is not a time to ambush your children with this discussion.
Actually, the first conversation should be how to have a discussion about this subject. Tell them what you would like to discuss and solicit their feedback regarding how they would like to proceed.
Ready them for several conversations so that they are not overwhelmed with everything in one sitting.
What if you have several children?
Delicately discover whether they would be more comfortable approaching the subject one-on-one conversations or collectively.
In summary, decide on a date for the first conversation, set the agenda, identify the participants and review your financial and estate planning documents.
Do NOT start with the bottom line.
You might be tempted to jump right in and discuss who is getting what, when, how and who is managing it all.
Whoa!
An estate plan entails mucho more than simply divvying up and distributing assets.
It should involve values.
Ideally, those values started when the children were children and you taught them the value of hard work and the importance of saving.
If that did not happen, do not give up.
It never is too late to do the right thing.
Next, discuss how you plan to address your own personal, health care and financial decisions should you be unable to make them yourself.
In other words, who do you plan to designate as agent under your health care power of attorney and as attorney in fact under your general durable power of attorney for financial decisions.
And why.
Most married folks name their spouse as the primary agent, but you should also name a younger persons to serve as a successors. Also, identify who you intend to appoint as the personal representative under your will and as trustee under your revocable living trust.
Get some feedback.
Children's feelings may be hurt if they do not understand why you designated one child over the other. Tell them your reasoning and ask for input through phrases like "Am I missing anything?" or "Tell me if I'm thinking about this the right way."
In the end, however, remember that you are the ultimate decision maker here. You do not need to change your plans to accommodate the opinions (and feelings) of your children. You can just say, "I respect your feelings, but I decided to go ahead with this plan."
If the discussion about powers of attorney, personal representative and trustee does not go well, then you may decide to stop the process right there. I mean if there is push-back on those roles, then it just might set the match to a discussion about your assets and how the eventual inheritance will play out.
In other words, rather than have a fight now, perhaps letting your will or trust do the talking after you are gone may be the prudent course of action.
After all, you can always include a letter of intent explaining decisions posthumously.
Move carefully with the assets.
If you decide to discuss your assets, proceed with caution. There may be arguments over small, sentimental items like jewelry or ceramic bullfrog collections. Consider asking your children which items they would like the most and try to meet their reasonable requests.
Let them know it is not ghoulish to discuss these matters while you are living. In fact, as you review items of tangible personal property with you children, this would be a perfect time to give some context to the individual items. Provide the who, what, when, where, how, why and so what behind them. For example, this rocking chair has "rocked four generations of your family" infuses the chair with more meaning than just being a rocking chair.
When it comes to dividing up dollars, many middle-class families have no idea how much they will have left over when all is said and done. Taking care of yourself in retirement is priority number one, especially with potential health care and even long-term care costs looming.
As a result, it may be best to approach inheritance distributions in terms of percentages rather than in set dollar amounts.
[If you want to startle your children, then tell them the only thing they are likely to inherit is you!]
Whatever you do, adult children need to know where assets are located. For example, what if you have Alzheimer's and they need to pay for your long-term care? If you have these discussions regarding what and where your assets are today, then it will be much easier for them to navigate those water in case of a sudden accident or illness tomorrow.
While you are at it, consider involving your estate planning attorney in these conversations with your loved ones. He or she can answer any technical questions that come up, help you "gauge the crowd," and better understand why you are doing what you are doing even after the conversations.
What if you do not have an estate planning attorney?
How do you find an "experienced" estate planning attorney?
First, ask around. Friends, family and other professional advisors are trustworthy sources.
Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").
Third, either way, verify. Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.
How?
There are two helpful resources just a mouse click away to assist with your due diligence: Avvo.com and Lawyers.com.
Check any Avvo ratings, client ratings/testimonials and attorney endorsements on Avvo.com and any "peer ratings" by judges/other attorneys and any client ratings/testimonials on Lawyers.com.
In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
Reference: MarketWatch (January 29, 2016) "How to tell your kids how much money you're leaving them"
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