Should You Tell Your Family What’s in Your Estate Plan?

Creating an estate plan is only part of the process. Peter discusses when it makes sense to share your plans with family members, which documents should always be accessible, and how better communication can help reduce confusion, delays, and family disputes. 

Transcript

Hello, it’s Peter Klenk, Trust and Estates Attorney, here to talk to you about death and taxes once again, this exciting subject.

And today’s subject is, well, should you tell your family what’s in your estate plan? It’s not just making the plan, but do you communicate it to them right away or eventually throughout the process?

Remember, your estate plan could be very simple. It could be you just named your kids as beneficiaries of your accounts. That’s an estate plan. That’s the plan for what you want to have happen when you die.

It could be you have a will. It could be you have a revocable trust. It could be you have something much more complex. That’s all your plan. The question here is, do you communicate that? Do you share it?

Now, I’m going to say that, barring there being a reason not to, communication and clarity is always the best answer. Let everybody know what’s going on so that they can be ready, be able to react as they need to take on jobs, and they know what your plan is overall.

If there’s a reason not to, maybe you have a child who has mental health issues. Maybe you have somebody who’s married, and that evil daughter- or son-in-law is going to use this information to cause trouble. Any number of reasons why you might ought to.

Well, then you need to make sure still that, when the time comes, people know what to do.

Now, for example, one thing that I think you just have to share is your medical power of attorney and living will. That’s the document that says, if the doctor believes that you should be put on a do not resuscitate order, what are your thoughts?

And the power giving somebody the right to sign your name to authorize surgery, move you to a facility, authorize any sort of care, or to make you do not resuscitate. That has to be shared for it to work.

You have an emergency someday. You’re in the hospital. If you haven’t even told the person that you selected them, how are they going to help you?

Or if you told them but have not given them a copy, it’s two in the morning. If you told them, “Call my lawyer,” guess what? I’m asleep. I’m not going to answer till morning. And you might have an issue that needs to be taken care of right now, immediately.

So that’s a document that we provide our clients with a PDF, so they can share it with the person they’ve selected as their medical power of attorney, their surrogate, it’s called in some states.

And that way, no matter where they are on Earth, they can text it to the hospital where you’re at and help you out. It doesn’t do any good if you have a hard copy in the kitchen and you say, “Come and get it,” when they’re in Paris, right? So you’ve got to give it to them for the system to work.

Now, the other document, if you have minor children, is a temporary guardianship. That’s the document that says, “Hey, if I’m bonked on the head and I can’t take care of my kid, who picks them up from daycare or from the hospital where they’re sitting on the social worker’s lap, or the police station? Who has the right to get them and authorize medical care?”

If neither parent is capable of doing it, somebody has to be given that power. You should be picking somebody, but they need a copy of that.

Again, they have to come to the lawyer. It’s two in the morning. Your kid’s sitting in the hospital. The police or social worker might not be comfortable just letting this other person walk out of the hospital with your kids, right?

So it delays everything. It makes things more stressful than it needs to be.

But if you have the paperwork all in order, and if the person that you pick, your temporary guardian, has a copy on their phone, let’s say a PDF, and especially if your kids are old enough, they do too, and everybody’s in agreement. It’s Aunt Susie, right? It’s Uncle Bob.

Well, then everybody’s comfortable, right? Your kids get taken care of, and the people who are making sure that they are released to the right person are comfortable too.

If you don’t share that document, everything’s delayed because there’s a very good chance there’s some confusion. Confusion isn’t good. This is a situation that you can imagine is already stressful, so let’s make it as easy as we can.

So those two documents, okay, those are ones you really need to share, and everybody needs to understand who you picked.

The other things, like who’s your executor and what’s in the trust, do you have to share that? Well, you don’t.

Again, I’m telling you, it’d be nice if you did. But if you don’t, you still need a plan to make sure that everybody can find out where they are and what they say after you die, without a bunch of delay and running around and stress and potentially causing arguments between families.

So you need to talk to your Trust and Estates Attorney. Say, “Look, hold on to these things, and I’m going to tell my kids to call you when I’m dead.”

All right, and that way everybody understands that’s what’s going to happen, and the kids know to call. So again, the stress level’s low because they understand what’s supposed to happen, even though you don’t want them to know what’s in it until that time.

Okay, that works. It’s ready to go.

But now let’s also talk about your things. If you don’t share where your bank accounts are, your insurance, your IRA, 401(k), as you move it around, as you take it out of the 401(k) and roll it into an IRA, all these things, we can find it, but it’s going to take a lot more time. It’s going to be more expensive, and there’ll be delay.

And you can imagine your kids, like, “Well, where’s Mom’s 401(k)?”

Nobody knows. We have to go find it. Everybody’s stressed out, right?

So much better, if you don’t want to share that data with your kids, that part of the summary, like the way we handle it at our firm, we have on your summary of the documents a list of where to go when you’re dead, and you keep that up to date over the years.

We note you every six months to keep it up to date, so that way, if you’ve died or become incapacitated, when your executor, your agent comes, we can hand it to them, and there they go.

Within a couple days, they’ve secured all your assets rather than weeks or months searching around.

I mean, you can imagine how many times I’ve had family come in and say, “Hey, Mom had a life insurance policy.”

And we say, “Where’s it at?”

They say, “I don’t know.”

Do you know how many life insurance companies there are out there?

So this just makes it easier. Sharing is the best answer. If you don’t feel comfortable, if it doesn’t work, at least setting things up so that it’s as easy as possible to find these things and to take care of them after you die, the better, right?

So communication, one way or another, it’s important, right? And that way, little things, like I’m going to give another example.

You might say, “Well, you know what? I want my kid to sell the house and then divide it between the siblings, and I’m going to name everybody beneficiaries of the accounts.”

Sounds easy.

Now remember, it could be that house takes a year and a half to sell. If you’ve sent that bank account off to all the kids, the kid who’s in charge, who needs to pay the insurance on the house, right? That needs to make sure that the water isn’t cut off. All those things.

Well, how are they going to pay for that? You divided the money up between the kids.

Now, it could be all your family’s kumbaya, and they all hug and they all love each other and they communicate great. Good for you. That’s not all families, right?

So now you can imagine that kid calling up his siblings, saying, “Hey, we’ve got to pay the insurance. I need a couple thousand bucks from you.”

And they might say, “I spent it.”

Well, what’s he going to do? Now he’s going to use his own money out of pocket.

So communicating also helps everybody put their heads together and say things like, “Well, wait, Mom. If you give all the money to everybody, how am I going to pay the bill?”

And you can say, “Whoa, I hadn’t thought about that.”

So you’re going to take those names off that account, so your executor child can collect it and have that money to pay the bills, pay for your funeral, pay for the insurance until the house is sold, and then it gets divided up.

Little things like that, right, that you might not think of. Then everybody involved can think about those things and come up with these things and brainstorm a little bit.

If you’re not going to tell your kids, you should at least have a Trust and Estates Attorney to point things out like that, right? To make sure it’s as smooth as we possibly can make it.

We’re not trusting on cooperation after you die. You know how well you think your kids just defuse the fight before it ever happens is very much a key, right?

So, to finish this up, that’s the answer. Sharing is the best idea. If you can’t, what’s your plan? Think it through. Make sure that it’s going to be as easy and painless as possible.

All right. Well, it’s Peter Klenk, Trust and Estates Attorney. Like and subscribe so that you can hear my soothing voice talk about this fascinating subject in the future as I start releasing more.

So you be well. You have a great day.