Inheritance Conversations with Siblings

Inheritance conversations with siblings can be difficult. We (hopefully) often think about our own estate planning that we do with our financial advisors…but have you also considered the conversations with family about it all? And what about the conversations you inevitably need to have with your siblings around your parents’ estate and possessions? I know, not the most fun thing to think about. But in order to avoid tension, misunderstandings or someone’s wishes not being fulfilled, they’re really important to have while everyone can still be a part of them.

And trust me, there are ways to have these talks so everything is clear, documented and so that everyone is a part of the process.

I’m going over my thoughts on the subject this week, so listen to my latest podcast now to learn more about having inheritance conversations with your family:

Show Notes:

Hey there. Welcome to another round of “Our Heart of Money Talks.” This is episode 26 and today I’m going to talk about inheritance conversations with your parents and conversations with your siblings. It’s inevitable. We will start to worry about our parents and want to have a plan in place to make sure that when they pass away, everything is smooth and peaceful.

This might sound morbid to some, I hope it doesn’t, but we need to normalize this experience a lot more. I had the benefit of seeing my dad’s parents’ well-planned wishes and instructions. They communicated and they wrote things down. They weren’t afraid to talk about it. I saw how organized my grandpa was and what a gift it was.

But we’ve all heard a story from someone about family fights and conflict when someone’s parents pass away or family members for that matter. Parents out there, if you’re listening, I want you to make a note here one way to eliminate your children from getting tense is to proactively talk and plan.

Parents out there need to take control first. I’m going to share with you the importance of setting family meetings to clear the air, set a date, to meet, be transparent about your wishes, intentions and being clear when talking about it. It is a gift to the rest of us. As parents you’ll have eliminated the tough conversations between siblings by having these open discussions before something happens to you, you’re going to eliminate possibly a lot of fights.

Now I have some ideas and I know of a couple of people that have done these. I think they’re fantastic. I know that one family that had a pretend auction night to decide who gets what of the sentimental and personal items. It’s a great idea if done, and in a great spirit and mood, one parent records the outcome, and then it’s written up so that when something does happen, it was already decided all together as a family.

I know of another family, they put everything into a hat and then drew names to distribute all the items. They recorded it down, wrote it down and it’s there for later for when and if something happens. It was a random draw and everything was already divvied up. Another thing you can think about as parents is you can actually start gifting while you’re alive.

You can distribute things – personalized items with a story or conversation. It can be a really peaceful process and it means so much more in person and is sentimental that way.

Now, what happens if this type of planning does not happen? Because I know not everybody out there is this well thought out.

And like I said, some of you might think this is a little bit morbid and getting ahead of ourselves. But how do siblings navigate this without seeming too insensitive or greedy or starting fights? So if that type of planning and conversation hasn’t happened by parents already this is something that siblings you’re going to have to step in on.

Someone’s going to have to step up and start a conversation. First thing, keep in mind that this is your family for life. Your sibling relationship is super important to maintain, so keep that at the forefront, recognize that it’s important to remember love and respect for each other.

Full disclosure right now, I am an only child. But please, don’t have any change of mind with all the suggestions that I’m giving you just because I don’t have any siblings.

It’s just me and the charities that are possible in that will. But I have two daughters and I have tried my darndest to share how lucky they are to have each other, how lucky they are to have a sister that has to have their back and look out for each other, no matter what. They have a lot of stories from when they’re younger and they roll their eyes now and they’re like, “Oh yes”.

I want them to remember every time they have to talk about it, but I wanted them to know how important it was. I think it’s worked. So far so good. They’re 22 and 24 years old and so far thumbs up.

I want you to try and remember this in the process – that your siblings are for life. This is important.

Okay, the next step is to set up the family conversations.

A good way to do this is to have a third party involved. It’s easy to say that your financial advisor would like to host coffee or lunch for the family. They want to do a review of the estate planning and have a one-on-one with everybody. Having someone impartial in the background to facilitate this is very important in these cases. It starts the ball rolling with being proactive and getting in front of the communication and that planning that I mentioned earlier, like with divvying things up while you’re alive, recording that and doing it in a fair way.

Bringing in a tax or financial expert can also allow you to look at some of the options out there before a parent passes away. There are options to start gifting to siblings evenly. This will avoid estate taxes and possibly probate taxes. This should be overseen by a financial expert and facilitated with your parents and actually, it’s best if they’re on board and they’re the ones that initiate this.

So parents out there – you want to make sure this is actually an option. You don’t want to put yourself at financial risk because you’re trying to get rid of everything right now while you’re alive and save on a little bit of probate tax.

You want to make sure you have enough. So that’s why you need that expert in there. You also want to make sure that it’s a good tax move because sometimes it isn’t. So you’ve got to explore these options. My grandma – my mom’s mom – didn’t have to plan too hard because my mom also was an only child.

I come from a long line of only daughters in the family. But grandma had stickies and notes on and in everything she owned that explained what it was, who gave it to her in the history of the possession. So even though it’s an easy estate rollover because really my mom was the sole heir, she still had gone through this process of writing things up.

I have to say it is so special inside her trinkets. Imagine there’s a story in history that brought so much meaning to the item. I still open the silver box, just to see her handwriting and picture her receiving the gift that grandpa had bought her in Paris, brought back just for her and how much it meant to her.

There’s a story with it and there’s even a year on it. Honest to goodness, her memory must’ve been fantastic. She’s written the year on them. So this is something that I get to pass on to my daughters, and I really love that legacy. So it’s another idea that I’m going to do when it’s my time to be an aging parent and get my affairs in order.

Okay back to siblings.

So if you have siblings, start the talk, start communicating and find some common ground and love to help facilitate the tough conversations now while your parent is alive and having this conversation. If you as a sibling and a child are having to initiate this, your parents might not have even thought of the idea of having that fun family auction and just recording who gets what, while they’re alive.

There’s some really good things in there that you can do. I want to leave you with this: the ancient Vikings had a practice that eliminated fighting. When one of their kings died, all of their treasures were placed on a barge and set on fire. If family members wanted treasures and wealth, they had to go out and conquer their own.

That is called a simple estate. If only it were that easy. Until next week, take care.