One of the most important meetings I have with my clients is the Estate Planning Meeting. Yes, it gets the special italics when I talk about it. Estate planning is that one time where family and finances merge into a whirlpool of emotions. I have done lots of these meetings and will continue to do lots of these meetings because planning an estate is one of the most important decisions anyone will make. From that experience I have a few tips for the younger generation who, like me, are in their forties and juggling young families and aging parents. Not everything will be applicable to your situation but I am sure there is something for almost everyone.
Talk to your parents. Having “the talk” is the hardest part because it is the most emotional part. You have to come to grips with the inevitable death of your parents. You can be humorous, you can be direct, you can be abrasive (probably not the best option) but the sooner you come to grips with the certainty of life the better you will be to handle the next steps.
Expectations set to zero. Listen, I KNOW there are lots of people out there who are building their retirement plans to include some form of inheritance going to their kids. I know there are life insurance policies and family trusts set up to make sure money is there for the future generations. I have clients that think that way and it makes perfect sense. However for you and your peace of mind, I always suggest to have expectations of receiving no inheritance. It is a mindset that leads to more harmony in the long run because mom and dad can live their life as they see fit and the kids can live their lives without the future reward hanging around like an expectant baby. The emotional toll of an expected gift weighs heavier and heavier as time goes on, and sometimes people make rash financial decisions because they have counted on the inheritance already.
The small things matter. Cottages and other high value items have a lifetime of emotional investment built into them and it is very important to plan for the effective transfer of all of these items. How often do we think of the small things or items with sentimental value, such as mom’s tea cups or the fountain pen your father used to write his family Christmas letters? In estate planning I always say you need to plan for the financial value AND the emotional value of your belongings. The small things often carry a disproportionate amount of emotional weight compared to their financial value.
Plan for yourself and your family at the same time. If you have made the effort to have the talk with your parents, you should also have it with your spouse. Estate planning is an ongoing process and what you have at 42 will likely be different than what you have at 72. That does not mean you should ignore estate planning at a young age. My wife and I have two young kids, a house, and a bit of savings. Our estate plan matters because we want to ensure that our kids are protected. Knowing they are properly cared for gives us comfort.
Time Spent>>> Money Received. It took me until September 23, 2012 to learn this important lesson. That was the day my daughter was born. We are all better off if we understand that you can always work another hour of overtime but you will never get that hour back with your family. This apparently goes triple for grandparents. I think it’s the joy of living childhood through your own kids without having to experience the daily battles of parenthood that makes it truly special for grandparents. Not one of my clients has ever expressed a desire to spend less time with their family as they age. Your parents absolutely want to spend more time with you, your siblings and the grandkids. Encourage them to do it. If it requires them to rent a cottage for a weekend for everyone, say yes to the idea. Be part of their aging years and let them know the value you place on their time. No amount of money can replace that inheritance of a good life spent with family.
As an experienced hand at the Estate Planning Meeting I know the value of each of these steps. I have done work from simple, straight-forward estate plans to extensive and layered plans but the laws are pretty clear and easy to navigate no matter the estate. It is the family dynamics and the emotions involved that cause all of the trouble. Your only solution is to talk early, talk often and place a greater value on the family over the inheritance. You will reap far greater rewards in the end.
Sam Rook, Investment Advisor
If you or your family are struggling with talking about the emotions and finances of estate planning, contact me today.