Last Updated on October 29, 2022 by Estate Planning FAQ
This question really has two subparts: The First is when the children should be told. The Second is why the children should be told.
When You Should Tell Your Children About Your Estate Plan
There are a number of different thoughts about when you (the testator) should inform the beneficiaries (devisees and legatees) about your estate plan. One line of thought is so that the beneficiaries are not surprised with what they actually may be receiving. For example, if the children think that the parents are worth $2,000,000 and the parents are only worth $100,000, the children may choose to not work or not be as contributing as they might if they knew their parents did not have as much. It may also assist in explaining why their parents seem to pinching pennies when in fact that is exactly what their parents have to do because they do not have as much as the children may have thought. Therefore, disclosing to the children early on after your estate plan is completed may be beneficial as you continue to age.
Whether to inform the beneficiaries of what is in the estate plan is a personal choice and many times is based on the dynamics of that particular family. There are some families that do not have any secrets and everything is disclosed. Other families do not disclose any of this information and it then comes as a surprise at your death.
At a Minimum, the Location of Where the Power of Attorney for Health Care and Power of Attorney for Financial Decisions Should be Disclosed
Even if you decide that it would be best to not tell your children or other beneficiaries about your estate plan as it relates to the distribution of your assets at your death, it is strongly recommended that the successor agent (commonly referred to as your power of attorney) at least know where the documents are located. Given the importance of the document and the short notice in which the power of attorney may need to act, knowledge of the whereabouts of the documents could mean the difference of life or death. Or as it relates to financial decisions minimizing potential losses.
In a typical husband and wife estate plan, including powers of attorney, the power of attorney for each is typically your spouse. For the spouse, the power to act is typically effective immediately. This allows the power of attorney to act before a determination is made as to whether you are disabled or incapacitated.
If the spouse is not able to act because of their own disability or incapacity, or simply chooses not to, the successor power of attorney typically would then step in and this can also be effective immediately or upon disability or incapacity. Because of their possibility of acting, they should know where the documents are. They do not necessarily need to know what the contents or extent of their powers are, just that they know where the documents are if this should become necessary.
Why You Should Tell Your Children About Your Estate Plan
The second reason to possibly disclose your estate plan to your children is the why behind what your plan consists of. In most family estate planning situations, the beneficiaries under the will receive an equal share. In this type of scenario, it would not necessarily require any explanation. However, there are times in which children may be excluded from inheriting; other individuals besides direct family members may receive a portion of the estate; charities may receive a portion or there may actually be restrictions put on the manner in which the beneficiaries will receive their inheritance.
In these types of estate plan, it may be worthwhile to explain to the children why you have prepared your plan in the manner that you have. This may alleviate a lot of finger pointing or hard feelings at the time of death of a parent if it has been explained in advance why the plan was established in the manner that it was. Many times, coupled with this explanation is also an explanation that the Will or Trust contains an in terrorem (in layman terms “no contest”) clause. In general terms, this type of clause provides that if a beneficiary challenges the estate planning documents, they are disinherited.
An alternative to actually explaining this to the children and have to deal with the issues that this may bring up and have to be addressed, at times it may be best that this could either be explained in the document itself or by a separate document that accompanies the estate planning document where you could write out what your feelings are and try and provide an explanation. In the author’s years of experience, in those situations in which the children have received an understanding of why their parents have prepared their plans in the manner that they have, it alleviates a lot of hard feelings and allows for continued family harmony.oncl
Conclusion
Each planning situation is unique and there is no standard answer for every situation. The reader is encouraged to discuss their estate plan with a professional in their particular state to make sure that what they intend to carry out (i) can be carried out and (ii) what may be the best method to have this completed. It is also best to discuss with the professional their opinion as to whether the estate plan should be disclosed.