Saturday, March 6, 2010

How Do You Talk To Your Family About Estate Planning?

The New York Times recently had an article entitled "Estate Planning as a Family Conversation" which reminds us how difficult it can be to bring up estate planning, wills and trusts and related financial topics with parents, children and relatives.

Why is it so difficult to have these financial conversations? Whether it is the parents explaining their estate planning to their adult children or those children asking their parents about whether they have enough money to see them through a long retirement - these are touchy conversations.

It may be likely that your parents or you grew up at a time when money was not discussed openly so there may be a discomfort at sharing details of your financial lives with each other. There may be pride and privacy barriers. Other family dynamics can also be at work. Estate planning can be viewed as simultaneously a private topic and a morbid issue. Many years ago, I recall one estate planning meeting with an actress regarding estate planning where I was asked by her manager not to mention the word "death" during any meeting.

The New York Times article mentioned two examples where enduring some uncomfortable moments in initiating estate planning discussions gave the families peace of mind and helped ensure future family harmony. In one example, a vocational consultant in Seattle asked her father, a lawyer specializing in American Indian rights, about his estate plan after learning he had brain cancer. She was surprised to find that her father did not even have a will.

Her father had been separated from his wife for 30 years but had never divorced. Without a will under his state's law, everything he left behind would go to his "wife." The father decided he would rather have his assets divided between their two adult children. Due to this conversation, the father met with a lawyer to discuss the necessary documents to carry out his intention.

In a second example, a mother had decided to leave one adult son a larger inheritance than the others because that son had more children. When the mother shared these details with the son, the son persuaded her that he would rather receive less money than cause any family disharmony or face the wrath of his siblings. As a result, the mother changed her plan so that all her children would receive equal shares.

In future articles, I will discuss different ideas and approaches for parents to share their estate plans with adult children. I will also discuss how adult children can talk to their older parents about their finances and help determine if an estate plan is in place and whether the children will need to support them and when.

How families handle sensitive issues depends both on the particular circumstances and the personalities involved. A bit of advance role playing can help and an experienced estate and trust lawyer can provide guidance. In my experience, and as noted by the New York Times article, it is sometimes better have a series of talks, rather than addressing everything at once. Instead of one giant family meeting, it may be decided to speak to each individual one-on-one.

Five Initial Strategies

Whether you are the adult child or the parent initiating the conversation, here are five strategies to guide you overall during this process. In some cases where there has been no planning, it may be necessary to have the initial conversation to get the other family member to consult with an estate planning attorney and get their affairs in order.

1. Have the right tone. Too much force and the person on the other side of the conversation will focus more on the money side of the discussion rather than the fact that you care about the family and them and want to have this discussion for the right reasons. However, if you are too timid, the other person could attempt to dodge the conversation.

2. Use yourself or your family as an icebreaker to bring up the subject. You can explain how you and your spouse are just going through estate planning, long-term insurance and then ask the relevant follow-up question such as "Is it time for you to update your estate plan?" Or you can state that you want to share your plans with your relative at a convenient time and place. You can also share the story of a friend whose affairs were not in order and what a disaster it was for the family or the friend whose family was torn apart when the estate plan and its reasoning was not known in advance by the adult children.

3. Use current events or recent headlines of a well-known person's death. Use a recent case such as Michael Jackson, Brooke Astor or a recent death of a celebrity as a reminder about how easy it is for us to put these important tasks off until it is too late.

4. If they are more comfortable writing or communicating in writing, think about how to write out your plans or help them write out their plans. While you are talking to your family member, you can pull out some paper and start jotting notes to help them go through this process.

5. Schedule a meeting with an experienced estate planning attorney to get the process moving. There is nothing like a deadline or meeting to get people focused on getting a task (especially potentially sensitive ones) done. Select an experienced estates and trust attorney who has a tax background rather than an insurance agent who is selling life insurance products for commission. One advantage of hiring a California estate planning attorney is that they can help guard against later claims that there was undue influence or lack of mental capacity.

Most sophisticated estate planning attorneys such as our firm quote a flat fee and there are no products being sold or conflicts of interest in advising you on the best estate plan for you and your family. Refer to my prior post on "What Does Estate Planning Cost?" for information about our firm's flat fees for estate plans.

Posted by Henry J. Moravec, III. Henry (Hank) Moravec is a partner at Moravecs, A Professional Law Corporation. He has over 20 years' experience as one of the best Los Angeles estate planning attorneys, Los Angeles probate attorney, Los Angeles trust administration attorney, Los Angeles beneficiary attorney, and Los Angeles trustee attorney with an excellent tax law background and is available should you need legal advice regarding your own situation.

You can e-mail Hank Moravec at hm@moravecslaw.com or call him at (626) 793-3210 to request a consultation. The firm website is http://www.moravecslaw.com/. The firm is located at 2233 Huntington Drive, Suite 17, San Marino, California 91108.