It is a topic that is an incredibly emotional one. One that ultimately is about what happens after the loss of a loved one.
However, there are an incredible number of benefits that come from families discussing inheritance and what assets and wealth go where. Here, we intend to map some of those out as well as offer some guidance about how to have these conversations.
While difficult, sad conversations may occur, open communication can prevent future issues that are far more serious.
The Importance of Transparency in Family Finances
One of the main benefits that comes from discussing family finances and who is set to inherit what, is transparency.
If clear communication is established, right from the off, there is no room for misinterpretation, higher than warranted expectations, or severe disputes.
By getting things sorted, those who are leaving things behind can focus on enjoying life and if it throws at you illnesses that affect cognitive decline, those who will be there to comfort and care for that person don’t have to spend time trying to interpret answers. It’s all been sorted.
Beyond health issues, involving the family in this discussion can empower them and make them feel heard. It can also prepare people so that they can plan how to maximise the inheritance to, for example, set up a business or pay off personal debts.
Common Challenges in Discussing Inheritance
Deciding who gets what and to what level can be fraught with emotional challenges. Members of a family can feel ostracised or be left with a sense that they weren’t as loved as a family member who received more.
Another common challenge is that these discussions don’t happen early enough. When sensitive topics such as this are not dealt with early on, a vacuum can occur where families are left not knowing what to expect.
By not tackling the topic up front there can be unfortunate consequences, especially after the person at the centre of it passes away. Challenges around who inherits what are compounded significantly when the person who has every right to decide what to give to is no longer there.
Similarly, by not properly planning or documenting a person’s wishes, the final location of assets and money is open to interpretation. When a family is dealing with the emotional toll of a loved one, they shouldn’t have to also deal with potential conflict.
Three Ways to Approach the Conversation with Sensitivity
Provide practical tips on starting the conversation, addressing concerns, and ensuring that all parties feel heard.
So we know why we need to start these conversations early but how do we go about doing that? Well, there are a few ways:
Explain why you’re starting this conversation
When the time comes to bring it up with family, say why you want to. Be clear about your intentions and invite people to ask questions.
Involve and speak to everyone
Ensure that every member of your family has been informed of the situation and their wishes and feelings have been heard. This should all be done in a relatively short space of time to avoid potential conflict.
Bring an expert along
A financial advisor can also help provide balance and act as a third party. They are used to having these conversations and can provide insights about how Inheritance Tax works.
Planning for the Unexpected
There are a number of financial support solutions out there that can help those who stand to inherit wealth or assets navigate any expenses with ease.
By figuring out what to do with the inheritance you have the opportunity to maximise its worth and limit potential liabilities. For instance, inheritance loans can assist those looking to receive a portion of what they stand to inherit before the probate process has finished.
Move Past the Difficult Conversations and Enjoy the Future
Of course, there are challenges to estate planning and inheritance but the long-term benefits – security, transparency, time together – far outweigh any awkwardness.