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7 Reasons to Tell Your Heirs What They’ll Inherit

by Norris Law Group on November 26, 2014

In some families, the topic of the inheriting money is either “off limits” or considered “morbid.” Of course, each family has the right to deal with money as it sees fit. But there can be advantages to being very clear with heirs in regard to what they can expect to inherit one day—or not inherit, as the case may be. Forbes staff writer Deborah Jacobs provides some advice and seven reasons to have financial discussions with your heirs in a 2013 article that appeared in Forbes magazine.

  1. “Avoid surprises.” If you make your financial intentions very clear early on, this could avoid potential disagreements among your heirs upon your passing. Taking actions such as having a will or trust in place, choosing an executor, and naming people whom who wish to grant financial or medical power of attorney can provide your family with peace of mind and eliminate any confusion about your final wishes.
  2. “Refine your approach.” Perhaps you would like to leave more money to one of your children than the others, because that child has more children. Maybe you have a family business to consider, or multiple homes or other property. Such issues can also become a bone of contention among heirs. There are a number of actions you can take ahead of time to avoid arguments after you are gone, and a skilled estate planning attorney can help you work those out.
  3. “Save taxes.” For the tax year 2014, the estate tax exemption is $5.34 million, and it has been increased to $5.43 million for 2015. If you are in a situation in which that amount of wealth (or more) is involved, estate taxes may be an issue upon your passing. Lifetime gifts can save on estate taxes, as these gifts leave less for the government to tax. If gifted assets increase in value after they have been given away, you will not owe gift tax on the appreciation.
  4. “Adjust expectations.” If you do choose to make large lifetime gifts, you might want to clarify to your heirs that these gifts may lead to changes in any amount they might inherit later. You could also make clear other financial decisions. For example, if you lent money to one child to start a business and it hasn’t been paid back, you could let all your heirs know that this child should receive a smaller inheritance.
  5. “Explain your reasoning.” The death of a parent can bring up old resentments among siblings, even if the siblings generally get along now. The more you can explain why you are making financial decisions, the better the chances may be that family relationships will be maintained.
  6. “Expect disclaimers.” A “disclaimant” is a person who chooses to deny an inheritance, usually for tax reasons, and often to donate the inheritance to another person or to a charity. For example, your child could disclaim an inheritance so that it passes to his or her own children. You can also add specific charities to your will in the event that an heir disclaims so that the money will go to an organization that your or your family supports.
  7. “Promote family harmony.” For most of us, seeing our family happy and healthy surpasses all other concerns. You can do your best to ensure that your heirs will stay in communication with one another after your passing by having some direct but compassionate conversations now.

Attorney Graham Norris and his associates at the Norris Law Group serve the residents of Utah County, UT and throughout Utah, Wyoming and Idaho. Contact them today at 801-932-1238 or online for a free consultation.

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