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Estate Plans: You're Not Doing Anyone a Favor by Avoiding the Subject

On February 9, 2017

(NewsUSA) - Do your kids realize just how much money you're really worth once all your assets are added up?

If they're anything like the adult offspring surveyed for Fidelity Investments' "Family & Finance Study," the answer is a resounding -- and rather scary -- "no." In fact, seven out of 10 of them underestimated their parents' estate by an average of $278,000.

That's right, by more than a quarter of a million dollars.

The reason that's scary -- and why it should be a wake-up call for even those with modest estates they hope to pass on to heirs -- is simple: It illustrates a breakdown in communications that Kevin Ruth, head of Fidelity's wealth planning and personal trust, says badly needs addressing through 'frank conversations" between parents and their adult children.

"Even in the simplest of family situations, conversations that don't occur frequently and in detail can result in fairly substantial family disagreements and disconnects," says Ruth. "Establishing an estate plan is your best bet to ensure your loved ones are taken care of in your absence and that your wishes are carried out the way you want."

In fact, according to the study, the two generations apparently can't even agree on whether they've already had such detailed talks.

Seventy percent of parents surveyed believe they have; more than 50 percent of their children claim they haven't.

So what are the benefits of an estate plan? Well, among other things, it allows you to:

* Preserve and maintain control over the transfer of your assets.

* Protect your family's privacy and possibly avoid probate.

* Provide immediate access to liquidity.

* Choose how your beneficiaries will receive assets.

* Designate who'll execute your wishes even if you're just incapacitated.

Plus, for those who despise the thought of the government getting any more money than legally required, having a sound estate plan in place could help your heirs avoid needlessly paying certain Federal estate taxes (not to mention state estate and inheritance taxes, depending on local laws).

Ah, but you're stuck on that $278,000 figure, right?

Actually, given how complicated today's lives often are -- what with stepchildren's interests to protect, say, and family businesses to pass on -- most people, and not just the very wealthy, could do with some solid estate planning. Heck, even distributions from IRAs and Roth IRAs can be tricky if the aim is to "stretch" payments out to beneficiaries, tax-deferred or tax-free, for as long as decades.

Attorneys and tax advisors can help you set up an estate plan, and online resources like Fidelity's Estate Planning Overview provide a good idea of what's involved. Fidelity customers also have access to its new Estate Planner to more thoroughly prepare and educate themselves for a meeting, right down to details like organizing documents and choosing lawyers.

As for why parents and their children may be reluctant to discuss the subject, Ruth has an explanation: "It's human nature to avoid thinking about one's own mortality."

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