HAVING THE TALK ABOUT INHERITANCE
While death and inheritances might not be the ideal dinner conversation, it is becoming more important that parents and other individuals have these discussions with their children/heirs. After a death in the family, emotions run high and family tensions can be eased if it is already established which assets pass to specific heirs. Typically, children can have a strong emotional or nostalgic attachment to certain possessions of their parents. Sometimes more than one heir can have this attachment to a particular item. For this reason, it is best that parents have discussions with their children, to help determine a fair and equitable division of property and keep any one child from feeling shortchanged upon the death of their parents. These discussions should occur frequently, as children’s situations and interests may change over time, and factors such as housing, finances, and location should be considered.
Independent outside appraisers can be employed to determine the value of tangible assets such as furniture, china, jewelry and memorabilia to achieve a fair division of property. Parents and other individuals should keep lists, which establish what pieces go to particular children, and which pieces should be sold to pay for the Parent’s care if liquid assets are exhausted. Individuals should also consider selling particular items that children may not want, or know how to dispose of, such as collections or other items of value. This could alleviate some of the stress on children after the death of their parents.
Additionally, sometimes it is appropriate to place vacation properties or other expensive assets, such as a shore home or a Pocono cottage, into an LLC, which can be funded with cash and the ownership shares can be divided amongst siblings upon the death of a parent. Establishing an LLC can help accommodate intra-family transfers and expense sharing as there are typically governance documents that can establish rules for property rentals, management, how expenses will be paid, and can provide a schedule usage between heirs and how a party may give up ownership or be bought out. The important thing is to have these discussions with your family, so you can determine what will work best.
For ideas on how to initiate this talk or to document your wishes, please contact a member of our Wills, Trusts, and Estate Team. (April 24, 2015)