Question 1: Should I tell my estate planning attorney that I am expecting an inheritance?
Yes. While some people may be hesitant to count their chickens before they hatch, looping your estate planning attorney into your full financial picture is the best way to prepare for whatever the future may hold. By planning ahead, you can help ensure that any money or property left to you is protected, allowing you to enjoy it for years to come.
Losing a loved one will likely bring about many difficult emotions, including sadness, anger, numbness, guilt, or even relief, all of which can significantly impair decision-making. You may feel a strong urge to make quick decisions, feel paralyzed by all the options, or make emotionally driven choices that are not in your long-term best interest. Having a preexisting plan in place means you will be better equipped to navigate this period with less stress, allowing you to focus on your grief and the administration process so you do not make financial decisions that could have lasting negative consequences.
Question 2: What happens to my estate plan if I do not receive the inheritance I expected?
If you expect to receive an inheritance but ultimately do not, your financial and estate plans can be revised to account for this shift. Consider estate planning an ongoing process rather than a one-time event. Your initial estate plan acts as a foundational framework, reflecting your financial situation and aspirations at a specific time in your life. However, that plan must evolve to ensure that your current circumstances, your changing wishes, and the money and property you have today are all reflected, rather than only what existed when the plan was originally prepared.
For example, if you were relying on an inheritance to achieve a specific financial objective, not receiving the inheritance might prompt you to explore alternative savings strategies or adjust your timeline. If the inheritance does not materialize, think of it not as a setback but as an opportunity to refine and strengthen your estate plan and continue to safeguard your financial future.
Question 3: How do I ask my family if I am getting an inheritance?
Finances can be a taboo subject in some families. Broaching this subject with your loved ones may be difficult and uncomfortable, but it is necessary. It is usually best to start the conversation during a relatively stress-free time rather than during the chaotic holiday season or before a major family celebration. Instead of focusing solely on what you expect to receive as your inheritance, approach the conversation as part of a larger discussion regarding your loved ones’ plans for their health and overall well-being in the years to come and what legacy they would like to leave behind.
You may want to inquire about what type of planning they have already done. For example, have they designated trusted individuals to act on their behalf if they become unable to manage their own affairs due to an accident or injury? Do they have a living will in place to memorialize their end-of-life wishes for medical treatment if they cannot communicate those wishes themselves? While planning for an inheritance may be your main focus, starting with a broader conversation allows for a more natural transition to the topic of inheritance as a piece of your loved one’s overall estate planning. It can also help ensure that your loved one is protected against the unexpected while demonstrating your concern for their future.
Question 4: What are the benefits of incorporating an expected inheritance into my estate plan?
Beyond the initial benefit of ensuring your financial security, incorporating an expected inheritance into your estate plan offers several advantages, including
- allowing you to proactively structure your estate plan and select tools that can help minimize potential estate and income taxes, ensuring that more of the inheritance goes to you and your beneficiaries;
- providing an opportunity for you to plan how you would like to pass down the inheritance you receive to your own loved ones, allowing you to create trusts or other mechanisms to protect these assets for future generations or to support charitable causes that are important to you; and
- enabling early communication with your family about your financial intentions and wishes for leaving behind a legacy, helping to reduce ambiguity and potential conflict among your loved ones while aligning family and generational goals.
If you have any questions regarding an expected inheritance, please feel free to contact Lannik Law, LLC at 617-431-2669