Multi-generational living is not exactly new, and as people are living longer, it may start becoming more common. Shared households bring many benefits, including convenience. Why should a nurse daughter travel 20 miles a day to take her mom’s blood pressure, asks The Mercury’s article “Do shared living arrangements make sense?”
There are some people who sign their will once in their life and never change it. They may have executed their estate plan late in life, or after they were diagnosed with a serious disease. However, even if your family life and finances are pretty basic, there are still changes in the law that you may need to incorporate into your estate plan. Some of the people that you named in your will could also have died or moved away.
A recent study by Ameriprise Financial found that more than one-third of adult children say they haven’t had a conversation about their parents’ long-term financial goals. Even though discussing this delicate topic may seem uncomfortable, addressing it now can help avoid challenges and uncertainty in the future. To that end, the Ameriprise Family Wealth Checkup study found that those who talk about money matters, feel more confident about their financial future.
Everyone needs to have an annual checkup, taking stock of their health with their primary physician and making sure that everyone is on the same page when it comes to instructions for health care and an advanced healthcare directive, also known as a living will. When people sign their last will and testament, everyone breathes a big sigh, says The Huntsville Item’s article “Make sure you talk to your doctor and family.” But that’s not the end of estate planning.
Here’s a scenario that happens often. A man receives an inheritance, and he decides to use it to purchase the family home outright. His wife has signed a quitclaim deed to put the property into her husband’s trust. The understanding was that if the husband died before the wife, she would be permitted to stay in the home until her own death. The problem, says The Washington Post in this recent article “Make sure you and your spouse are on same page on who will inherit your home,” is that the husband never signed the living trust.
It’s an emotionally charged decision. Parents who sit down with an estate planning attorney would much rather talk about their grandchildren and how much they are looking forward to retirement.
However, then the discussion turns to how they want to distribute their assets, as reported in the article “Why is it called a ‘No Contest’ clause?” from The Daily Sentinel, and a problem is revealed.
The parents share that there is a family member, an adult child, who has never been part of the family. Usually they have had a troubled past, pushed others in the family out of their lives and it’s heartbreaking for all concerned.
The discussion then moves to determining how to handle that individual with respect to their estate plan. “Do you want her to be part of your estate plan?” is the least judgmental question the attorney can ask. In many cases, the parents say yes and say they’ll keep trying to foster some kind of relationship, no matter how limited. In other cases, the answer is no.
In both cases, however, the concern is that the difficult child will fight with their siblings and take the battle to court. That’s one of the reasons to include a no contest clause.
As long as estate planning documents are prepared correctly and signed, they will survive a legal contest. However, putting in a no contest clause creates another barrier to an estate battle.
The no contest clause is intended to act as a strong deterrent for those individuals who believe they are entitled to more of the estate. It makes it clear that any challenges will result in a smaller portion of the estate, and possibly no inheritance at all, depending upon how it is written.
Both parents need to have a no contest provision included in their wills. The message is clear and consistent: these are the estate plans that we decided to create. Don’t try to change them.
For families with litigious family members or spouses who married into the family and feel that they are not being treated fairly, a no contest clause makes sense to protect the wishes of the parents.
Speak with an experienced estate planning attorney about how a no contest provision might work in your situation. If your family doesn’t need such a clause, count your blessings!
Reference: The Daily Sentinel (Aug. 10, 2019) “Why is it called a ‘No Contest’ clause?”
Parents talk with their children during various stages of their lives about the challenges ahead. The tough talks about sex, drugs, drinking, driving, bullying and mental health are understood as a necessary part of good parenting. However, why, asks The New York Times, don’t they talk to their children about money? The answers are presented in the article “4 Reasons Parents Don’t Discuss Money (and Why They Should).”
Two-thirds of Americans with at least $3 million in investable assets have not spoken with their children about their wealth—and say they never will. This was the surprise conclusion from a Merrill Private Wealth Management study of 650 families. Some said they didn’t because they figured the kids had already figured it out. However, 67% of those respondents had made gifts in a trust or set aside money in their children’s names to pay for school, buy a home or help them out with income. Ten percent steadfastly said they won’t talk with their kids about money, saying it’s no one’s business.
