For better or worse, dynamics within families are often complex. For aging parents; a desire to leave possessions, real estate and assets to adult children may create unexpected tensions between both parents and adult children and between siblings. To mitigate possible conflicts, parents are advised to establish and regularly upon an estate plan which may include a number of estate planning tools to accomplish several related goals.
A 2015 study by HSBC revealed that roughly 56 percent of U.S. adults who are over the age of 65 plan to “leave an inheritance with the average amount of $176,814.” Additionally, 10 percent of retirees reported that they are providing financial support to “at least one adult child.” Combined, these factors indicate that a tremendous amount of wealth is currently and is expected to be transferred to the next generation.
For aging parents, discussing financial matters with adult children can be uncomfortable. This is often especially true in cases where there are great disparities in income and wealth between siblings as parents may struggle with whether or how to address such disparities.
Many parents who plan to leave assets to children seek to do so in a fair manner. However, it’s important to realize that, when it comes to estate planning and inheritance matters, fair and equal may not be the same thing. Regardless of how parents choose to distribute or transfer belongings, wealth and real estate; it’s often a good idea to inform grown children of such plans in advance.
It’s also important to be prepared in the event that this conversation doesn’t go as smoothly as one hoped or planned. While it can be difficult and may even cause tension and conflict within a family, it’s best to discuss inheritance matters while parents are alive and are able to express, explain and, if necessary, defend their estate plans.
Source: Huffington Post, “Keeping the Peace Between Adult Children in Estate Planning,” Nathaniel Sillin, March 23, 2016