Question: My spouse and I have our estate planning all worked out. She has kids from a prior marriage and so do I. We have a professional trustee lined up to take care of things when the time comes. On Thanksgiving, our kids and their families will be at our home. Do you think we should let them know of our plans? They don’t always agree with each other, but we are sure this is the right plan. I don’t want to start a war, but we think they should know. Any thoughts?
Answer: This question comes up often and especially around the holidays when kids and their families are usually home for visits and celebrations. The answer is, it depends. Personally, I think the more our kids know about what and how things will be handled, the better. However, this isn’t true for all families. It also depends on how your estate plan is structured.
As part of your decision making, consider how much of your estate planning to share. You may want to let them know that you have all your planning done, let them know you have selected a professional trustee to step in and handle matters, who your attorney is and leave it at that. Of course, this may open the door to further discussions about who gets what and how your estate plan is structured so you should be prepared for that.
If you are giving everything equally out to all the kids, you may want to share all the details. If not, you may decide it best to keep the particulars private. Alternatively, and again in the interest of full disclosure, you may want to let them know if you are treating them differently and why. You mention your kids don’t always see eye to eye so having a full discussion about the reasons behind all your decisions may not give you the best results and could, ostensibly, ruin a good holiday.
If you are treating them differently and elect not to share this now, you may consider writing a letter to your kids which your trustee can give them after your death. Oftentimes, it is not apparent to heirs why one is being treated differently than another and this unknown can cause sadness or confusion – which I am sure all of us would like to avoid.
A couple of other things to consider. You may want to have your kids meet the professional trustee now, rather than meeting “this stranger” after you have passed when they are already dealing with grief and other strong feelings around losing you. If you opt to have a meeting with your trustee and the kids, make sure your trustee knows how much information you want shared with them. If you have decided to share little of the ultimate distributions but just want to put a face with the name, be sure your trustee knows.
One issue that comes up often in a professional trustee situation and which is not always addressed is how to treat loans that you may have made to the kids. If you or your spouse have loaned money to one or more of your children and the debts remain unpaid, how do you want those loans treated after you are gone? Do you want the outstanding balance to reduce their share of your estate? Do you want the loan to be forgiven? If you lend money to your kids, be sure your trustee knows about the loans and how you want them dealt with if they remain outstanding on your death.
Ultimately, you know your kids better than anyone, so you are best suited to make the decision of whether to fully disclose all your plans or just share some of the material information. At the very least, you should share that you have plans in place and have a professional who will step in. Share the contact information for that future trustee. Chances are the kids will know immediately when you have passed, and they need to know who to call for answers when the time comes.
Liza Horvath has over 30 years of experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a question call (831) 646-5262 or email liza@montereytrust.com
