February 2010

Should you talk to your loved ones about your Estate Plan?

So you have just completed your estate plan or perhaps you have been a client a while and completed your plan some time ago. Perhaps you spoke with your children during the course of drafting the plan or maybe you did not. But right now you have a pressing question: "Should I/we talk to our children or other people we love about the plan?"

This is a very good question.

Unfortunately, there is no one correct answer to this question, and you are under no legal obligation to disclose your private affairs. Not to duck the question, but the wise answer is, "it depends on your own situation and fact pattern".

Whether or not to disclose what your estate plan says is a complicated question to answer. The decision to disclose to children or other beneficiaries, begets other questions. To who is disclosure made? What can actually be disclosed and what is not wise to disclose? When should it be disclosed and where should it be disclosed?

In this article, I will attempt to set forth the factors to help you decide the preliminary questions of whether you and/or your spouse should disclose any part of the estate plan. In the next issue of our newsletter, this topic will be addressed further. Don't be concerned if you miss a newsletter. You will be able to retrieve articles that appear in prior newsletters from our on line newsletter archives.

Factors to Consider

The decision whether or not to disclose what is contained in your estate plan depends on many factors. First, you have to examine your own feelings about whether or not you wish to reveal that part of your life to your beneficiaries/children. You have to ask yourself, "Do I want ____________ (you fill in the blank) to know what I am doing with my estate planning?

If you are a single individual the decision whether or not to disclose is truly your own, but for those of you who are married or in a relationship with a significant other, you and your partner may not have the same common desires regarding this issue. Accordingly, the decision to reveal may be truly conflicted. It is easy to imagine a situation in which one spouse in the relationship feels very comfortable about sharing this information with their children/beneficiaries, but the other spouse does not.

The decision to disclose any aspect of the estate plan becomes more complicated in situations where the couples have remarried and each have separate children from their respective prior marriage. Each spouse may have very different relationships with their own children. Some of our clients come to us with children from a prior marriage that are fortunate enough to have a "Brady Bunch" type of family, where as in the 70's television show, everybody gets along and everyone was overjoyed to be part of this new "blended" family. But in many instances, a remarriage may involve strained or even cordial but cool relations between the new spouse and the children from either your own or your spouse's marriage. In these situations, the decision to disclose any part of the sensitive and intrinsically confidential information contained in your estate plan may become problematic. In fact, disclosure may lead to massive unrest in your family and your relationship. So please beware.

Threshold Questions to Consider

Some of the following threshold questions should be answered by you and your spouse/partner before you make the decision to reveal the contents of your estate plan:

1. Why do I want this person to know this information?
2. What benefit is to be gained by this disclosure?
3. Is the person who receives this information mature enough to treat the information that has been disclosed to them in a sensitive and responsible manner?
4. What role does this person play in the estate plan?
5. Will the disclosure of our plans have the potential to cause more harm than good?

The list of questions can be endless. But, these are the few common sense ones that jump to mind.

Your Answers

Your answers to the threshold disclosure questions are personal and depend on your own family fact pattern. For example, you may answer question 1, to allow disclosure because:

• You feel very close with this person, your children or a particular child, and want them to be prepared for the inevitable when it happens;
• You may want them to know what role they play in the plan. They may be named as one of the Executors or Trustees; and you may want to be able to explain to them what that role involves;
• They may in fact be a beneficiary of the trust and you may want for them to know that fact;
• You may also want them to know about the plan because they have been nominated to serve as guardian of your children, or;
• They are serving as the holder of your health care proxy and you wish to express your wishes to them verbally about extraordinary life support measures and other end of life health care decisions.

The common thread in all of these examples and the benefit to be gained by the disclosure is that you are informing the individual(s) of the role that you and your spouse/partner want them to play in your estate plan:

• You may want your brother to know that he is the trustee, executor of your estate and what that role will look like after your demise;
• You may want your brother to handle the investment of the trust funds in a certain manner as Trustee;
• You may want him to know how as trustee he should manage the funds for the benefit of your children or grandchildren.
• You may want to discuss your parenting style with your guardians, how you feel about private versus public school, liberal arts versus a technical education, strategies to build self esteem for your children in the role as guardian, housing issues etc.

Reasons not to Disclose

So the reasons for disclosing and the benefits of disclosure are abundant. However, sometimes there are very good reasons not to disclose which offset the benefit of full disclosure. Threshold Questions numbers 3 and 5 above speak to these considerations and the answers to these questions are often related. One must first determine, with careful judgment, to who this information can safely be revealed. Some parents believe that one particular child, who may be serving in a fiduciary capacity, has the maturity and wisdom enough to know how to handle the information they receive sensitively.

The decision to disclose any portion of the estate plan, and to whom and when and where is often problematic. Some kids believe they have a legal right to inherit from their parents (which they do not) and other children believe that because they have "helped out" so much, that they are entitled to a more than equal share over their siblings. To prematurely find out before death that their parents don't share the same philosophy as their expectations may cause trouble in the family, by fighting and squabbling over "their inheritance" long before anyone has passed away. Sometimes, your choice to choose one child as Executor or Trustee over your other children for very good reasons could cause a problem in the family if it is prematurely disclosed. So in all of these situations, the benefit of disclosure may be outweighed by the harm that may be caused to your family by the disclosure. Remember that if a fight in the family is caused by the premature disclosure of what is contained in your estate plan, it may wind up hurting you emotionally and cause you and your spouse/partner great distress. Unfortunately, once the information is disclosed you can't get it back. Also, some clients will change their choice of guardians or other fiduciaries over time. Once you disclose this information you may be put in a difficult position to later tell them you changed your designations.

Closing Thoughts

One strategy frequently used by clients is to disclose only a portion or portions of the plan, and keep private the information that will likely cause harm. If, however, one begins this process of disclosure, it may lead to more questions that you may not want to answer, and for some reasons many people, despite the many benefits of disclosure opt not to disclose.

No matter what you decide regarding the broader disclosure, it is generally a good idea to let your loved ones know that you have completed your plan and where your estate planning documents are physically located. For clients of our firm, we generally hold the originals document and your loved ones should be given instructions to contact us in the event of a medical emergency, your disability or your passing.

Using your sound judgment and common sense will more likely than not, help you come to the "right decision" regarding disclosure of your estate plan for you and your loved ones.