Are you reluctant to talk to your adult children about money and other assets you plan to pass along later in life, or after you die? Talking about money and inheritance can be emotional and uncomfortable.
Maybe you don’t want your children to know how much you have (or you’re self-conscious about having less than they think). You might worry that the conversation will discourage them from working hard and they’re counting on their inheritance instead. Perhaps your family is not one to talk openly about death and money, or it’s a cultural taboo.
Having a conversation can help set and manage expectations and open up discussions that could result in changes to your estate plan, if you see that your plan failed to consider certain aspects.
Here are some suggestions when you’re ready to have the talk.
Opening the discussion
You can wait for the topic to come up, reference an article you read, or bring up the fact that you recently chatted with your financial advisor about estate planning. You can use a life event — a job loss, a milestone birthday or someone’s divorce to initiate the conversation. You could call a family meeting either face-to-face or online or talk to each child separately.
Remember it’s a conversation, not a declaration. Your children will want to be heard, but you also need to make clear that you’re the decision-maker.
Conversation starter: “I’d like to talk about what will happen after I die, and I am looking for your feedback and thoughts.”
Talking about your assets
Your children will likely have a general idea of your assets. There’s no need to disclose your precise net worth if you’re not comfortable doing that. After all, asset values will fluctuate, and you could end up spending more or less than you planned for medical expenses, vacations or other costs. But knowing in a general way what they can expect could ease their worry (for instance, about paying for their children’s education), or it could help to prepare them if they’re not getting the windfall they’re counting on.
Conversation starter: “We have done well, and I want you to know what my plans are, so let’s talk about how things will work.”
Talking about unequal distribution
Inheritance issues — challenges to wills, sibling infighting, jealousy — often stem from the feeling of being treated unfairly. Even if you divide your assets equally, someone may feel they deserve more than the sibling who moved away and never kept in touch; or that one sibling got more financial support over the years. There may be hurt feelings and someone might be unhappy. There may be circumstances where you want to leave more to one child, whether it’s due to a disability or health condition; or they may be your caregiver due to proximity.
It could be helpful to air any perceived imbalances – there may be factors you hadn’t thought of. Ultimately, it’s your gift and you get to decide who gets what. Being transparent now may not make a difference — but it probably won’t make it worse.
Conversation starter: “I know you may not be happy with the distribution, but I’ve decided to leave XX more than the rest of you because XXX. I’d rather you know now and not be surprised.”
Naming the person in charge
Someone will need to take the reins and do the work of settling your estate after you die. There may be an obvious choice in your family, and if not, you can explain why you chose one person over another, whether it’s greater organization, experience with financial matters or lives closest to you.
Alternatively, you can hire a professional executor1 to settle your estate, which can be especially helpful if your estate assets are complex, your loved ones would not be keen or well-suited to administer the assets, or you simply wanted to relieve them from the burden and liability of doing so.
Conversation starter: “We need one of you to manage the Will and finances… We feel XX has the most experience…” or if you’re choosing a third party, “It’s a lot of work and we don’t want to burden you with the stress.”
You should also go over with your children where your wills and powers of attorney are kept; where your banking and investments are held; and the names and contact information of your team of professionals (financial advisor, tax advisor, lawyer, estate and trust advisor). If you have a medical professional corporation, let your children know how to notify your regulators and patients, safeguard documents, name a new director, etc. This gives them a leg up on dealing with the immediate aftermath of your death, as well as with your estate.
How MD can help
The good news is that you don’t have to approach the inheritance conversation alone. An MD Advisor* and MD Estate and Trust Advisor can help facilitate discussions with family members to ensure all aspects are covered.
MD Private Trust Company (MDPT) also offers professional executor services and acts as an executor to take some of the responsibilities off your family.
Contact an MD Advisor to learn more.
* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.
1 An “executor” is called a “liquidator” in the province of Quebec and an “estate trustee” in the province of Ontario.
The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals.