Poll: Should Beneficiaries Know Of Their Inheritance Well in Advance?

[youbet]

My son and I have a joint account which I gift money into each year and manage the investments for him, I don't think he has alot of interests in knowing what are in there but on the other hand, he is intelligent and curious, so I am hoping that he looks through the holdings in the account periodically.

For estate planning, you might want to double check if you'd be better off with your son owning the account and you having full POA rather than holding it as a joint account.

 

[CRLLS]

We have 2 married children, both in their mid to late 40's with their own families. About a year ago, we told them they will inherit what is left 50/50. Also what the "estate" value was at the time in very rough numbers and clearly said that can go up or down from there. We also said were weren't going anywhere soon. We did not receive any further questions about details.

Wills are complete and have provisions if they are not this side of the grass at the time of our demise.

It clearly is easier to plan with ours being the only marriage for us both (no ex's or 2nd or 3rd spouses here).

 

[RetMD21]

...When my Dad died, even though I did his tax returns back then, I was never sure we had collected every life insurance policy claim or bank account.

He just didn't have a paper list of current accounts and policies.

Same issue with my Mom, and she had approximately 10 bank accounts (lived during depression) but no list, so maybe I missed something....

Having been through this three times I keep a list including a statement about account types and life insurance policies that don't exist. I spent too much time trying to hunt down lapsed policies and annuities based on poor records.

 

[athena53]

My son is my only child. That makes it easier! He and DDIL are very responsible with money. DS says he wants to work his entire life (he's an actuary so it's pretty much a sedentary desk job), but having ER'd at 61 I know that's unrealistic. They're saving- I don't know how much but DS is a pretty conservative investor and likes fixed-income. It's likely that I'll leave $4-5 million when I leave this earth. He says he doesn't want my money. I believe him but I hope that it will be a cushion for them in retirement. If he were making poor choices or making financial decisions in anticipation of a large inheritance I'd be less transparent.

My personal situation- Mom died in 2016 and Dad in 2021 after 18 months in long-term care. At one point I asked my brothers if his expenses were sustainable (i.e. did I need to chip in to help) and they said yes, they were. I never asked what he had. About 20 years ago Dad had asked me how to do internal rates of return on his portfolio in Excel and I showed him. Their assets at the time were about $500K so that number stuck in my head. I was stunned when I found he'd left an estate of $1.4 million. It was split evenly among my 3 brothers, my sister and me, but still an unexpected blessing.

I don't count it in my net worth calculations. I'm gleefully spending it over 10 years, mostly charity and the grandchildren's 529 accounts and some family travel. Thanks, Mom and Dad!

 

[Niuatoputapu]

Great discussion, everyone. My DW has little interest in our finances. My solution has been to, once a year, update a written financial/estate plan and get our three children (aged 28-37) plus DW into a day-long discussion about what happens if I am "hit by a bus". The kids do not know what percentage of the total estate will go to them, and no one seems to care. Hopefully, it will be twenty years or more before they find out. My DW or an incapacitated me are well situated if that bus finds me. The kids are learning about financial and estate planning and how to manage an investment portfolio - larger than what they each currently have. Next year's session will include how to handle inherited IRAs and how to coordinate QCDs and RMDs. The motivation to learn about things to "protect their mother after the bus accident" is strong.

 

[Texas Proud]

SOOOO, after reading some comments I am going to add an addendum to my post saying that they should be told...

That is if the money is going to be going through the estate or a trust... before I was talking about beneficiaries of an account which the executor has nothing to do with it and the entity can ignore them...

But if it is going through the estate or a trust there is a person who is going to be distributing what you requested...

The example from reading here is when we were putting my mom in memory care... and two of my sisters asked if they needed to chip in for the expense... I said no... they had no idea how much my mom had... she never told them, I never told them...

Mom also left money as life insurance that went into a trust and all the grand kids got money... ALL were surprised how much they got.. not a great amount (like $36K) but big money to them... some of my siblings had no idea their kids were going to get anything..

 

[More Cowbell]

Or your Parent gets married..... and the $$$$ all goes away to spouse, and the kids get zip. It happened earlier in the thread.

This can happen if a non-savvy parent remarries and intends for children to inherit, but doesn’t update BOTH will and trust after remarriage to specifically disinherit the new spouse by name. Failure to update both after remarriage leaves an opening for the new spouse to claim an intestate share (the “omitted spouse” share) once the parent dies in some states. The presumption is that the omission was accidental. The surviving spouse gets half of the couple’s community property, half of the couple’s quasi-community property, and a share of the deceased’s separate property, not to exceed half of the separate property.