Why are parents so reluctant to have the “money talk” with their kids?
The Motivation Factor. Parents are concerned that knowing about an inheritance will destroy a child’s motivation. They think if they don’t say anything, the kids won’t know about the inheritance. However, children are smarter than that. They know how to find out the value of their homes, the cars their parents drive and how much vacations cost. For prominent parents, there may be all sorts of information online about their assets. By second grade, children who go to their friend’s houses have a pretty accurate read on wealth levels. Education about money should start when they are in nursery school, not when they are 24 and asking for a new car.
Not Knowing What to Say. Parents have certain markers for certain conversations with their children. When they are able to get a learner’s permit, we talk with them about driving, drinking and safety. When it is clear that they are becoming teenagers, we talk with them about sex, personal safety and responsibility. However, there’s no set time to have a conversation about money, and few guidelines. Do you start with a conversation about family values and the responsibility the wealthy have towards the community? Should you explain how the household runs and where the money comes from? Or, should they get a better understanding of what it took to amass the family’s wealth, and what strategies are in place to protect and grow that money?
You may not need to educate an 8-year-old on buying stocks, but they should certainly understand the value of their allowance. On the other hand, an 18-year-old is old enough to understand where the money came from and what the family’s values and expectations are.
No One Had the Talk with You. One of the survey respondents shared a very personal story: she had started talking with her children about the family’s money when they were young, but she herself did not know how much money the family had. She found out only much later when the children were older, when she learned that a share of her husband’s business had skyrocketed in value, as had several of his other businesses. Since then, the family has held annual meetings with the children to talk about their feelings about money and how it can be used to help and hurt.
Money is New to Your Family. Families that come from multiple generations of wealth have succeeded in passing wealth to the next generation, because of the conversations that have gone on for years. Those who talk early and often about wealth with their children do far better than those who keep silent. The families follow this key three step process: educate the children about finances and wealth, communicate the family’s values and hire very good advisors.
Reference: The New York Times (Aug. 2, 2019) “4 Reasons Parents Don’t Discuss Money (and Why They Should).”
If you have a family, you can probably benefit from estate planning, regardless of your asset level. The Montrose Press published an article, “Estate plans can help you answer questions about the future,” that answers some of the big questions:
What will happen to my children? As part of your estate planning, you should name a guardian to take care of your children, if you pass away. You can also name a conservator–sometimes called a “guardian of the estate”–to manage the assets that your minor children inherit.
Will there be a battle over my assets? If you fail to put a solid estate plan in place, your assets could be subject to the time-consuming, expensive and public probate process. During probate, your relatives and creditors can get access to your records. They may even challenge your will. However, with proper planning, you can maintain your privacy.
Who will control my finances and my living situation, if I’m incapacitated? You can sign a durable power of attorney. This permits you to name someone to manage your financial affairs, if you’re incapacitated. A medical power of attorney lets the person you choose handle health care decisions for you, if you’re not able to do so yourself.
Will my family feel cheated if I leave significant assets to charities? As part of your estate plan, you have options. You could establish a charitable lead trust. This will provide financial support to your chosen charities for a set period. The remaining assets will then go to your family members. On the other hand, a charitable remainder trust will provide a stream of income for family members for the term of the trust. The remaining assets will then be transferred to one or more charitable organizations.
Careful estate planning with the help of an experienced estate planning attorney can answer many of the questions that may concern you.
Once you have your plans in place, you can face the future with greater clarity, peace of mind and confidence.
Call us (228) 460-5243 or email us at firstname.lastname@example.org to find our how your estate planning attorney can help you.
Legal disclaimer: The information in this article is provided for information purposes only and should not be construed as legal advice. Your should not act or refrain from acting on the basis of any content included in this article or on our website (www.perklawgroup.com) without seeking legal or professional advice.
Reference: Montrose Press (July 7, 2019) “Estate plans can help you answer questions about the future”
Protecting your children from frittering away an inheritance, is often done through a spendthrift trust but that trust can also be used to protect them from divorce and other problems that can come their way, according to Kiplinger in “How to Keep Your Heirs from Blowing Their Inheritance.”