Should you tell your children about your wealth and your estate plan? This is a common question, and the answer depends on the unique dynamics of the family. In many cases, it can be a very beneficial thing to do.
No matter how wealthy you are, having conversations in advance about your wishes and intentions can help avoid conflict. In November 2024, Berkshire Hathaway CEO Warren Buffett issued a letter to company shareholders explaining his decision to convert some of his company shares and give the proceeds to four family foundations.
He wanted to be transparent about his activities and his intention to leave the bulk of his wealth to charity. Buffett’s children are aware that they’re receiving only a fraction of his vast wealth because he has openly shared the terms of his estate plan with them. “I have one suggestion for all parents, whether they are of modest or staggering wealth,” Buffett wrote in the letter. “When your children are mature, have them read your will before you sign it.”
Telling Adult Children and Other Beneficiaries About Your Estate Plan
Getting the family’s input could lead to more effective planning and decision making. “Be sure each child understands both the logic for your decisions and the responsibilities they will encounter upon your death. If any have questions or suggestions, listen carefully and adopt those found sensible. You don’t want your children asking ‘Why?’ in respect to testamentary decisions when you are no longer able to respond,” Buffett wrote.
For example, it’s not uncommon for parents to want to bequeath a family vacation home to adult children, especially if it has been part of family traditions. While many children would love to inherit a vacation home, others might not want the expense or responsibility for it. Having multiple children end up as owners of a single vacation property can lead to conflicts over time, as differences of interest in and ability to use and pay for the property arise. It would be wise to discuss the decision to leave real estate to loved ones so that everyone agrees on what should happen to the property.
Likewise, thoughtful business succession planning enables a family business to pass as smoothly as possible to family members and avoid disagreements between business owners that could cause the business to dissolve.
Parents should also consider the tax consequences of the wealth they plan to pass on to their children. It may be wise to consider gifting assets now or estate planning strategies that pass assets on to grandchildren instead of adult children, to reduce or avoid unfavorable income, gift, or estate tax consequences.
Benefits to Talking About Your Estate Plan in Advance
In addition to uncovering family wishes and ideas about their inheritance, there are several benefits to sharing your estate plan with adult children, including:
Avoiding hurt and disputes in the future. Disagreements and misunderstandings about money can create lasting family resentments, and a surprising estate plan revealed only after a parent’s death, at a time of maximum emotion, can lead to hurt feelings that increase the chances for disagreements and misunderstandings to arise and to cause problems. Families can face many sensitive issues such as provisions for children in blended families, the decision to leave more money to one person than others, and putting guardrails in place to protect a beneficiary from their own bad judgment. It’s best to be open and transparent about your thinking, as Buffett advises. Talking through the terms of a Will can offer the opportunity to minimize hurt feelings.
Communicating family values. Estate plans offer a way to meet charitable goals, create social capital, and establish a family legacy. It can be quite meaningful to communicate values, aspirations for future generations, and core beliefs in advance of one’s passing. In addition to discussing the plans for inheritances, many families find profound meaning in preparing an Ethical Will that captures the family ethos.
Eliminating ambiguity and guesswork. Many families find that they’re not only grieving the loss of a loved one; they’re also overwhelmed by the actual process of having to find and interpret the person’s Will. Family conversations ahead of time can mitigate confusion. An estate plan can and should also include a document, sometimes known as a Letter of Instructions (LOI), that tells fiduciaries and beneficiaries important information, such as where possessions are located, how to manage affairs when the decedent has passed, and other details about how the estate should be handled and how to find assets and legal documents.
If you’re looking for a Metro Atlanta estate planning attorney who can help find creative solutions in the areas of estate and tax planning, estate and trust dispute resolution, business succession planning, charitable gift planning and tax strategies, we welcome you to call Morgan & DiSalvo at (678) 720-0750 or e-mail us at info@morgandisalvo.com to schedule a consultation. We can talk through your family’s unique dynamics and situation and create an estate plan that addresses your goals and provides peace of mind.
