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Estate planning: Keeping it family friendly

Estate planning requires attention to a number of

Estate planning requires attention to a number of documents. Credit: ISTOCK

Family conversations about money are almost always difficult, particularly the topic of estate planning. To learn why, and to come up with strategies to overcome this difficulty, I asked two professionals for specific advice.

Why is this topic so hard to discuss? “Because feelings and money get tied up,” said psychologist and author Lisa Damour. Money can evoke feelings of control (or lack of control), furtiveness, dignity, shame, fear and lack of confidence. And when we express views on or ask questions about financial matters in a way that fails to take these emotional aspects into account, things can get thorny.

Just imagine an exchange like this:

Son (age 40): “Mom, have you and Dad updated your will recently?”

Mom (age 75): “Why? Are you hoping that we will die soon, so you can finally pay off that big mortgage that we warned you not to take?”

You can see how these kinds of conversations can go downhill pretty fast, which is why each side needs to resist the urge to grab whatever bait is thrown out. After all, you are not going to litigate your entire relationship with your parents or your adult children during these interactions. Damour said she tells parents of teenagers to “not take anything that they say so personally.” That advice applies to discussing financial and estate issues with your loved ones.

Instead of jumping into such a discussion full throttle, said estate attorney Virginia Hammerle, it’s helpful “to focus on an isolated issue, like titling of a bank account or making a beneficiary designation.” This can lead to a broader discussion on family finances and estate planning.

Once you break the ice and start the process, it is helpful to ask what goals you are trying to accomplish. Do you want to ensure that your assets will be passed to the next generation and beyond? Are you worried that one of your heirs will squander any money that is left to him or her? Do you want to be charitable? Are you anxious that you will offend one of your heirs?

The good news is that by discussing your concerns with a qualified estate attorney, you can build a plan that addresses all issues and concerns. It’s important not to “get stuck on the next 50 years,” Hammerle said. “Every estate plan can be changed — and in fact should be revisited every few years.”

Here are the basic documents that you will likely draft:

  • WILL This ensures that assets are passed to designated beneficiaries, in accordance with your wishes. In the drafting process, you name an executor, the person or institution that oversees the distribution of your assets. If you have minor children, you need to name a guardian for them.

n LETTER OF INSTRUCTION This may appoint someone who will ensure for the proper disposition of your remains — creepy but important if you are choosing a method that is contrary to your family’s tradition.

  • POWER OF ATTORNEY This appoints someone to act as your agent in a variety of circumstances, covering matters such as withdrawing money from bank accounts, responding to tax inquiries or making trades.

  • HEALTH CARE PROXY This appoints someone to make health care decisions on your behalf if you lose the ability to do so.

  • TRUSTS Revocable (changeable) or irrevocable (not-changeable) trusts may be useful, depending on family and tax situations. For 2016, the first $5.45 million of an estate is exempt from federal estate taxes. If an estate is above the threshold (or twice that for married couples), you may want to consider a trust.

The goal is to have these documents in order before the circumstances that necessitate them arise. As difficult as it is to initiate a conversation about these circumstances, that is far easier than facing them unprepared.

Jill Schlesinger, a certified financial planner, is a CBS News business analyst. She welcomes emailed comments and questions.


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