Study Finds Parents and Adult Children at Odds on Estate Planning
Parents and their offspring often have different perspectives on everything from music to clothes to cellphone use. A new study suggests that the generation gap is alive and well in another area of estate planning.
The 2014 Fidelity Investments Intra-Family Generational Finance Study showed that almost two-thirds of parents and adult children disagree about when to discuss such subjects as preparing for retirement, elder care, wills, and estate plans.
According to the study of 1058 parents and 159 adult children, a majority of adult children want to discuss these issues well in advance. Parents would like to postpone the discussion until after they retire.
The study also showed that, even as parents and children grow older, they continue to misunderstand each other. Children overestimate the degree to which their parents are worried about financial security. Children also generally underestimate the value of their parents estates by more than $300,000, a three-fold increase since 2012. Nearly half of the children surveyed expect to have to take care of a parent, while very few parents share this expectation.
When respondents said they had discussed retirement-related issues, the study suggested the discussions were not very detailed.
40% of families had not had an in-depth talk about living expenses during retirement. A slightly higher percentage had not discussed healthcare and elder care in detail, while 20% had not discussed it at all. On the topic of wills and estate planning, 31% had not had a detailed discussion, and 10% had not discussed it at all.
The failure to address these difficult issues in advance creates the risk that, when a crisis arises, families will be less prepared and have fewer options. The study strongly encouraged families to talk more, urging children to share their point of view while leaving the ultimate decision in the hands of their parents.
It also urged parents to think ahead about who among the next generation would be most suitable to have power of attorney over assets or serve as an executor of their estates. It suggested they weigh the personalities of their children, the nature of their relationship with the parents, their geographic proximity, and other relevant factors.
Preparing for retirement, illness, and the disposition of assets is one of many difficult challenges a family faces, and as this study illustrates, intergenerational communication can prove to be difficult. The experienced estate planning attorneys at Longman & Van Grack can help you deal with these delicate yet critically important topics. If you would like to discuss the best ways to protect your family and your wealth, contact us at (301) 291-5027 for a free consultation today.