How to Discuss Division of Assets with Loved Ones
Estate planning is a difficult topic to broach no matter what, but conversations can also make things much easier for your loved ones and limit the possibility of disputes in the future by holding these conversations in advance.
Clear communication can reduce stress and provide clarity around your intentions, making it easier for your loved ones to receive the assets you wanted for them in the future.
Avoiding division is a key goal for many people approaching the estate planning process. Through clarity and communication, your loved ones may better understand why you’ve gifted what you did to certain people. This reduces the possibility of arguments among family members.
In some cases, an advance conversation may help them more effectively manage the new asset. You may need to discuss IRA distribution rules, for example, or cover details around options for managing or selling a specific collection of items.
Take it Beyond Items: Focusing on Values
A discussion about asset division goes beyond sharing who will receive what. It can also discuss your values and hopes for them in the future. Those memories may be cherished for years to come by your loved ones.
Whether it’s family heirlooms, proceeds from a life insurance policy, real estate, or money, setting expectations early on helps people understand your frame of reference and your goals in the planning process.
Remember that if you revisit your estate plan and adjust things over time, it is well worth having this conversation again with impacted people.
Tell Your Chosen Key People About Their Roles
You may choose to include a few or many people in your conversation about your estate, but you must share your goals with anyone who will play a role in your future life or after you pass away.
Depending on the structure of your estate, you may have loved ones playing various roles such as:
Trustee
Executor/estate administrator
Power of attorney agent
These people should know about their roles well in advance, especially since they may be unaware of what’s involved. They may also become a point of contact for distribution of assets in the case of a trustee or POA agent.
Be Upfront and Clear
Look at the asset distribution equation when you're alive and healthy to think about how you could best support your family members and get them to understand why you made the decisions that you did.
For example, perhaps you've earmarked funds and a trust for a relatively young child to use for their college education. You may place those in a trust for educational purposes. Telling your child how to access and use these funds in advance is helpful.
Avoid Disputes
Far too many estate planning disputes and the legal conflicts that follow are associated with a disconnect between someone's perception about what they would receive and what they actually received. Loved ones may feel that something is unfair or incorrect, ultimately triggering a probate dispute.
Where possible: don't try to divide indivisible assets to bring siblings together. They may instead disagree about these, causing further problems. If someone feels that one person receiving a certain asset is unfair, you may want to explain why you chose to structure your estate this way.
There’s no one right way to create an estate plan, and it’s important to realize that your loved ones may not agree with what you’ve done. A conversation, however, helps them recognize your wishes more clearly and sets the tone for the future.