Data shows that 45 million U.S. households will receive inheritances running into trillions of dollars. However, the mere mention of inheritance can cause some people to go into a fit because of past experiences.
The process can be emotionally charged, so you must ensure a smooth asset transition to your adult children. As a senior citizen, you have the right to know the differences between the specific laws that apply to you. These tips will guide you through the process and help you sidestep the slippery terrain that causes significant inconveniences.
1. Start the process early and communicate with your family
Starting the process in advance gives you ample time to put everything in place. If you wait until the last minute to plan an inheritance or your will, there is an increased risk of overlooking salient areas. There is no problem with planning your will, even when considering your assets small or insignificant. Waiting until your twilight years is never advisable because that can create the perfect ground for misunderstandings between your adult children. While at it, do not forget to start open and honest conversations with your adult children. Let them know the situation with your assets and your plans for distribution.
This discussion kickstarts a healthy forum to initiate conversations on who gets what. Sometimes, you may want the inheritance to favor a financially struggling adult child.
That is understandable, but will your other well-off adult children agree with the arrangement? Certainly, you have total rights over whom you bequeath a significant portion of your wealth. But it’s equally important to understand the sensitivities with such decisions. If you fail to address them early, you inadvertently increase the risks of lengthy sibling litigations after your passing. Transparency will prevent conflicts and create a peaceful environment devoid of bitterness. Remember that your wishes will be carried out as intended if you put them in a legally binding will or trust.
2. Seek professional guidance
Financial advisors and attorneys come to mind when you consider this point. A smooth inheritance will depend on navigating complex processes that only professionals can understand. The financial advisor helps to quantify your assets, especially when liquidation becomes an option. Their rich experience selling on the open market provides the help you need to ensure fair asset distribution to your adult children. Meanwhile, the attorney you consult must have the requisite experience dealing with inheritance issues. Their specialization helps you navigate tax laws while ensuring equitable distribution of your assets. Ideally, an estate planning attorney will be your surest bet to ensure a smooth inheritance process when you depart. Y
our adult children may be concerned about how you intend to go about the process as you age. They may avoid mentioning the topic due to its sensitivities but will be relieved that you’re working with professionals who bring their experience to bear. An attorney does more than oversee the main inheritance process, and you’re about to discover what these are. First, they set up trusts and establish healthcare proxies if needed. With their guidance, you can safeguard your wealth against unforeseen circumstances like other relatives contesting the will. Such legal suits may sometimes originate from existing business partners or the state. These issues can be tricky and time-consuming. In such cases, you can find a reputable probate attorney to help you navigate the challenges.
3. Organize and share important documents
The ideal person to share your important documents with is your attorney. However, some situations may require sharing these sensitive documents with trusted persons. In other circumstances, your most trusted adult child may be entrusted with knowing the location of these files. Trust documents, deeds, insurance policies, bank account information, and the actual will are documents you must share. It is also advisable to grant access to digital versions of the same documents. These measures are taken to avoid losing access to inheritance documents. Facing reality would be best, especially during compromised health situations. Imagine what would happen if you fail to organize and share these documents before dementia hits.
A Columbia University medical research states that 1 in 10 seniors already have mild cognitive impairment by age 65. That increases to 3 in 10 seniors by age 70. The prevalence rate makes it compelling to take measures to avoid losing your most sensitive documents. You will be glad to have taken the needed steps before any health condition compromises your cognition.
What will happen if your documents cannot be found? First, there will be delays during the inheritance process. Secondly, it increases the likelihood of confusion and disputes. Delays and disputes will contribute to expensive legal battles, ultimately ruining relationships among your children. Your state may apply intestacy laws in worst-case scenarios to dictate how your assets must be distributed. Unfortunately, this will not align with your original wishes, but it’s best under the circumstances.
4. Choose between a fair or equal distribution
You have absolute rights over your assets and how you want to distribute them. However, certain factors sometimes come into play, putting you in a dilemma. Meanwhile, you must contend with the internal struggle over who gets what as different emotions stir within you. All your adult children have different needs and varied financial situations. Would you give more to the successful adult child you’re proud of? In another breath, are your parental heartstrings pulling towards the struggling adult child who has become your primary caregiver? That is when you should consider giving a fair or equal distribution. This delicate matter can escalate into conflict if you fail to handle it properly. Fortunately, there is a way around such situations. First, consider their individual circumstances and current financial stability. Do they have a young family, or are they still in college? Secondly, consider previous financial support you may have provided your adult children.
These are critical considerations that define the parameters of fair and equal distribution. At this point, you may want your estate plan or will to reflect your inherent values. Some aging parents may stick with an equal distribution, no matter what, to show their unbiased personalities. On the other hand, others choose a fair distribution to appreciate enhanced support from adult children during dire moments. The decision is yours to make at the end of the day, but as discussed in the first point, discuss it with your family.
5. Put contingency plans in place
What happens if the executor of your will passes on before you do? Have you considered what to do if one of your adult children departs or is suddenly diagnosed with a terminal illness? These are extremely sensitive subjects that must be tackled head-on with contingency plans. They are backup measures to ensure a smooth inheritance process when life throws a wrench into your original plans. Things might not go as smoothly if you don’t provide the roadmap for how you want your last will to be carried out.
What would you do if you had only one adult child who passed suddenly and never had kids or married? Who will be the deserving beneficiaries of your wealth? When people face this painful situation, they sometimes bequeath their wealth to charity. Others resolve to donate their wealth to humanitarian causes. These are noble causes to consider as part of your contingency plan. Another noteworthy point is choosing your power of attorney early in estate planning. That way, the person can act in your stead if you become incapacitated.
Last, but not least, remember to review and update your will periodically. Life happens when you least expect it to, so reasonable flexibility is needed in your plans.