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Managing Beneficiary Expectations

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Updated August 30, 2022

Julie Westbrock JD, Vice President, Development

Ways to Prevent a Family Feud Over Your Estate

For many families, death and money are two of the most uncomfortable topics to discuss. Combine those two topics, and end of life financial planning can be uncomfortable to talk about.

Numerous studies back this up, including a 2019 survey by Lincoln Financial that found nearly half of all Americans have a hard time talking about personal finance with family members. Based on the survey, the only more challenging topics to discuss are sex and — you guessed it — death.

So it should be no surprise that when a loved one dies, lack of communication is a primary reason for family arguments over the estate. Aside from damaging family relationships, these fights can lead to lengthy and costly legal battles. The good news is that those outcomes are preventable.

Our Trust Point team is well versed in estate administration, having worked as a trustee or personal representative for many families. From our experience, the best way to make sure your estate transitions smoothly and without family conflict is to plan ahead and set clear expectations with your beneficiaries. Consider these steps and remember, we are ready to help you at any stage of the process.

Have Your Documents in Place

No estate plan can exist without the proper documentation in place. We won’t take a deep dive into everything here, but a few key documents you need to have in order include:

  • Financial power of attorney, which allows a loved one to make financial decisions for you if you are incapacitated. This terminates at death.
  • A health care directive or living will, which allows a loved one to make medical decisions if you are unable.
  • A will or trust with clearly listed beneficiaries and terms.

Wills and living trusts are the most common estate planning tools and should be drafted in consultation with a licensed and reputable attorney. A key difference between the two is that a will requires validation through probate court, whereas a trust does not. Another important distinction is that a will takes effect at death, whereas a living trust can be funded and administered immediately.

Wills are administered by a personal representative or “executor” named in the document and approved by the probate court. Trusts are administered by a trustee(s) appointed in the trust document. Trust Point can serve families in either capacity, which is often beneficial as we are a third party without a vested interest.

Start the conversation early, continue it often, make sure there are no surprises, and you should be in good shape for a smooth estate transition

Lean On Us

If you’re using a third-party facilitator like Trust Point to handle your estate, set up a meeting to walk through your will or trust, to determine whether it works the way you want. Clients often have a vision for how their estate will be distributed, but it doesn’t always match the document. A meeting is also a great opportunity to ask questions about the distribution of assets.

Also keep in mind that your assets will change over time. Maybe you have sold a business or gained some new real estate or personal property. Your will or trust may need to be updated to incorporate those changes, which should again be reviewed with your facilitator to quarterback the conversation with your attorney.

Notify Beneficiaries

Once your intentions for your estate are documented and you understand how your plan will work, it’s important to meet with your beneficiaries to share your plans. Family feuds often arise when sibling expectations aren’t met upon a parent’s death. Do your children expect an even split of assets? Do each of them expect to get the house, the family business, or cherished possessions? Keeping your will a surprise means each beneficiary has different expectations, which typically does not end well.

Ease into the conversation by saying you’re developing an estate plan and there are some things you’d like to see
happen when you’re gone. You might also ask them what they think is going to happen, as a way to begin the discussion. Or sometimes sending a written letter to beneficiaries is a good way to kick off the conversation. The talk doesn’t need to happen in one sitting, nor does the initial discussion need to involve dollar amounts. You know your family best — just be sure to get the discussion started and continue it until everyone is on the same page.

Though it can feel awkward, it’s best to have all of your beneficiaries (and sometimes other family members who might expect to be beneficiaries) in the same room for estate planning discussions. Even if your comments are identical, family members tend to hear different things in individual conversations, which could lead to arguments later.

Did you know? The Baby Boomer generation, born between 1944 and 1964, is expected to transfer more than $30 trillion in wealth during the next few decades.

Introduce Your Facilitator

It can also be a good idea to introduce your beneficiaries to your facilitator and even schedule a meeting to talk through your estate plan as a group. At Trust Point, we are happy to meet with our clients’ family members to explain our role and how estates are administered. Developing that relationship after a client’s death can prove challenging, especially in situations where beneficiaries are unaware of assets staying in trust, or of our role as trustee or personal representative.

Go With Your Gut

Estate planning can be a challenging task, especially when striving for equality among family members. But remember, fair isn’t always equal. It’s your estate and you can distribute it as you see fit. You can even decide to sell certain assets or make a donation to charity. Whatever you decide, be prepared to share your plan with your family. Start the conversation early, continue it often, make sure there are no surprises, and you should be in good shape for a smooth estate transition.

See what trust services we provide to help you feel more confident in yours and your loved one’s financial security.

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Julie Westbrock JD, Vice President, Development