After DM resigned as trustee and I became trustee, I did some AI research, learned about the accidental “omitted spouse” issue. I contacted the lawyer who’d worked on DM’s estate plan to ask if this was a concern. It was, so I brought DM to the lawyer to amend the trust to omit her new spouse. She’d only updated her will to omit hew new spouse after remarriage, thinking the trust was secure. So that’s one less potential headache to deal with going forward.

 

[More Cowbell]

We're still working out how to handle finances, and keeping them separate for now. My previous husband was like yours, I was the only one he cared about, and for good reason considering how his remaining family ignored him. Dummies!

My vote when dealing with a new spouse who has their own children is to keep finances separate with maybe one joint account that both contribute to for shared expenses, like utilities or cell phone bills. This prevents accidental commingling of property.

Don’t be like my DM who turned all her bank and credit union accounts into joint accounts with her new spouse. It doesn’t matter that her children are listed as beneficiaries, if she passes first, then legally it all goes to the joint owner, her new spouse. Now that I’m her POA I’ve made sure the joint accounts (not trust accounts) are used to pay for their joint expenses and her expenses (caregivers).

 

[badatmath]

I was thinking this morning that I'd probably not have retired if I had not expected an inheritance. I mean, I retired cause I got laid off and had 2 choices and took the one that left me with retiree health insurance but I may have overvalued that considering how $$ it is.
In the back of my mind I also expected to inherit enough to help me delay filing for the pension a couple of years which would have put me more or less in line with my original plan. But things didn't work out that way. I wish nobody had ever brought it up. . . especially over and over and over. I'd really not have thought of it on my own since my family was not overly in any of the "kids".

 

[Sunset]

I had no expectation of getting an inheritance of $$$$. The benefit was no bitter taste at all , and the bonus was a tiny inheritance which made no retirement difference.

 

[bigcmagor]

The knowledge of the potential inheritance was enough for me to jump prematurely five years ago. The job had become too much and daily chest pain was routine. Having the potential and likely assistance in the future if I screwed up probably saved my life. Count me among those who suggest you share your plans.

 

[big-papa]

Our kiddo knows that she's our sole heir after we both pass. She also knows that she will basically get "whatever's left" and that the amount is impossible to know in advance, especially at our current age. She has no idea what our current net worth is, but she had a rough idea from about 6 years or so ago when she filled out FAFSA forms before starting college.

We do help her from time to time and I've started a discussion with the DW about funding a Roth IRA for her each year.

Cheers.

 

[Aerides]

My sister and I know we'll be even-stevens beneficiaries, with probably a carve out going directly to her two kids (haven't specifically asked, but presume my parents would take that off the top before dividing the rest between the us two).

But I have no idea how much it is, and hope it's a lot less when they do pass. I'm always pushing them to spend more. Also things like financial assets vs. house and how to split? No idea, but I know them well enough to know it's all well documented.

And I do have dibs on mum's full set of Denby from the 70's.

I don't think it's a good idea to do the "when we go this will all be yours" thing to most adults kids. A) it could be a lot less after LTC, and B) things change, people change, priorities change.

Before telling anyone "you're getting this money one day" I'd have a long hard look at how that would be of benefit for the eventual/probable recipient, specifically based on that person.

 

[RetMD21]

......

After DM resigned as trustee and I became trustee, I did some AI research, learned about the accidental “omitted spouse” issue. I contacted the lawyer who’d worked on DM’s estate plan to ask if this was a concern. It was, so I brought DM to the lawyer to amend the trust to omit her new spouse. She’d only updated her will to omit hew new spouse after remarriage, thinking the trust was secure. So that’s one less potential headache to deal with going forward.

I wouldn't have guessed that the trust would need to be amended. It could have been a huge problem if you hadn't caught it or if your mother had lost testamentary capacity.

 

[RetiredHappy]

I just visited my kid last week and reminded him of the annually updated to-be-opened letter that I had left in his cabinet. Later on when we were chatting, and he said that I was rich, and I said no. He asked "What do you have? A couple of million dollars?", and I simply nodded and we moved on to talk about other stuff.

 

[Music Lover]

Happens a lot.

A snowbird acquaintance in Florida told me about getting married (her first time) in her early 40s to a divorced man (in his 50s) with adult kids. He was a very successful contractor. They lived in a big house, living the life, fancy travels, etc. He died (suddenly) 10 years later. She got everything, his adult kids got zilch. The kids don't talk to her.

omni

My wife and I have been together 8 years. If she passed and I somehow ended up with 100% of her estate I would just give it all to her daughter.

