Managing Your Family's Inheritance

Maybe one of the most uncomfortable discussions you will have with your family is regarding how your parent's or your own estate will be divided upon after you are gone. No one wants to talk about such issues. Death is scary, emotional, and fraught with fear; and mixing those thoughts up with financial issues seems to cheapen the entire discussion.

However, generation after generation, we see families, both rich and poor, divided because of issues regarding inheritance. Elders have a duty to make sure that their estates are passed on as they wish, and that their beneficiaries are satisfied with the reasoning behind such decisions.

So here are some steps to make the passing of your inheritance a clean and relatively painless process.

1. Have individual discussions with the family - You may want to have individual discussions with all of your children first, to get the feel of what they expect, and what they don't. Getting everyone in a group initially is probably a mistake, because fights can ensue, especially if children have opposing viewpoints.

2. Start a list - Make a list of those items that you think are essential to talk about. Don't forget little items,such as cheap heirlooms and pictures. They often become the source of fights and division.

3. Decide what you want - This may be the hardest and most important step. You have to balance what you feel is right with what will bring harmony to the family after you are gone. Maybe one child has ignored you, or hasn't taken care of you in your later years; do you really want to treat them as an equal, while another child sacrificed for you? Some of these decisions will be very hard, especially for family heirlooms that multiple people want. But remember: it is your property, and ultimately you must make the decision. Don't leave it up to others to decide, because that is fraught with problems.

4. Try to divide items relatively fairly - Once you decide who deserve what and how much, then you have to also balance it out with the wants and needs of the children. After you are gone, not everything that will effect your children will be just about you...they have to live with their siblings as well. Try to be fair as possible, within reason, taking in to account things I discussed above.

5. Charity? - Determine if you want to give anything away to charities. Maybe you want to donate items to your church/synagogue/temple? Or your favorite nonprofit? Make this decision early, so everyone knows what you intend.

6. Try not to give any big items away while you are alive - Small items, fine. Heirlooms and such. But houses, money...you need those things to live, and you may not have them when you need them.

7. Decide what is better to be sold off - Sometimes there are assets that just can't be divided fairly. Decide who deserves a share, and state that the best course of action would be to sell the item and divide the profits fairly.

8. Talk to a lawyer and accountant - If you have large assets, the estate/death tax could really hurt, especially after 2010. There are numerous ways to avoid many inheritance taxes, which I won't go into detail here, but if your estate is likely to fall upon these taxes, spending a few thousand dollars up front may save your children tens of thousands of dollars later.

9. Have the family discussion - Finally, bring everyone together and have the tough talk. Tell them what YOU have decided. It may take months to bring your list about, especially as you try to balance everyone's wants and needs. But in the end, you need to make it clear what your intentions are. Additionally, if there are disagreements, you can be the one the settle them, instead of fighting about the children, or worse, the court system.

10. Be proactive - This is the most important thing of all. Many people leave these decisions until it is too late. Decide while you have the time and energy to do all the work that is entailed. It will serve your family well.

These are just the most common sense things you can do to make sure that the property and items that you have worked so hard for your entire life pass to your children and others the way you want them to, while at the same time maintaining family harmony.