What type of financial legacy would you like to leave to your adult children? Whatever you have in mind, share it with them. Make sure they understand your estate plan so you can avoid potential confusion, hard feelings and family squabbles when it’s time to settle your affairs.
Of course, it may not be easy to discuss estate planning with your children. Even though they’re adults, they may feel uncomfortable discussing topics dealing with your death.
In fact, surveys have shown that fewer than one in three families have had meaningful conversations about estate planning. Once you’ve decided to bring up estate planning with your children, how should you go about it? Consider easing into the subject by talking about matters that may not be so emotionally charged. For example, discuss your grandchildren’s post-secondary education and how you’d like to help pay for it. Or talk about a charity you support, and mention that you’re planning to remember it in the future.
Once you’ve broken the ice, it will be easier to move into the finer details of your estate plan. Tell your children what’s in your will, who the executor is, who helped prepare it and where a copy can be found. Better still, give them a copy. You may even want to discuss these matters with your children before you draw up or amend your will, to make it easier to meet their wishes and expectations. For example, find out which of your children might be interested in the family home or cottage, or who has a special attachment to certain family heirlooms, before you decide how to distribute property. This will help ensure even and fair distribution of your assets.
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If you intend to use a trust or other vehicle to transfer assets, explain the advantages with the help of your financial advisor. For example, your intention might be to better manage taxation of your estate, provide longer-lasting benefits to your heirs or manage potential legal complications.
It’s also important to discuss how your affairs should be managed if you become incapacitated. You should prepare powers of attorney for financial matters and personal care. That means deciding who will act on your behalf if you can’t make financial or medical decisions. If you pick one of your children as your representative, explain the choice to your other children.
And always make sure your will and other elements of your estate plan are up to date. Your will should take into account new family births, marriages, divorces, remarriages and deaths. Review your will at least once a year to make sure it reflects your wishes and any developments that might call for changes in beneficiaries or terms. And don’t forget to review the beneficiaries named in
insurance policies and financial accounts.
When all of these elements are in place, everybody benefits. Plus, you’ll avoid the estate-planning problems that the unexpected can bring. Your financial advisor can help arrange professional legal and tax assistance to help develop and execute your plan.
Deborah Leahy is an Investment Advisor with Edward Jones
Edward Jones, Member of Canadian Investor Protection Fund