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Estate planning choices should be explained to heirs

Readers here in Sacramento may have seen a recent financial editorial about inheritance, and the people who are faced with tough decisions about where their money should go after their death. This isn't a dilemma for the super-wealthy or those with a substantial estate, this is an issue that affects nearly everyone who has assets and wishes for their distribution when they pass on.

One recent survey showed that about one of every four people between the ages of 18 and 59 expect to receive an inheritance, from their parents or otherwise, during their lifetime. Also telling is that about one of three parents said they plan to leave their assets to charity. One concern is that their children or other heirs aren't responsible enough to wisely spend their inheritance.

In addition, an increasing number of parents believe they may need their existing assets to cover their own personal expenses later in life. As medical advances prolong the life expectancy of people in the United States and medical expenses continue to rise significantly, this is a legitimate concern, and one that would most likely lead to fewer young beneficiaries getting the inheritance they claim to expect.

No matter the reason for leaving or not leaving an inheritance, potential heirs don't have to like it, but it may help if they at least know the rationale. The discomfort surrounding family financial topics can be alleviated by communicating openly with potential heirs and educating them about the situation and the parents' wishes and expectations for use of the money. "It's a terrible mistake not to tell them about your wishes and expectations," said one financial planner. "But if your children know the reasons why or why not, they are less likely to question it and argue about it."

While this conversation may be easier said than done in some cases, it is also beneficial to enlist the help of an experienced estate planning attorney. An attorney can establish an estate plan and a foundation for communication, which is an essential starting point for success.

Source: Kansas City Star, "Leaving an inheritance? Manage expectations," Steve Rosen, Oct. 11, 2013

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