This is one of a series of upcoming posts covering important discussions involving money between family members. Over the course of our lives there are many conversations that children have with their parents that can be difficult for both of them, but are important, and these discussions often strongly affect their lives, both in the present and for the future. These discussions can cover a very broad range of topics, from choices in education and career to lifestyle choices, such as friends or moving to another state. We'll be talking here about those necessary financial discussions within the family, and providing some ideas on how to prepare for these talks and consider how their outcomes could meet the expectations for some—if not all—family members and friends.
One key conversation that sometimes is avoided until it is too late is talking about a parent's will. It’s extremely important that family members are aware of a parent's desires in the will and that they believe that the parent has carefully thought through who will manage the estate and how its assets will be distributed. The specifics of a will and how the estate is handled can be a cause of great disagreement within families and among family friends, and taking time to understand a parent's desires before the will is needed can help avoid negative emotions, arguments, and unpleasant actions both with heirs and with individuals that are not included in the will.
This is a sensitive topic that should be approached honestly and carefully. The goal is for the parent to be confident in their choices, while understanding that it can be useful to be presented with additional opinions that provide both valuable information and thoughtful opinions to consider.
Following are suggestions both for discussing this topic with a parent, along with important information to keep in mind, and possible actions to take before the will is needed:
- Do not be judgmental about your parent's decisions in the will, but be thoughtful with your questions and polite with your concerns. It is very helpful to be able to back up comments with facts.
- Generally, if the will is highly detailed it creates less uncertainty about who gets what possessions, as it should clearly specify both heirs and what exactly each of them should receive. Ideally, a thorough list of possessions that also has heirs named with each item they should receive could help prevent any confusion.
- Discuss who the executor will be and if there will be more than one. Establishing co-executors may create problems, as feuding or non-performing co-executors can create a stalemate on administering the will, since neither executor has the sole authority to make decisions nor take action to fulfill what the will says should be done. There should also be contingency executors, so that if the named executor cannot or will not serve in the role, then there are several back-up executors.
- It can be highly beneficial to have those named in the will attempt to determine in advance and in writing their choices for property and possessions, and try to work out conflicting choices before the parent's passing.
- Make certain that the parent has a secured file (digital and/or paper) listing all credit card, financial and membership accounts (such as frequent flyer, hotel loyalty, purchasing club programs), the related account passwords and other sign-on details, insurance coverage, as well as real estate and any possessions that may be unusually valuable, such as jewelry, antiques, art, and collectibles. Also make certain that more than one family members knows where the file is located.
- Be aware that any financial accounts held jointly with a parent become the property of the other owner upon the parent's death and therefore are not under the authority of the will; these accounts cannot be inherited if they still have a living joint owner.
Money may strongly affect how people think, feel and act. When money is involved in a family matter, it's important to have upfront, clear conversations, so all interested parties have the opportunity to present their points of view and feel that they have fully involved in the situation.