You’ve worked hard to build a nest egg to pass on to your children. But do they know that? And do they know what you hope they’ll do with it?

If not, you’re not alone. Consider this: 40% of parents with at least $1 million in investable assets haven’t talked about their estate plans with their kids.*

Conversations about inheritance and your legacy can be stressful and emotional. But they can also give you and your family peace of mind.

Not sure how to approach your kids? Use these conversation starters to begin the discussion and help avoid family inheritance issues.

Open with an anecdote
Have you recently read an article or talked to a friend about inheritance? You can use these real-life experiences to prompt a conversation. Breaking the ice casually can ease some of the tension that comes with talking about inheritance.

Conversation starter No. 1: “I just [had a conversation/read an article] about estate planning, which reminds me that I wanted to talk to you about our situation …”

Lead with a question
Making a declarative statement could come off as indifferent to your children’s feelings, hopes and wishes, and shut down the discussion before it begins. Instead, be firm but polite, and lead with a question that shows you’re open to a two-way dialogue. If you have a plan for how they should spend their inheritance, consider gifting the money now and guiding them accordingly.

Rather than, “I’m giving you this amount, and you’re going to do X with it,” try the following:

Conversation starter No. 2: “I’ve set aside X amount for you when I’m gone. How would you feel about that?”

Explain what your estate plan means to you
Help your kids work through the discomfort of the conversation by sharing why estate planning matters to you. You can also acknowledge that it’s awkward — but necessary — to discuss it:

Conversation starter No. 3: “I know this isn’t easy to talk about, but I want to go over the inheritance you’ll receive when I’m gone. It’s important to me that you’re prepared when the time comes.”

*Source: “Talking to children about inheritance,” Central Trust Company, March 22, 2021.

1. Assigning co-executors isn’t always a great idea.

People often want all of their children as co-executors, to be fair, but this can often cause problems when it comes to administering the estate. What happens if they don’t agree? This can end up causing a lot of arguments. Let’s say you have a house and want to sell the estate assets. Some children may want the house to stay in the family, some may want to sell. Even if they agree on selling, how much should it sell for? These disagreements can inevitably turn into family in-fighting. Additionally, each co-executor should have their own attorney if you can foresee any conflicts of interest. So if you have four co-executors, that’s four times the legal fees. If you are going to choose multiple co-executors, it should be an odd number, so you have a majority rule. The worst situation is a stalemate where one executor wants one thing and the other disagrees.

2. Don’t be vague about assigning items of sentimental value.

Oftentimes someone will say, “I leave an equal share to all my kids”. While you may believe your children all get along and can figure things out, when people pass away, relationships can change. It’s easy to divide a monetary sum, but you can’t equally divide a sentimental painting, for instance. As people are processing loss and the associated emotions, these sentimental pieces can become very important. Without some kind of mediation or line of succession, this can also lead to arguments and in-fighting among your children.

3. Even with a will, it’s likely your executor(s) will still need to go through probate.

Probate is the legal process of administering a person’s estate when they die without a will, or if they die with one, proving the will. Although a valid will can direct where the assets are allocated, it doesn’t always avoid the probate process if the decedent owned real estate. Putting assets in a trust can be very beneficial for avoiding the probate process.

4. Update your will to reflect life changes.

Certain life events such as divorce, marriage, or the birth of children require your documents to be updated. Even outside of these circumstances, it’s recommended that your estate plan be revisited every five to seven years. If you forget to update, you could inadvertently leave someone out of your will. For example, if new grandchildren are born and the parent dies, the grandchildren would be outside of the will and would receive nothing.

5. Leave instructions about where to find your will.

Be clear and specific when letting loved ones know where to find your documents. If they simply know you have a will, but don’t know where the originals are or how to find your attorney, it could be a long time before they’re able to administer your estate. In the worst possible situation, they may never find it and need to go through probate without a will.

6. Work with someone who actually understands estate law.

Estate planning is complicated and even a good attorney who doesn’t specialize in the field can run into traps and errors that could cause serious problems down the line. While it may be tempting to work with a divorce lawyer, or an attorney who does litigation because you’ve worked with them before, or they can give you a good deal, it’s always best to work with a specialized estate planning attorney. The difference between a well-prepared set of documents and poor ones can mean a lot of extra time, money, and issues down the line.

Probate is the process completed when a decedent leaves assets to distribute, such as bank accounts, real estate, and financial investments. It’s the general administration of a deceased person’s will or the estate of a deceased person without a will.
The probate process includes the collection of the decedent’s assets, payment of claims, appraisal of assets, filing of tax returns, and the distribution of the remaining assets to the estate’s beneficiaries.

Not All Assets Pass Through Probate
Only assets held in the decedent’s individual name with no named beneficiary pass through probate.

Here are a few examples of assets that are not subject to probate:

Pay on death bank and brokerage accounts
Jointly held real estate
Joint bank accounts
Life insurance and retirement accounts with named beneficiaries
Assets held in a trust

The Advantages of Probate
During probate, the period for creditors to file claims is only four months from the date the executor is appointed. In the absence of a probate, the period is generally one year from the date of death. The shortened claim period can be beneficial when the decedent left behind unknown debts.

The Disadvantages of Probate
Probate is an expensive and lengthy process. In California, the typical probate takes around a year, but can last far longer in contested or mishandled cases. While the court filing fees aren’t too expensive, the fees paid to the personal representative and probate attorney are significant. While fees can vary, they generally average around 2-3% of the estate value.
Additionally while most trust administration matters remain private, probate is a public process. All of the court filings can be reviewed online or in person by the public.

Probate is Not Required in Cases of a Small Estate
The current threshold in California for a small estate is $184,500 (as of 2023). If all the assets that would pass through probate do not exceed this value, the assets can be collected by presenting an affidavit to the bank or other entity holding the property.

Setting Up a Trust as an Alternative to Probate
The majority of clients will set up a revocable trust as an alternative to probate when planning their estates. With a living trust, upon death, the assets will pass to the trust beneficiaries after the administration process is completed by the trustee.
While trust administration is not free, the costs are generally much lower than in a formal probate.

It is well known that the court supervised process called “probate” is tedious and expensive; therefore, it is a common goal to avoid probate.

What is less well known is that, because probate is court supervised, what is accomplished is court approved and final.

Some examples of situations where probate may be necessary and crucial are:

– When there are beneficiaries or heirs who are in conflict;

– When there are problems with creditors.

In those cases, the relative conflicts and the debts are all settled in the probate process.

So it’s not all bad.