As we've made abundantly clear on our blog, people from all walks of life should give strong consideration to executing a comprehensive estate plan setting forth very clear expectations concerning the distribution of property, medical care and even guardianship of children.
That's because the failure to do so can create both unnecessary tax liability and chaos among surviving family members. Furthermore, it can even result in the state dividing assets in a manner in which you may not necessarily agree.
Interestingly enough, financial giant UBS recently released a report outlining how well baby boomers -- who estimates show will leave their heirs close to $40 trillion in assets -- are doing when it comes to planning for their demise.
The report found that the majority of baby boomers are doing fairly well, as 83 percent of the respondents were found to have at least executed a simple will.
However, the report seemed to uncover an altogether bigger problem: baby boomers are reluctant to talk about their estate plan with their children.
UBS found that only about half of the respondents had talked about their will with their children, while only 34 percent had discussed the actual estate assets with them.
This trend was found to exist regardless of income levels, as only 55 percent of baby boomers with estates over $1 million admitted to talking with their children and only 53 percent of boomers with estates less than $1 million admitted to talking with their children.
It was also found to exist despite the fact that 84 percent of baby boomers wanted a smooth transfer of assets to their children, and 66 percent were concerned about the possibility of creating bad blood among their children.
Why then are baby boomers so reluctant to discuss their estate plans with their kids?
Experts indicate that it can likely be traced to the fact that baby boomers don't want to discuss their own demise and generally feel uncomfortable discussing money. Furthermore, they theorize that it can also be traced to fears that disclosure of assets will cause their children to lose their motivation and that their children lack the necessary financial skills.
While these concerns are all certainly valid, it's very important for baby boomers to give serious consideration to sitting down to discuss their estate plan with their children, as it can serve to alleviate confusion and, more significantly, prevent bad feelings further down the road.
Source: The New York Times, "What's almost as certain as death? Not talking about the inheritance," Paul Sullivan, Aug. 1, 2014