Fran Hughes: With the great wealth transfer under way, it’s time to talk to your kids about your will

Discussing the content of your will with your children can be a sensitive and potentially challenging conversation.

However, it’s a crucial step in ensuring transparency, understanding and harmony within your family when the time comes to execute your estate plans.

My father-in-law recently passed away. Although awash in sadness we found comfort in the way he made time beforehand to discuss his wishes on why and how his will was set.

So here are some ways to approach this important discussion.

Be transparent and honest

Honesty is paramount when discussing your will with your loved ones.

Clearly explain your wishes, the reasoning behind your decisions, and any considerations that influenced your choices.

Openness fosters understanding and reduces the likelihood of misunderstandings or disputes in the future.

Selecting an appropriate time and setting is also key. Ensure that everyone is relaxed, free from distractions and has enough time to engage in a meaningful dialogue. I find after a meal is a good time for friendly discussions.

Prepare your legal documents

Drafting a will is an important aspect of estate planning that ensures your wishes are carried out and your loved ones are provided for after your death.

According to a recent survey, almost half of Australians die without a will. With the great wealth transfer under way it is estimated that $3.5 trillion in assets will likely change hands in Australia by 2050.

Legal experts say anyone aged 18 or over should write a will, even if their assets are limited.

Start by compiling a comprehensive list of assets including real estate, bank accounts, investments, retirement accounts, vehicles, valuable possessions and any debts or liabilities you owe.

Choose a trustworthy executor, someone who will outlive you and can manage your estate affairs.

Emphasise fairness, not equality

Identify your beneficiaries and emphasise fairness rather than strict equality when dividing your assets among your loved ones.

Explain that fairness doesn’t always mean an equal distribution of assets but rather taking into account individual circumstances, needs and contributions.

Perhaps there had been a provision for an early inheritance for one sibling who needed a helping hand in buying their home and, therefore, a reduced portion in the will. Or perhaps there were considerations for a child that needed ongoing care because of a disability.

A popular topic is who’s going to inherit the family jewels or dad’s golf clubs. Such personal items can be listed within a so-called letter of wishes.

Consider all options

Where there’s a will . . . there are potential legal disputes.

To contest a will in WA, the claimant must prove that the deceased had a duty to provide for them in the will but failed to make adequate provision for their welfare and advancement in life.

Legal instruments such as testamentary and bloodline trusts can enhance the comprehensiveness of your estate planning strategy.

The benefit of a testamentary trust is that it forms part of the will and comes into effect after death. It strives to protect assets from creditors, lawsuits or irresponsible spending by beneficiaries.

Bloodline trusts, on the other hand, are designed to preserve wealth and protect assets for future generations. It can help prevent disputes and conflicts among heirs by providing a clear framework for asset distribution and minimising the potential for misunderstandings or disagreements.

Seek professional guidance

Consider involving a trusted estate planning lawyer or financial adviser in the conversation.

A professional can provide valuable insights, clarify complex legal or financial matters and ensure that your loved ones understand the implications of your decisions.

Lawyers can guide you through the steps of setting up the relevant legal documents. Accountants can advise on the tax implications of disposing of assets to beneficiaries and the implications of trust structures.

Financial advisers provide guidance on superannuation payments, share transfers and insurance payouts. Their expertise can help facilitate a smoother and more productive discussion.

Discussing the content of your will with your loved ones is a crucial step in ensuring transparency, understanding and harmony within your family.

By choosing the right time and place, being transparent and honest, emphasising fairness, listening to their concerns, seeking professional guidance, encouraging open communication and revisiting the conversation periodically, you can navigate this sensitive topic with sensitivity and grace.

Fran Hughes is a Certified Financial Planner and head of Nexia Perth Financial Solutions