I must say, I get this question quite a bit. Accordingly, I was very happy to read this article in the New York Times discussing the benefits of an open and honest dialogue with your heirs about the inheritance that they should expect.
Many older clients feel that their kids should learn about their inheritance the same way that they did – only after the surviving parent died. There are several good arguments why clients tell me that they don’t want their children to know about their inheritance, with sloth being the biggest one. They want their children to work hard and not rely on getting a large sum of money.
I, however, must generally agree with the article written by David Cay Johnston. I have always felt that, except in limited circumstances, it is usually better to advise your family of what they should expect.
I have seen too many estates go into litigation because the elder parents did not properly advise their heirs of their testamentary plans. This is especially true when there is an unequal distribution or if the decedent had been married more than once.
Now, this does not mean that you need to give all the details, and certainly many of the details should be age appropriate.
For example, I would tend to advise against telling a 19 year old that he will be inheriting a million dollars, but it would be OK to tell him that his disabled sister or his step mother will have special trusts set up for them.
On the other hand, once a client has children over the age of 45, unless the children have medical or psychological problems, there is usually very little reason to keep this kind of information secret.
As with many things in life, there is a sliding scale of what is appropriate and what needs to be mentioned to the family. At a minimum, I request that parents who do not leave their money in a traditional fashion write a letter explaining why they did what they did. I usually do not like to put the reasons themselves in a Will as that is a public document and someone may get offended.
So what do I tell clients who are still worried their children will become lazy if they inherit a lot of money? I tell them to advise their children that they can always change their Will to give the money to charity if the children do not earn their inheritance.
Financial incentive can be a power motivating force – and that they can consider it a bonus for a “job” well done. (Note, If a client has multiple children, I do not recommend that a client say he or she will give all their money to only one kid. It is better to say you will give that undeserving child’s share to charity or the undeserving child’s children, otherwise the anger that the disinherited child feels will be directed at his or her sibling.)