As a parent or grandparent, there are many milestone talks to have with the younger generation. Talking about what a child will or will not inherit is as challenging as the birds and bees discussion. After you meet with a Michigan elder attorney to decide how to handle a Michigan Retirement Plan Trust, you will feel ready to share with your children and grandchildren. According to an article by forbes.com, speaking openly about the sensitive topics related to your estate and retirement plans will prevent confusion and resentment in the future. Some people meet with an elder attorney to talk about different options before opening up the estate planning discussion with their children or grandchildren. Ultimately, your estate plan is your private matter but you can avoid problems by getting input from the beneficiaries. A piece by the AARP, reveals that baby boomers in their 50s and 60s will likely leave $30 trillion to their children (millennials).
Avoiding sibling rivalry with Estate Planning
If you have more than one child, discuss the inheritance to prevent sibling rivalry issues. Some surprises are good, but others create tension and uncertainty. According to forbes.com, one important issue is who will be the executor of the will.
Clearing up any confusion
If you are fortunate enough to own several homes such as vacation or investment properties, don’t assume which children would prefer to inherit a certain property. An estate planning attorney will let you know how to handle a situation when one real estate property is worth more money than another. Also, you can guard against the problem of leaving a home to one child that you think will be worth more or less than it is worth in the future. Also, your children might have preconceived ideas about how much you are worth. The AARP cited a Fidelity Investments survey that showed children underestimated their parents’ estate by $100,000. In many cases, you could give your children greater peace of mind.
Avoiding probate and taxes
If you don’t want to put your children through the stress of probate, talk to an elder and estate planning attorney about ways to avoid probate with a retirement plan trust. One great way to help your children is to pay off your debts while you are living if you can. Also, you might want to simplify your financial situation by selling real estate in another state that you no longer need or want to include in the estate plan. Experts advise people who want to avoid estate taxes to start making lifetime gifts each year.
Explaining your intentions
Most parents and grandparents only want what’s best for their family. Explain your reasoning to your children or other beneficiaries. By having the difficult inheritance talk you can create more family harmony. The AARP recommends if you plan to distribute the inheritance unequally, just explain your reasoning. Some reasons might include the fact that one child earns significantly more or one child has many more children to care for in life.
While it might to tempting to try to control your children from beyond this world, experts caution against using an “incentive trust,” that stipulates what your children have to do in order to receive an inheritance. While incentive trusts make for a good storyline in a movie, it’s often counterproductive and leads to lawsuits that eat up your hard-earned money.
Christopher J. Berry, an elder law and estate planning attorney, and the Elder Care Firm, work hard to provide you with the answers you need for your estate plan. For more tips on how to talk to your children and their inheritance and how to set up a Michigan Retirement Plan Trust, please contact us.