Mention “Estate Planning”, (a.k.a. “Death Planning”) in mid-winter, and everyone retreats into a blue funk. Mention it when the sun is shining in mid-summer and it seems…well, less of a downer.
As was suggested in our May 22nd Planet Longevity post, summer is a the perfect time when all generations have more time to be together and, in a less pressured way, can open conversations about practical topics that are often sensitive to family dynamics, such as estate planning.
During our lifetimes, we all collect “stuff” – financial, material and sentimental goods. These are our “toys”. Estate planning is all about distributing the toys in a way that makes sense to us, and hopefully, is understood by our beneficiaries, the people to whom we are giving our toys.
What is to happen to these toys, our assets, when the older generation dies? What role will adult children play in the aftermath?
Opening the Talk.
We all die at some point. It’s a necessary conversation often avoided in family discussions. It doesn’t matter whether the conversation is started by the parents or the adult children.
As the parent it might start with:
• “(We/I/Father/Mother), won’t live forever. We’ve put together an estate plan which we want to explain to you (and your siblings). Let’s talk about it now.”
Setting Beneficiary Expectations
Step One. Let beneficiaries know the location of key documents: Is the Will in a bank safe, at home, In the lawyer’s office? Is there a list of all credit cards, insurance policies, bank accounts, investment accounts, service contracts, passports and so on? Everyone should have this information documented in a “Just in Case” file, easily accessible in case of accident or death.
Step Two. What are the expectations of family members regarding the distribution of assets at death? Will there be equal or unequal distributions depending upon the needs of beneficiaries?
• How will “sentimental objects” be distributed? More family quarrels arise over family treasures (often of little monetary value), than most people realize. Have a plan in place – find out who would really like the old mantel clock, the painting in the hallway, and who wants Dad’s pocket watch or Mom’s pearl earrings.
• Will some objects, or money be distributed to family or friends before death as gifts? If yes, make sure that the surviving spouse/partner will have enough to live on and feel comfortable after the things or funds have been doled out.
• What arrangements have been made for the comfort and security of the remaining parent? There are Family Laws in all provinces which dictate certain levels of support. Make sure that the Estate Plan observes these rules.
• Are there charitable bequests to be made? Have other tax efficient strategies been explored?
Of course, all this assumes that there IS an estate plan worked out with professional assistance. If not, the question becomes one of understanding the consequences of NOT having an Estate Plan. Namely, that the province of residence has an estate plan already drawn up – it’s called Intestacy; and the rules may surprise and disappoint many families. Having a Will is key, if people have assets to pass on to the next generation.