The Importance of Family Discussions in Estate Planning

 Posted on August 30, 2014 in Estate Planning

Although people do not like to think about their own mortality, the realities of life is that it will end one day. And that is why making plans to ensure that our wishes are met and our families are taken care of is so important.

A study that was conducted by Fidelity Investments revealed that many adult children and their parents avoid having family discussions about estate planning. Topics such as retirement finances, elderly care and will and inheritance issues are issues that should be discussed, but quite often, are not. In fact, according to the study, four out of 10 families have not had those conversations at all.

The Intra-Family Generational Finance Study surveyed parents who were 55 years or older, with an adult child of 30 years or older. The parents had to have a minimum of $100,000 in investable assets. The adult children who participated had to be at least 30 years old and had to have a minimum of $10,000 saved in an IRA, 401(k) or other investment account.

Despite the high amount of families who have not broached the subject, 75 percent of participants said it is important to discuss finances. However, when these conversations should take place was a source of disagreement among parents and children. Over 60 percent of parents and children disagreed on the timing. Parents think it is better to wait until after they retire, but their adult children want to decide these matters well before parents' retirement or medical problems become an issue.

Other discrepancies between the answers given by parents and adult children included the following:

• Adult children think their parents worry about finances more than double (56 percent) the amount of time the parents actually worry (23 percent); and

• Parents and their adult children also disagree on who will care for the parent in the event they are no longer to care for themselves. Almost half of the children say they will be the caregiver if their parent becomes ill, but only six percent of parents expect their children to take care of them.