Inheritance - Is It Time for a Family Discussion?

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Apr 28, 2017

By Todd Helle, EA Partner at Terry Lockridge & Dunn

Nobody wants the kind of surprise Joan Crawford left her adopted children at the end of her life in the movie “Mommie Dearest” — no inheritance. Of course, inheritance should not be expected or relied upon, but because it is so rarely talked about, few people know what to expect. As it turns out, while some families discuss other end-of-life issues, very few talk about the details of inheritance. According to a recent study conducted by Ameriprise Financial, of 2,700 American adults surveyed, only 21% indicated they knew how much they would receive.

So, why do families avoid this discussion? Beyond the obvious that death is a difficult topic, the reasons vary. Often those leaving an inheritance are concerned they are not on track to leave as much as they would have liked, while some do not have an estate plan in place. Another source of concern is that their heirs do not have realistic expectations about the amount they will receive. And, of course, money decisions among family members can cause tension and disagreements that are already exacerbated by the prospect of losing a loved one.

Experts recommend that families sit down together and have an honest discussion about the potential inheritance. Despite how difficult it can be, older family members (parents, grandparents) need to be candid about the amount they plan to leave so that their heirs can incorporate this amount into their own financial planning. In addition, informing family members of the details means there will not be a surprise when the estate is distributed. If the benefactor does not have an estate plan already in place, the family can discuss working with an attorney to have one prepared.

Discussing end-of-life issues is never comfortable, but seeking the financial advice of an accountant or attorney might be a way to ease the tension for your family. At Terry Lockridge & Dunn, we have accountants that can assist you with your estate planning questions and needs. We can be reached in Cedar Rapids at 319.364.2945 or in Iowa City at 319.339.4884.