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Beyond Wills and Trusts: Expressing Your Wishes to Your Loved Ones

  • Kate Redden, CFP(r) The National Planning Group of Ronald Blue & Co.
  • 2007 7 Jul
  • COMMENTS
Beyond Wills and Trusts: Expressing Your Wishes to Your Loved Ones

How many times during your lifetime have you heard about those big and confusing estate taxes and the need for estate planning before it is too late? And now that the estate tax laws are changing (again), you wonder if there is even more that you should be doing in this often confusing planning area.

You and your spouse decide to take the plunge and ask around for some referrals for the right estate planner and attorney. After interviewing several professionals, you choose one who understands your wishes and can provide the best service for the right price. You set an appointment, spend several hours discussing all available options, then finally begin to craft the perfect estate plan to meet all your needs. You get the documents drawn up, sign them, pay your bill, and breathe a sigh of relief. And now you're finished, right? Not necessarily. You may be overlooking the most important step of all - the family conference.

For most of us, the primary reason for doing estate planning is to benefit surviving loved ones. After all, we don't personally benefit from tax savings or professional asset management after we are gone. It's our spouse, our children, or other beneficiaries, who receive all the benefit and live with what was crafted in the original documents. Yet so often we forget to discuss with them what will happen at our death and why it needs to happen in the way specified. Not communicating while you are living can later lead to surprise, unmet expectations and often unnecessarily hurt feelings.

This became all too evident in my family last year when my grandfather passed away at the age of 89. In 1992 I was a new financial planner, right out of college with lots of book knowledge but very little practical experience. As I quickly began applying all of my new-found knowledge to everyone around me, I discovered that my grandparents truly were in need of some estate planning. Their total estate was larger than the estate tax exemption amount at the time, which would have resulted in significant estate taxes at the second death. I also discovered that they each wanted to individually specify how to leave their personal assets - especially if they were the first to die. So I got to work and with the help of a local attorney, I designed what I thought was the perfect solution - a Revocable Living Trust for each (after correctly splitting assets) that would avoid probate court and the prying eyes of nosy neighbors. Then a testamentary trust was used for each of them to receive the full estate tax exemption amount of assets with the surviving spouse as lifetime trust income beneficiary and the children as final trust asset beneficiaries. Lastly I employed a QTIP trust for the remainder of each estate that would allow them to designate their own final beneficiaries. Perfect! Except that I failed to encourage them to share with the children what to expect at each of their deaths.

Eleven years later my grandfather, the true patriarch of the family, lost a long battle with cancer. I was so thankful that at such a difficult emotional time, we wouldn't have to be worrying about trivial estate issues since we had already taken care of all of those details with the trusts. In fact, I was feeling a little bit proud that everything was working just as smoothly as we had designed it when we set up the trusts.

A week after the funeral, my grandmother and her four children decided to read the will together - a long, boring process of reading several trust documents full of incomprehensible legal jargon. (Real life is never quite like the movies, is it, where the benefactor leaves an eloquently stated account of his true feelings and all his worldly possessions to his loved ones?) As they all stared at each other with blank stares at the end of the reading, someone finally asked, "So, did Daddy leave us anything?" To which my grandmother replied, "Well, I don't think he did."

After eleven years, my grandmother had forgotten what we had set up with the trusts and why it was done that way. Further, no one else in the room knew how to really interpret the legal jargon in the documents. Confusion and misunderstanding reigned, with some hurt feelings for being "left out of the will." They quickly contacted me to see if I could explain the documents and I immediately called a family conference - something I should have done eleven years ago. Fortunately, matters were quickly explained and understood, but I so regretted the fact that any of my family had to deal with this confusion during an already emotionally difficult time. Much of this could have been easily avoided with simple, honest communication at the right time.

What does this story have to do with you and your family? Whether you are in need of complicated wills and trusts or a simple will to dictate your last wishes, remember the most important step of all - open conversations with loved ones. No legal document can replace the power of your own words for conveying what is most important to you. A meaningful family conference before your death could be greater than any gift you could leave behind.

Suggested Tips for a Successful Family Conference:

• The actual process will be different depending on your situation and could range from simply, "Here is where our simple wills are..." to one or two days of meetings depending on the size of the estate.

• Have everyone present who may be involved with your final wishes - especially all the heirs and potential heirs.

• Pick a convenient, relaxed location for everyone with time allotted for quality family interaction.

• Have an objective moderator who is knowledgeable of your situation and the current tax laws - possibly the family attorney or financial advisor.

• Decide beforehand if you will be sharing both how your estate works AND the value of your gross estate and subsequent distributions. Sometimes being too specific can have negative effects on the heirs.

• Clearly explain the way your estate plan is designed as well as the reasons for setting things up the way you have. Diagrams are helpful.

• Make it a fun, yet informational, time together where everyone feels free to ask questions. The family conference gives your heirs a chance to hear from you - your heart, your wishes. It also gives them the permission and opportunity to ask questions.

• Don't be afraid to be honest!

This article provides information of a general nature. None of the information contained herein is intended as legal advice or specific estate planning advice.


The National Planning Group of Ronald Blue & Co. is a unique division within RB&Co. that serves the everyday steward - For more information you can visit their website:  www.everydaysteward.com.