The Planner's Perspective: Communication is Key

Paul Morrone |

By Paul Morrone, CFP®, CPA/PFS, MSA

Communication is key in any relationship, personal, professional or otherwise. Too often are the lines of communication broken down between family members, especially when it comes to hard or emotional topics such as money and death. We can spend hours discussing the merits of estate planning, but equally as important as having executed a solid estate plan is communicating that plan to those who will be most affected by it. This generally includes not just your spouse, but your children, siblings, parents or others who may have a defined role as beneficiary or fiduciary.

We often recommend that our clients hold a (formal or informal) family meeting so that everyone is on the same page regarding what happens when someone passes. As morbid as a thought as this is, it creates a friendly and open forum for people to ask questions and gain some clarity as to why decisions are being made. Admittedly, most parents may not want to divulge the full extent of their financial resources to their children, but that does not mean that a productive conversation will still not be valuable. Without getting too specific, it provides an opportunity to describe what they want to happen to their assets (both money and ‘stuff’) upon passing, giving everyone present a broad sense of what to expect if something were to happen.

Often more contentious than the division of financial assets (which can usually be easily split equitably) is the division of personal property, real estate and business interests. A family conversation may bring to light issues that had never previously come to light, such as two sibling’s desire to have mom’s engagement ring or dad’s classic car.  If there are items of material importance, either sentimental or in dollar value, that you would like to pass to a specific individual we feel it is best to document your wishes as part of your will or trust in addition to disclosing your desires to your heirs while alive. While some may not like what they hear, it can mitigate the probability of a fight post-mortem.

Selecting the right distribution plan (i.e. who gets what) is only part of the decision-making process, of tantamount importance is selecting the right people to carry out your wishes. This means placing the right people in control over your financial decision making while alive (via a durable power of attorney), your healthcare decision making while alive (via a healthcare proxy), your estate administration (as executor/executrix) or your trust assets (as a trustee). Aside from the inherent trust factor that should be present to appoint a fiduciary, in many cases, these decisions are made from a practical standpoint with appointees selected based upon the proximity to the person drafting their plan, their professional competence in dealing with such matters or even the intangibles as having the ‘coolest head’ in the family. All of these are valid considerations depending upon the size and complexity of an estate plan, but based upon the family dynamic, composition of estate assets and planning instruments used, it may be wise to consider appointing a professional for help in certain capacities.