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Advisor Insight | The Importance of Communicating Your Estate Wishes With Your Heirs

By Laurie Lynch, Director of Client Services and Jim Brennan, CFP® 1 North Wealth Services


If the last long year or so has done anything, it has given us time to think about the reality of getting older and how the coming years or end of same will be felt and handled by our spouses, children, and heirs. Recently we’ve had to help clients deal with a parent’s estate or a loved one’s incapacitation where they were not given any or insufficient instruction on the wishes of their loved ones. We all agree that the topics of death and incapacitation are difficult to discuss. Yet, it is so important to provide your family with an estate plan in order to alleviate added stress, misunderstandings, alienations, and in some horrible cases, legal actions during an already emotional life stage. This discussion is on communicating your estate plan with your family or heirs.

Update and Share your Medical Directive

Lucky are the children who are guided by a parent’s Living Will or Medical Directive and luckier still are those who’ve participated in a conversation prior to being surprised by the terms of a living will. We’ve all heard the awful, excruciating accounts of those who’ve died alone during the pandemic. But we’ve also heard (whether in our lives or from accounts of others) of situations where there is disagreement among family members on the extent of treatment to be administered at the end of life. An emotional argument about treatment is the last thing needed in a hospital room or nursing home; therefore, we strongly recommend that you keep an updated Medical Directive. If you don’t have a Medical Directive, we can provide you with the free document from your state’s Attorney General. We recommend as well that you provide a copy of this Medical Directive to your chosen health director (likely your spouse, then your child). You should also review and revise this document based on your current wishes.

Create a Durable Power of Attorney for Financial Matters

Apart from a Medical Directive, you should know who can act on your behalf for all financial matters. For this, you would need to give durable powers to a trusted family member to act on your behalf when incapacitated. This does not mean that you should add them to your bank account as co-owner, as that may cause liability concerns. The Durable Power (DPOA) means that once you become incapacitated, your chosen attorney in fact can complete financial tasks for you, such as money transfers and bill payments (if listed on your bank account, for example). Your estate attorney can create a comprehensive DPOA, but our office can set up a DPOA for your investment accounts as well, so that your chosen agent has the ability to act on your behalf. Without such, by definition, the only person allowed to access your account or request a distribution is you, the account owner. Please note that individual non-retirement accounts generally don’t have beneficiaries but adding beneficiaries is available and advisable. We would do this by adding a Transferrable on Death (TOD) designation to the account.

Communicate your wishes for your estate to your heirs

For those of us in the Baby Boomer generation, the subject of money was not open to discussion between parents and children. Yes, there was allowance and school supplies and maybe college tuition and expenditures, but our parents’ actual financial details were their business only. Most of us didn’t have our own accounts or responsibility for those. And, of course, many wives were not involved in the family finances. Those days should be long over! As it is impossible to predict an accident or some impairments, it’s vital that financial knowledge be shared between partners/spouses. It is also a good idea for children -future heirs – to have a general knowledge of what to expect. In the case of a spouse/partner, the financial knowledge should be detailed so that each of you could manage your financial affairs. Your children or future heirs should be given an idea of how assets would be inherited when that time comes. Do you know what these inherited assets will do to your children’s tax situation? Do they want to inherit some or all of the assets you plan to give them? Could they use some of these assets before your death? Do you have a long-term care policy that will help meet your future health needs? How long do you plan to stay in your home? These are all important questions that will help your children help you in transferring your estate and protecting your wealth from unnecessary tax or legal headaches.

Your call to action is simple. Communicate your wishes for your estate with your advisors (your estate attorney and us, as your financial advisors), as well as your family and/or beneficiaries. Over the years, we have found great success in helping you, our clients, in facilitating this family discussion. And we recommend such a discussion during the summer months, when we all feel furthest away from our last breath. So now is the optimal time and we have the tool to help you. Attached is an example of the talking points for a Family Estate meeting. Please review and let us know if you would like to set up this meeting between your family and Jim or Margo as your facilitator. We do not recommend including spouses of children/beneficiaries. We mean no disrespect to them but find that the communication is best with just your family/heirs.

We wish you a wonderful summer and will continue to work on all the ways that we can keep your family and assets safe. We are here to assist you with any questions you have and welcome the opportunity to guide family and friends that are struggling with this issue.

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