Dividing an Estate? Five Ways to Create Transparency

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I am a wealth adviser, and one of the most emotionally charged conversations I help clients navigate is how to divide an estate. While decisions about fairness often dominate these discussions, one factor in particular can make all the difference: transparent and consistent communication with your children. Whatever decisions you make, discussing them openly and early can prevent misunderstandings and ensure that your wishes are understood and respected.

Consider a case from my practice: The Smiths (name changed to protect their privacy) were a high-net-worth couple updating their estate plan before selling their business and retiring. They have two adult daughters: Laura, a lawyer, married with two small children, and Emily, a public school teacher, divorced with one child.

The Smiths initially planned to leave a larger share of their estate to Emily because of her greater financial needs. They assumed Laura, with her higher income and savings, would not mind.

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However, when Laura learned of the plan, her feelings were hurt. To her, the decision seemed less about fairness and more about favoritism. Meanwhile, Emily, despite her financial worries, was uncomfortable with being perceived as the "needy" child.

This miscommunication caused emotional friction between the siblings before the estate plan was even finalized. However, because the Smiths communicated their tentative plan early, they were able to address these concerns before making any final decisions.

This open dialogue gave the family time and space to weigh in, and the Smiths were able to adjust the plan to better reflect their intentions and avoid future misunderstandings.

Ultimately, the Smiths chose to divide their estate equally, but the real success was in ensuring that everyone understood the reasoning behind the decision.

Why transparency is key

The heart of effective estate planning lies in transparency. Here’s why open communication with your children is so vital:

Preventing misunderstandings. When your children are left in the dark about your intentions, they are more likely to misinterpret your decisions down the line. Sharing your plans — and the reasoning behind them — allows your children to ask questions and voice concerns while you’re still able to address them. This proactive approach can dispel any feelings of favoritism or unfairness.
Ensuring your wishes are respected. Clear communication ensures that your intentions are accurately reflected and carried out. Without a full understanding of your goals, your beneficiaries may inadvertently act in ways that conflict with your wishes.
Avoiding surprises. No one likes surprises when it comes to inheritances. Imagine a scenario where one child expects an equal share of the estate, only to learn after your passing that they’ve been allocated less. Even if the decision is logical and well-intentioned, the shock can lead to resentment and long-term discord. Communicating your decisions early ensures everyone understands your rationale and reduces the risk of conflict.
Clarifying expectations. For families that may not have strong bonds or existing harmony, transparency helps ensure that each person knows what to expect. Open dialogue minimizes ambiguity and helps all parties prepare for their roles and responsibilities in the estate plan.

The kids will be all right: Five steps to foster transparency

Transparency doesn’t happen overnight. It requires thoughtful planning and a commitment to open dialogue. Here are some actionable steps to ensure your intentions are clear:

Start early. Begin conversations about your estate plan well before it becomes urgent. This gives your children time to process your decisions and ask questions.
Explain your reasoning. Whether you choose equal distribution or a needs-based approach, share the thought process behind your decisions. Clarify how you’ve considered each child’s unique circumstances while balancing your goals.
Involve a neutral third party. Engaging a financial adviser or estate planning attorney to facilitate discussions can help reduce tensions and ensure the conversation remains focused and productive.
Consolidate your affairs. Aggregating your financial and legal matters with a cohesive team — including a financial adviser, attorney and tax professional — simplifies the process for your children. Clear documentation and a well-organized estate plan provide clarity and reduce the potential for disputes.
Create a living legacy. If you feel strongly about addressing disparities between your children, consider doing so during your lifetime through gifts, educational support or other means. This approach allows your estate plan to reflect equal love and appreciation while providing support where it’s needed most.

The impact of communication

Estate planning is about more than just dividing assets; it’s about ensuring your wishes are respected and that everyone has a clear understanding of what to expect. By prioritizing transparent and consistent communication, you send the powerful message that your decisions are thoughtful, intentional and meant to provide clarity for the future.

Open dialogue reduces the risk of misunderstandings and ensures that your legacy is carried out as you intended.

Ultimately, it’s not just the decision on how to divide the estate that matters, but how you communicate it that ensures everyone involved is prepared and informed.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Sevasti Balafas is the CEO and Founder of GoalVest Advisory, a New York City-based wealth management firm with over $700 million of assets under management. With over 20 years of experience in the financial services industry, she is a seasoned wealth advisor specializing in creating tailored portfolios for high-net-worth individuals. Ms. Balafas is passionate about financial empowerment, offering sophisticated investment strategies and personalized solutions that allow her clients to reach their financial potential.