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Tips for Estate Planning Conversations

Even in the most open families, conversation often quiets when two subjects arise: death and money.

For both parents and adult children, confronting the prospect of each other’s deaths can be uncomfortable. Privacy around financial matters is often a key concern, even among close family members.

Why conversation is critical

When it comes to estate planning, there are often significant financial and personal benefits to being transparent and having sensitive conversations. For example, you might assume one of your likely survivors would be comfortable managing a certain asset or serving as trustee, when in reality that person is not up to the responsibility.

From the survivors’ perspective, it’s important they understand your intentions and plans for your estate. Lack of clear communication during estate planning (or an inadequate or outdated plan) can not only reduce the amount your beneficiaries receive, it can also result in uncertainty and conflict for them in an already difficult time.

If you do most of the work on your family’s finances, you’ll want to be certain of your survivors’ comfort level with taking on the task and their understanding of your intentions. For some, it may be best for a professional to assume the responsibility. Consult with your attorney or advisor.

Survivors may even make decisions based on erroneous ideas of what the deceased would have wanted. For example, when communication is lacking, some surviving spouses think honoring their loved one means keeping investments exactly as they were at the time of death. Eventually, this could lead to an outdated portfolio and missed growth opportunities.

Additional benefits of dialogue

Covering all the bases

Sometimes, to be effective, the conversation may need to extend beyond your immediate household.

As an adult child, make sure your parents have their own plans and will be properly cared for if one of them passes away or becomes incapacitated.

As a parent, make sure your children have an understanding of your plans and wishes; if the children are still minors, make sure the appointed guardians are willing and clear on your intentions.

As a grandparent or other relative, ensure your grandchildren, nieces, nephews, etc., will be taken care of through your own estate planning, as well as coordinating with their parents on their plans, too.

The benefits of having a dialogue about estate planning within your family don’t stop at asset protection and an accurate understanding of intentions. Such an open dialogue can:

  • Bring your family a sense of empowerment, that you are taking control of each other’s collective future rather than leaving some elements to chance.
  • Pass on family values.
  • Help your family develop a common understanding and a common philosophy for how you and your family’s legacy will be carried out through generations.
  • Help prepare the family in the event you or another family member becomes incapacitated.
  • Help other members of your family—your parents, your siblings, or your children— develop a responsible plan.
  • Allow your family to take advantage of some of the best tax strategies.

How to get the conversation started

Despite how important this conversation can be, it may still be difficult to initiate. There is certainly more than one right way to begin a dialogue; however, here are a few suggestions to help guide you:

  • Pick a positive, comfortable environment during a period of relative calm. Don’t wait until a time of crisis when it may be too late to make adequate plans and family members may not feel emotionally able to talk.
  • Be sincere about your intentions. Be clear that you are initiating these talks out of concern that proper plans are in place and are understood.
  • Stress the importance and benefits of this conversation to everyone affected. One way to do this is to show an example of an estate that was improperly handled because family members had failed to discuss their plans with each other.

For more information about personal financial dialogues, see If money talks, so should you in Fidelity Viewpoints®.

Next step

Choosing an executor, health care proxy, and others
Prepare the documents you’ll need and choose the people who will help with your estate.

Questions?

The tax information and estate planning information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Fidelity does not provide legal or tax advice. Fidelity cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws which may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Fidelity makes no warranties with regard to such information or results obtained by its use. Fidelity disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.

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