Amy & Dan Smith's Planning for Life: Planning for Life Disclosure and Other Family Issues in Estate Planning

               

What do we tell the kids?

Questions of how much and what type of information to give the children often arise during consultation.  The answers depend on the circumstances of each family – the ages and maturity of the children being the most obvious factors.  As a general rule the ideal is to advise the children as to the extent and nature of the parents’ assets and plans.  This can lead to a smoother transition to the next generation.

Issues of entitlement, sibling rivalry (where there is more than one child involved), and perceptions of fairness may naturally surface with regard to the parents’ estate.  Feelings may be particularly acute where one child has provided more care and attention to a parent than the other children, as is often the case.

Intra-family struggles are painful and can continue long after the parents are gone.  Lawsuits over estates are often more about replaying family wounds than issues of legal substance.  To the extent that parents can confront potential conflicts during their lifetimes and head them off, they will go far in providing a more meaningful legacy for their progeny.  An investment in professional family counseling during the parents’ lifetimes may be the best use of family resources.

Essential Information for Estate Administration

Accessing information for survivors can be difficult.  If no effort has been made to organize financial and estate documents during one’s lifetime, the survivors must search for necessary information to conduct estate administration.  In the digital age, mail may not bring statements indicating asset values and locations.  The Virginia General Assembly has enacted legislation to empower the estate administrator to obtain access to digital accounts; however, the process is tedious and problematic. The survivors need to have access to passwords.

Where one spouse does all the financial management for the couple and he/she is the first to die, the surviving spouse feels particularly vulnerable.  It is recommended that the money-manager spouse regularly share with the other spouse his/her routine with the family finances.

Who Should be in Charge?

Parents often ask whether their estate or trust should be left in the control of one or more of their children after they are gone.  As a rule, professionals (lawyers, CPA’s, or bank trust departments) do not need to be appointed as personal representatives of an estate or trustees of a trust.  Lay people may serve in these capacities and consult with professionals as needed.  The staffs of the Probate Department of the Circuit Court and in the Office of the Commissioner of Accounts are generally available to provide assistance to people serving in these capacities.

There are situations, however, where appointing a child or children may not be advisable.  For example, if there are several children, singling out one or two for authority may lead to ill feeling among the others.  If a parent leaves the share of a child in trust for that child – instead of an outright gift – out of concern that he/she is irresponsible or that he/she may be particularly vulnerable to a spouse or other source of undue pressure, it is generally not wise to appoint a sibling as trustee of such a trust.  It could lead to friction between the siblings.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm.  Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC.  Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176.  (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James.  Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice.  Dan Smith is not affiliated with Raymond James.