After putting together an estate plan, it is worth considering how much (or little) you want to communicate about it to your children. What you choose to disclose is entirely up to you. However, in general, the more your children and heirs understand your plan, the easier it will be for them to navigate the distribution of your estate.
Deciding How Much to Share
In addition to communicating practical information, your adult children will eventually need, sharing your wishes can offer a gateway to deeper connections. It may also offer an opportunity for your children to share their own perspectives that can inform the choices you make in your plan.
Conversely, these conversations can introduce tension. Everyone’s family dynamic is different and deciding how much to disclose is a personal decision based on many factors, including your comfort level with disclosing financial information and your relationship with your children. You are not required to discuss your personal financial decisions with your children. The following guidelines can help you decide what to share and ensure you don’t neglect something important.
Important Contact Information
Your children should know whom you have appointed to oversee financial matters and health care directives. Frequently you will have appointed your children to take on these roles. It is helpful for them to know beforehand what responsibilities you expect them to take on. If your executor is a third party, or you’ve appointed a financial power of attorney, share contact information for that person.
Giving an inventory and access instructions for key financial information, including bank, investment, and retirement account numbers, life insurance policies, pensions, annuities, and beneficiary designations can eliminate days of searching, paperwork, and phone calls to the bank. In addition, make a list of liabilities, including credit cards, outstanding debts, and recurring payments, since the executor may have to settle or close these accounts.
Where Important Documents are Located
Your adult children should know where your will and other important documentation are located. If an attorney’s office prepared these documents, the name of the firm, the attorney, and the contact information should be relayed to your children. In addition, access to digital information, including passwords to key accounts, should be listed so that your children have quick access.
Sharing both what property you own and any mortgages you hold on that property can be very helpful.
If there is a traditional mortgage on your home, heirs will need to keep paying the monthly payment even if they intend to sell the home.
If there is a reverse mortgage and the last borrower has passed away, the loan will come due and heirs will need to take steps to pay the loan off by selling the home or some other means.
If there is other real property in other locations, domestic or foreign, adult children should know the location and how to deal with those pieces of land.
The location of timeshares is also of potential interest.
Eliminating the guesswork for children in case you are hospitalized or incapacitated is key. If you have a medical power of attorney, make this clear. And, if you have a DNR in place, let your children know the location of this paperwork so they can readily access it. Discussions can focus on the practical, but it’s helpful to share your feelings about how you want to prolong or not prolong your life which might help them make some difficult choices should they be required to.
If you’ve left funds to access to pay for burial or funeral services, share how much you’ve left, where, and specific instructions regarding the treatment of your remains and service. This could include everything from how much you want the coffin to cost, to how elaborate the service should be and what religious representative (or not) you would like to oversee the service.
This article is intended for general informational and educational purposes only, and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.