While most people write wills, very few families discuss inheritance. Parents avoid discussing inheritance planning with their children due to the subject’s sensitivity.
However, avoiding the conversation does more harm than good. For example, poor wealth management by heirs can lead to business collapse.
Here are some reasons why you should discuss inheritance planning with your family.
To Prevent Conflict
The risk of conflict is higher when you fail to communicate how you want your heirs to run your estates. While the will specifies who should get what, you may need to explain how you want them to run the business.
Your heirs may also experience unforeseen disputes if they are not aware of your share of the business and who should take the voting power.
To Protect Juvenile Heirs
Inheritance discussions with family help you devise plans to protect the minors entitled to your estate.
For example, you can guarantee your kids’ education through education insurance or a life insurance policy.
Your discussions can also help everyone understand when they can receive their inheritance and how they will receive it.
To Express Your Expectations
Since inheritance planning goes beyond property division, your family will know how you expect them to run your estate once you are gone.
Your heirs can also prepare for the new responsibility in advance instead of experiencing sudden changes.
To Encourage More Discussions
While it may seem difficult, talking about inheritance with your family is a gesture that the topic is open for discussion. So, your heirs can ask the questions they have about the subject.
These conversations also create a sense of ownership among your heirs, increasing their morale when under your leadership.
To Avoid High Taxation
While there are no inheritance taxes in Australia, beneficiaries must pay income tax from inherited property. For example, you must pay tax for rental income generated from inherited property and dividends from inherited shares.
Estate planning discussions can help you devise ways to minimise the tax burden for your heirs. The approach you choose depends on your situation.
Since your kids and spouse are the beneficiaries of your property, you can involve them in inheritance planning to simplify the process. You also get an opportunity to express your expectations, ensuring that your legacy continues after you are gone.
If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.
This information does not take into account the objectives, financial situation or needs of any person. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation or needs.