We have two grown children, both married. We are close to both our kids, as well as with their spouses and our four grandchildren.
Here is where we could use some advice. We own two pieces of property, both on different ends of the east coast. The house in New Hampshire, located on the ocean, is where we raised our kids; both kids love this place and now vacation there with us whenever they can. Our condo in Florida is a recent purchase; our kids and grandchildren come maybe once during the winter to visit, as it is not convenient to get to.
We are in the process of updating our will. When we mentioned to some friends that we planned to leave both properties to our two grown kids to own jointly, they suggested that joint ownership among siblings can be fraught with difficulties.
The problem with leaving one property to one of our kids, and the other property to our other child probably won’t work because both kids will want the home they grew up in with all its wonderful memories, plus it’s more accessible. Also, the family homestead is worth about twice the value of the condo. Your advice?
Of course, you will want to work with your financial planner and your estate lawyer when it comes to legalizing your inheritance wishes, but I can share with you some other aspects of the process that you might find helpful, including emotional and psychological considerations.
The non-financial implications of inheritance
As elder law attorney Mark Accettura explains in his excellent article, “In addition to the transmission of wealth, our estate plan communicates many things to those we leave behind. We say who is remembered, who is loved, who is important, who we trust and who we trust to be in charge. It carries additional weight, because it is our final statement.”
In dealing with the emotional aspects of death estate planning, journalist Paul Sullivan suggests, “Children crave equal attention from their parents. So when it comes to inheritance, which can seem like a final accounting of that love, anything but an equal split can be tough to grasp.” To Mr. Sullivan’s point, as one of his readers comments, “If you think of how children feel over the course of a lifetime, there are so many things that kids keep score on. Who got this quality time? This car trip? There are so many imbalances. You think it [inheritance] would just get divided equally in the end.”
Equal is the operative word here. So, if you were dividing up a set sum of money and dividing that sum by two and then distributing it, doing so would most likely be viewed by your children as equitable, meaning it would be impartial, reasonable, and fair. In fact, you could achieve this outcome after your deaths by requiring that both of your properties be sold and the proceeds shared equally by your children and/or your grandchildren. This is all very straightforward and easy to execute.
However, this approach may be counter to your children’s desires. That is, they would have preferred to have the real estate rather than a check. In other words, the emotional possibilities of honoring your legacy by living in your space, while at the same time they are creating new and wonderful memories for their families by retaining one or both of your properties, may be more important to them.
Talking about inheritance possibilities with your children
The good news is that because of the close relationships you have with your children, you are in a position to talk directly with them about their preferences. You know best whether to have this conversation with your two kids together or separately.
I suggest that these are the main points of your conversation with them:
- You are updating your death estate planning and you want to share some possibilities with them. (Your kids may balk at talking about your deaths, but set a good example by being unemotional about the whole thing: “Hey, we’re going to die. Do you want our deaths to be easy to deal with from a legal point of view, or do you want have to face all kinds of messy legal entanglements?” (Easy choice, I should think.)
- Many experts agree with your friends who suggest co-ownership by siblings is not the best route to go. You can let your children know that you are taking this option off the table, even if they insist they would be able to work out any differences. (Not putting them in that position is another gift of love from you!)
- Let them express how they feel – financially, psychologically, and emotionally – about inheriting either the family homestead or the Florida condo. (Because one property is worth less than the other, you can explain how this difference can be addressed by adding cash or other assets.)
- Depending on what you learn – for example, you may find that: one or both of your kids have their own plans for a vacation home in the future; that they have a particular interest in one piece of property over the other; that because of professional choices they’ve made they don’t ever envision being in a position to financially support a second home; they would choose travel over a second home.
- Let it be known that you appreciate that whatever decisions are made today regarding the properties, circumstances, such as expensive unforeseen medical expenses, may require re-visiting your estate planning, and making changes.
After those conversations, you will be in a better position to make decisions that are more accommodating to everyone. (If both kids express a desire to be left the family home, you may simply pull a name from a hat. That should be perceived as fair.)
To share, or not to share . . .
There are differing opinions on whether to share with your children what you ultimately decide to do. For example, one of Sullivan’s readers writes: “Both my wife’s and my adult children have copies of our documents, wills. POAs (power of attorney), living trusts, etc. That way they can complain while we’re alive. They don’t, however, have listings of the value of the estates.”
Mark Accettura disagrees and feels estate planning content should be kept private:
“Clients often ask whether they should give a copy of their estate plan to their children. With the exception of health care powers of attorney (living wills), the answer for most families is ‘no.’
“As in the movie ‘Back to the Future,’ you don’t want knowledge of the future to affect the course of history. As author, you reserve the right to change the ending of your personal history. Giving documents during life creates the expectation that no changes will be made. Later changes will be viewed as taking away something previously given. We don’t know the future; keep open the possibility that things may change.”
In addition to my advice above, these related article may provide additional information that is useful:
I hope you find my ideas and suggestions helpful.
Perhaps you’ll agree that this quote is a nice way to end this column:
“I had an inheritance from my father,
It was the moon and the sun.
And though I roam all over the world,
The spending of it’s never done.”
― Ernest Hemingway, For Whom the Bell Tolls
Ask Dr. Gramma Karen is published every other Tuesday.
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