Gifts + Estate Planning Philanthropy

Should You Tell Your Beneficiaries What They Will Inherit: 10 Estate Planning Tips

BY Spectrum Wealth Management | Dec 4, 2023

Recently, a North Dakota woman was charged with killing her boyfriend to get his inheritance. The man was expected to inherit $30 million, and officials believe her plan was to make a claim that she was his common-law wife so she could get the money from his estate. Whether the man had a will is unclear. In most states, your assets will go to your spouse and children if you die without a will. Some states recognize common law marriage (the concept that you are married in the eyes of the law even though you did not obtain a license or have a marriage ceremony). Still oddly enough, North Dakota is not one of them.

Getty images

This is an extreme example, but it begs the question: should you tell your heirs what your assets are or what they should expect to inherit? Here are 10 points to consider:

  • Letting your adult children know about your estate plan may make things easier for them after your death. At a time when they may be feeling lost and adrift, knowing the path they need to follow may comfort them.
  • If your plan is unequal between your children, it may be best to let them know beforehand so that their expectations are set. Your children may be okay that one child inherits the family lake house, but that news may be better coming when you are alive than after your death.
  • Just because you tell your children about your estate plan does not mean that you need to tell them how much they will inherit. You can certainly tell them about the plan without divulging dollar amounts.
  • Be sure to introduce your children to your advisors so that they know whom to speak to when you die. Having them be familiar with your lawyer, accountant, and financial advisors can help them feel grounded at an unsettling time.
  • Letting your children know about their inheritance can help them with their financial and estate planning. For instance, if your children are doing well, they may not need to inherit from you. Placing their assets in a trust, which they can access if required but will otherwise pass to your grandchildren free of estate and generation-skipping taxes, may be a better option.
  • Children often think they will inherit more than they will. Parents may be embarrassed to tell their children that assets have dwindled, but they are doing their children a disservice if they do not tell them. Giving a child extra time to put away assets for their own retirement instead of relying on their inheritance may be critical for them.
  • If you do not have children and will leave money to friends, you should probably not tell them about the money they will receive on your death. In the best case, it may make the relationship awkward. However, in the worst case, your friends may begin to see you as a source of funds. Let any inheritance for friends be a pleasant surprise. And if you later change your mind about the inheritance, you will not have created an expectation that will go unfilled.
  • Leaving money to nieces and nephews can also be challenging. Extended families, more than anyone, seem to expect that they will inherit when there are no children involved. You may not want to tell your ne’er-do-well nephew that he is cut out of your will, but if he expects to inherit from you, he may challenge your will later on. If you think a family member will challenge your will, be sure to speak with your attorney to ensure that your other beneficiaries are protected.
  • Including charities in your will is often an important part of estate planning. Letting the charity know about the gift in advance can help with their financial forecasting. It may also open you up to recognition from the charity during your lifetime that you may or may not welcome. Some people like the recognition that they will receive from the charity, and others prefer to remain anonymous. Do what is best for you.
  • If you have no spouse or children, be wary of people who may take advantage of you. It is better to rely on your trusted advisors (lawyers, accountants, and wealth managers) than people who may benefit from your passing.

Spectrum Wealth Management, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Additional information about Spectrum’s investment advisory services is found in Form ADV Part 2, which is available upon request. The information presented is for educational and illustrative purposes only and does not constitute tax, legal, or investment advice. Tax and legal counsel should be engaged before taking any action. The opinions expressed and material provided are for general information and should not be considered a solicitation for purchasing or selling any security.