Most people aren’t discussing their estate plans – and that’s a problem. If you haven’t talked to your family about your estate plan, you could be setting things up for disaster. A frank conversation could help your family avoid confusion, resentment and even bitter disputes.
The Important Conversation Few People Are Having
According to Irwin Mitchell, only 30% of people over the age of 55 have discussed inheritance with their children.
Many people try to avoid touchy subjects like politics, death and money, so a subject like estate planning might seem taboo. But while avoiding politics might be a good way to keep the peace at family gatherings, not talking about estate planning could cause more problems than it prevents.
Getting Everyone on the Same Page
Let’s say you have a vacation home where you’ve created a lot of fond memories, and you want to pass it on to your adult children so they can continue making memories – but they don’t want it. Maintaining a house comes with both responsibilities and expenses, and they may not be interested in either. Or even worse, one of your children might want to keep it while another wants to sell it. That’s the sort of disagreement that can lead to bitter disputes.
By discussing your inheritance plans ahead of time, you can get everyone on the same page. In some cases, you may change your estate plans in light of your family’s wishes. In other cases, you may keep your estate plans and just make your reasoning clear. Either way, you can avoid unpleasant surprises down the road – so your family can focus on your memory and not your assets.
Preventing Confusion and Financial Loss
After someone passes away, the person serving as the executor of the estate has a lot of paperwork to handle. To determine what assets and debts have been left behind, it’s typically necessary to locate a number of different documents, including wills, insurance policies, and financial records.
If your loved ones don’t know where to find something – or even that it exists in the first place – they might never locate it. By giving your loved ones a heads-up, you can help them avoid:
- Insurance payouts going unclaimed. Many people have life insurance, but if the beneficiaries don’t know about it, they may not ever make a claim, and the money could end up in a state fund. According to the Insurance Information Institute, technology has made it easier for insurers to track policyholders and beneficiaries, but it’s still possible that no one will notify the insurer of a policyholder’s death or initiate a claim.
- Assets ending up in the wrong hands. You might think your belongings are safe in a storage unit or bank safety deposit box, but have you thought about what happens if your loved ones don’t know to claim the contents? Items in a storage unit could be sold at auction, while items in a bank safety deposit box could go to the state or an unclaimed property office.
Even items stored in your house could be overlooked. According to People, an employee at Goodwill found $42,000 in cash that was accidentally donated along with some sweaters. This isn’t the only time people have unintentionally donated cash or other highly valuable items – and there are probably more instances that never get reported. Sorting through a person’s belongings is a lot of work, and it’s very easy to miss concealed cash, savings bonds, or rare collectibles if you don’t know what you’re looking for.
- Digital assets being lost forever. NPR says a cryptocurrency exchange lost access to $190 million in bitcoin and other funds after the CEO died unexpectedly and no one could find the password for his laptop. Even if you don’t have $190 million in bitcoin, you may have photographs and other digital assets that you’d like your family to have. If they can’t find the passwords, that may never happen.
Encouraging Everyone to Make a Plan
Not discussing your estate plan with your loved ones can be bad – but not having an estate plan is even worse.
Many people put off estate planning, and a frank family conversation about the importance of planning may be exactly what they need to stop procrastinating. When you talk about your own estate plan, you can also ask what your loved ones have planned and share advice.
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