If you’ve done the hard work of properly organizing your life around a solid financial plan and building your estate, the next step is discussing your plan with potential heirs.
According to an Ameriprise study, only 1/3 of Americans actually expect to receive an inheritance, although 44% of Baby Boomers would like to leave an inheritance for the people or causes they care about. While those statistics may seem low, a 2012 report by Accenture found that Boomers will leave approximately $12 trillion to their children over the next 30 to 40 years. While this might not be a fun topic to explore, it’s a very necessary step in securing financial peace for your loved ones.
Timing is Everything
The best time to talk to your children about their inheritance is when they have established themselves financially. It’s not a good idea to tell them too early for fear of them thinking they don’t need to be responsible because mom or dad is going to take care of them. Big life events such as purchasing a house or the birth of a child might also serve as a good opportunity to discuss your plans and how they may affect your children’s lives in the future.
Under Promise and Over Deliver
Prior to having the talk with your family, make sure to review your numbers in detail to get an accurate sense of what your estate looks like and how you plan to distribute it accordingly. Be sure to cover all of your assets first, then exaggerate your expenses and plan for long-term care costs. You don’t want to overpromise and under deliver, so the best way to protect from this is to do the opposite.
Vague Numbers, Clear Communication
When discussing the inheritance, it may be better to stick with ballpark figures as opposed to hard and fast specific dollar amounts. This will help your loved ones plan their own financial future. Even if you have outlined the details in your will and estate plan, having a face-to-face discussion will help to clarify and put your family in a better position to handle the estate when you pass. Be sure to keep an open mind as questions and concerns may arise from all parties. Look at it as an ongoing discussion and not just a one-and-done conversation that leaves confusion for your heirs.
Set some specific time aside to have the inheritance talk. If you need help crafting an outline of what exactly needs to be discussed, contact us to set up a time to get a talking points plan in place. You will be much happier knowing you have done your part in making the transition easier.
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