What Should We Tell the Kids?

"What should we tell the kids?" That's one of the most frequent questions we get from grantors who name ATG Trust as their successor trustee. When we meet to review the discretionary provisions included in their trust instruments, parents are concerned about how their plans will impact their children and sometimes are wary of broaching difficult subjects. Unfortunately, there isn't a clear answer to the question of how much of an estate plan to divulge to younger generations or other beneficiaries.

As a professional trustee, we see many grantors' plans come to fruition and have experienced the effects that a lack of communication has on descendants. As grantors evaluate how to communicate with their children about the assets they have (or have not) left them, parents may want to consider the following scenarios:

• Large sums of money passing between the generations via trust: Although most kids don't know how much money their parents have, lifestyles are often a good ballpark indication. If Mom and Dad have vacation homes and an upscale lifestyle, chances are the next generation believes they stand to inherit a substantial sum. Rarely do children think of their parents leaving a legacy in trust, particularly if they feel they have a good relationship with them. Therefore, it can help with the transition after the parents pass if a conversation about the existence of a trust is discussed. Dollar amounts don't need to be part of the discussion but talking during life about why a trust is beneficial and the goals the parents have for their estate plan can eliminate hurt feelings and lingering questions after death.  
• Assets staying in trust for one sibling but not all: There are often very good reasons to leave assets in trust for some but not all beneficiaries of an estate plan. Having a conversation with the beneficiaries to explain the reason why can eliminate sibling issues farther down the road. Sometimes, it is impractical to have the conversation with the beneficiary whose share is to remain in trust. The grantor may want to consider having the conversation with the successor trustee so that they can explain the motives behind the plan so the trustee is prepared to help when the time comes.
• One sibling playing a role over another sibling's share: Given the increasing number of special needs beneficiaries, many plans include a sibling have a role over another sibling's share. Similarly, siblings may also be asked to serve as successor guardian or Power of Attorney. Parents often imagine that a sibling will step into their shoes as the support system for their sibling with special needs. It is important for parents to prepare their children for the responsibilities that will entail. So many times, we see siblings taking over for a parent to assist with a special needs sibling without any understanding of the job they are about to undertake. A conversation early on can help the family make an educated decision about who should fill what role. Sometimes, it may make sense to name a professional trustee to assist when it comes to a special needs trust.

Although there are many reasons grantors do not to talk about their estate plans with their children, doing so may help the carefully crafted plan work even better. A conversation upfront about roles and responsibilities can help facilitate a smooth transition when the time comes.

We are happy to meet with future clients to discuss their estate plans. Contact us today to discuss your grantor's trust and set up a meeting.