Of course we both have wills so that won't happen as her daughter is her sole beneficiary. But sometimes I wonder how many second spouses that end up with 100% of an estate decide to share with the spouse's kids instead of keeping it all? Not everyone is greedy and not everyone needs the extra money.

 

[brett]

As someone who has been the executor of four estates, currently in the middle of a somewhat messy one, my advice would be to focus your efforts on two basics before you even consider disclosing contents.

The first would be to keep you finanical affairs, including taxes, in order with a clear list of all assets/institutions/insurances, etc. Some joint accounts if you feel the necessity.

Have a properly, well thought out will, that is updated on a regular basis or when life changes occur.

Have it prepared and vetted by a professional. If not, what you tell your beneficiaries may not be what actually transpires from a legal perspective.

Have POA's in place in the event that you become incapacitated. Do your executor,family a huge favor by pre arranging your funeral/cremation according to your wishes. Not theirs.

My sister recently passed. Her husband preceeded her by five months. The one saving grace is that she was in the midst of selling her home. Fortunately she took the opportunity to revise her will.

Her previous will was written in 1986. It idid not reflect her current wishes. Her new will was written two months prior to her passing. It did reflect her wishes.

Have a medical directive of some sort. I was in the position of having to make such a decision. Knowing exactly what my sister's wishes were made a difficult decision that much easier.

 

[6miths]

Four children know that they will be getting whatever is leftover equally split. Nothing beyond that.

 

[brett]

The challenge arrises when cirmcumstances change and the person(s) who was advised that he/she would be a significant beneficiary are subsequently written out or the amounts reduced significantly in a revised will.

Without being told of the change. There can be an expectation gap that results in bad feelings or worse.

 

[ugeauxgirl]

Our boys are 21 and 18. Hilariously, one thinks we have lots of money, and the other told my husband that I was going to spend it all and they wouldn't inherit anything . This is unlikely as we have a substantial net worth and spend very little of it.
We do plan on telling them at some point, but don't want to disincentivize them by telling them too early. We're 53 and 62, and in excellent health, so hopefully there's plenty of time for that later.

 

[pb4uski]

Disagree. I was told to count on $ and plan accordingly then whoops remaining spouse remarried new spouse and it vanished. (Not spent, left to others new spouse liked). Fortunately I had not counted on it.

That's why I want a trust.

 

[aja8888]

Widower here with one daughter (no grands). She knows she will inherit everything (including my dog). We go over the details of the financial accounts each January. There will be no "new" wife in my life going forward. Everything will be hers labelled as beneficiary (100%) on the accounts. She has my POA for medical in case I have a "problem". She has a copy of my will and the original is in my safe.

Simple stuff for my situation.

 

[Keim]

Appears I am in the minority here: Wife and I (both in our 50s) stand to inherit a substantial sum. Both sets of our parents (all in their 80s, varying degrees of healthiness) are very comfortable, but how they've dealt with letting us know we will inherit is an interesting contrast. On my side, which includes 1 sibling who is the executor, dad let us know where they stood financially about 20 years ago. He hasn't said a word since. A few years ago they let us know where the records are, and who their lawyer is. "In case you ever need it." My wife's parents have become totally transparent. She knows EVERYTHING.

Knowing we will inherit has not impacted our financial choices to date.

 

[dunkelblau]

Up until a month ago my policy was strictly don't ask/don't tell. The unspoken rule in my family was no open discussions about finances. Of course this was for our generation only; our parents always shared openly so that we could assist them and we were always happy to do so.

But after I got the shock of my life during an ER visit last month, I felt an urgent need to open it up to all my beneficiaries immediately while I was still functional, so that's what I did. My situation is complicated by a highly uncertain timeline, it could be months, years, even decades, all of these currently with similar likelihoods if I read between the lines correctly. More data is in the pipeline so clarity should grow quickly.

In the meantime I'm assuming the shortest horizon and so have dumped all of my details on every one of my heirs. My family has been very supportive in my efforts to catch up on all of the forms and paperwork that could conceivably be useful depending on where I land. This includes impairment scenarios which apparently are more likely than imminent death based on what we know so far. I'm finally caught up except for my will which I've just finished drafting an hour ago.

So count me in for "notify with $ amount", but I can't say yet whether this is "well in advance".

 

[badatmath]

@dunkelblau;
Sorry to hear you have something going on with your health. Wishing you all the best to deal with the issue.