In general, I believe transparency is the best approach to estate planning when a client has adult children. Of course, what “transparency” actually means will differ according to the client and the specifics of the estate and family members. In some cases, it will mean sharing all details of the will, trust(s) and other estate planning documents. In other cases, the details might remain obscure, but sharing certain kinds of information should take place. To determine where the client falls on that spectrum, some factors to consider include:
What to tell. At a minimum, family members should be told where the documents are located, who are the key advisors (lawyers, accountants, financial advisors) and what immediate steps they might need to take if an unexpected death occurs. Losing a parent can be hard enough, there’s no reason to add additional confusion and potential harm by leaving the family completely in the dark. I recommend calling the family together long before a client’s potential demise to start conversations that are deeper and more meaningful, focusing on values, purpose and family “legacy”—so that the focus after one’s life goes beyond “assets.” Parents can share their own guiding principles with children. This conversation is important if the parents intend to leave unequal bequests, especially if shared in a loving atmosphere. If there are special arrangements between parents and one or more children, parents must recognize the “truth will out,” and it’s their responsibility, not their childrens,’ to explain why.
How to tell: The more thoughtful families bring together all adult children to have a conversation, or many, focusing on meaning and purpose, rather than a “pre-reading” of the will. An ethical will can be shared before death as an opener to these conversations. For many families, an outside facilitator can help this process.
Special circumstances: There are certain families who are in a special position so that more (or less) disclosure is advisable. In a family business, succession planning for management and ownership should be seen as a process, not a one-time event. The family should set up a forum (for example, a Family Council or Assembly) for open discussion of operational and financial issues, as well as ongoing plans for leadership succession. Family members who are included in these discussions earlier can become responsible owners and make better decisions, such as whether to keep or sell the business. When family wealth is significant enough that the parents (or other ancestors) have transferred assets into trusts over which the children (and grandchildren) have “beneficial” ownership, they need to know so they can integrate them into their lives. Less disclosure (especially when entities aren’t in place) may be advisable if it could create harm in the children's lives (such as putting a wedge in an unstable marriage). And of course the child’s mental capacity and emotional maturity are key factors—many children simply won’t be able to handle the information.
What not to tell: As life expectancy increases, most clients with adult children could potentially deplete their resources before their demise. With this in mind, it makes sense to withhold specific financial information and other details, not only to keep expectations in line, but also to preserve a sense of autonomy over their lives. Yet, even in those cases, it’s likely that one or more children will shift to taking responsibility for the parents’ affairs while the parent is still alive. Again, advanced disclosure will help both parent and child to smooth that difficult transition.
Patricia Angus, JD, MIA, TEP, is the founder and CEO of Angus Advisory Group LLC, a philanthropy and family governance consulting and educational firm.