Last week, two clients scheduled appointments with me while their children were home for the holidays. The goal of the meetings was to explain the parents’ estate plan to the children. I did not disclose the extent of the parents’ net worth. We discussed various trusts that would be established, the identity of executors and trustees, and the disposition of specific assets. We also covered some premarital asset protection planning concepts. Both meetings were positive.
I am often asked whether children should be informed about their parents’ estate plan and, if so, when is the appropriate time. The answer is: It depends.
On the positive side, making sure that your children know about your estate plan can make things go smoother during your senior years and after you die. As we are living longer, it becomes more likely that you will live for some period of time in which you need assistance from your children. If they understand your overall plan, they can better carry out your wishes.
Knowledge of your estate plan may assist your child with their financial or estate planning. For example, if you have established a trust that gives your child a testamentary limited power of appointment, your child may want to exercise the power in a way that coordinates with the child’s estate plan.
On the negative side, if children are disappointed with their future inheritance they might whine or connive to change the outcome. This might accelerate a stressful condition that would otherwise not manifest itself until after your death. Your child may have a mental illness or might be married to a person whose family values differ markedly from your own. Conversations about estate planning might be uncomfortable. Some of my clients understandably have the attitude of “Why should I put up with that during my lifetime?”
Knowledge about a substantial future inheritance might cause your child not to realize their maximum potential. In my practice, I have encountered children who seem to be waiting on their parents to die. They expect that their parents will take care of the child’s retirement years, so the child does not work as hard.
Overall, I believe that sharing your estate plan with your children is healthy. You need to judge when your children are mature enough to receive this information. If you have a dysfunctional child, it may be best to wait until after your funeral.