Estate planning is not always an easy topic to discuss, especially with your children. However, there are some great reasons to have your children involved in the process. Doing so can go a long way to help avoid any discrepancies and confusion in the future.
Below, you can find a few of the top reasons that you should sit down and have a discussion now with your children about your estate plan.
Avoid surprises with your distribution choices
We have all seen high-profile cases where distribution of assets and funds creates chaos within the body of the family. This is your chance to be clear and concise about your intentions as to who will receive what and why.
The last thing you want is to reawaken old rivalries because there is no discernment as to why one sibling received one thing versus another. This is the time to hash out any misunderstandings and give your children - as well as yourself - an opportunity to speak openly on what could be a very touchy subject.
Get input from your children
You may think that you know what is best when it comes to defining the way that funds, assets and businesses may be distributed, but when you allow your children to have input in the process, you may find that they think differently.
Perhaps you wished to pass on the bulk of your business to your eldest child, but your business has never been their passion and they would prefer to move on.
You have now created a chance to redefine what may work better in the end between your children and grandchildren. For example, you may decide to leave stocks and other proportionate business assets in lieu of the business itself.
This can leave you with a better sense of satisfaction in knowing that you were able to gain valuable knowledge in making things less stress-free for everyone in the end. After all, this is the goal.
Possible tax breaks
Dependent on the size of the estate in question, taxes can become a major expense. If this is the case, you might want to consider making lifetime gifts now to prevent having to pay outrageous estate taxes later. There are tax breaks that are in place for gifts and the breaks are even more considerable when passing gifts to a spouse.
Current tax laws allow gift amounts of just over $5 million to be transferred, during life or death. If the assets that have been transferred as a gift appreciate in value after your death, there will be no gift tax owed as a result. Thus, if your estate is sizable, this can become a good discussion.
Morbid as these conversations may seem in theory, having them now will help alleviate much anguish in the end. It also will grant you the opportunity to adjust any expectations that children may have had in your estate and how the assets would be doled out upon your passing. Having the open forum promotes a good, healthy family balance and answers many questions that may have gone unanswered otherwise.