Inheritance Etiquette: How to Talk to Your Family About Money.

If you were to pick topics most likely to cause family disputes, money and inheritance top the list.

This means that families often avoid or put off crucial conversations about inheritance, wills and legacies in order to avoid feeling uncomfortable.

While uncomfortable, and in many ways it could culturally be seen as a premonition of impending death, having the inheritance conversation is an important step towards protecting your legacy and providing for your loved ones without leaving any ambiguity.

In spite of how much of a taboo topic talking about death and money is, having upfront discussions helps to avoid conflict, large tax bills, and dragged-out legal battles. 

Here’s how to get ready for conversations on how to secure the family finances and ensure everyone’s needs, and wishes are heard.

1. Take Account Of Your Assets

What inheritance is there to talk about if you do not have assets to leave by? While that might sound a little harsh, it is generally true that everyone has something to leave their loved ones after death. 

Not everyone has millions in shares of big companies, or a collection of cars, large tracts of land, millions in the bank or a profitable family business ripe for succession. It may be your Sacco shares, the family home, a life insurance policy, or a treasured family heirloom that has to be passed down from generation to generation. 

Now, you want to make sure anything valuable you have is left to benefit your loved ones and not people, strangers you never planned to benefit from your hard-earned wealth. 

To put this into perspective, take for instance data from the Unclaimed Financial Assets Authority (Ufaa) that shows the agency is sitting on over Ksh55 billion as of January this year whose owners it can’t find. 

Of this amount, since 2014, the authority has received claims only worth Ksh1.5 billion from 23,134 claimants. 

The money is held by banks, pension schemes, insurance companies, mobile money mobile wallets, law firms and Saccos in many forms including as idle cash, shares and dividends.

There are also about 3,000 safe boxes with title deeds, jewellery, treasury bills and share certificates that are yet to be claimed. 

But this may only be a tip of the iceberg as a 2018 survey shows the amount of unclaimed assets could be in the upwards of Ksh300 billion with over Ksh250 billion yet to be reported by private and public entities. 

Interestingly, these entities, according to the report, continue to report them as assets in their books, consequently benefitting from what would have been someone else’s inheritance. 

You probably do not want your money sitting unclaimed somewhere because you failed to disclose what you own to your loved ones when you were alive - as you may already know, these cases are not that rare. 

Besides, you just really want to have a list of everything you know so you can decide how to fairly divide it among your heirs and beneficiaries. Otherwise, you may find yourself struggling to make a decision and most probably keep procrastinating. 

It is highly advisable to include an expert to outline your inheritance plan, so you can make well-informed decisions. 

2. Who Are Your Heirs?

An heir is an individual who is legally entitled to inherit some or all of the estate of another person who dies, without having made a will.

Those considered heirs are your children, descendants for example grandchildren, or other close relatives of the decedent, such as your parents, siblings and grandparents. 

If the person left a will, there are laws that protect against disinheritance of lawful heirs such as the spouse and minor children. Adult children may also be entitled to some share of the deceased’s estate. 

Disinheritance can happen by either completely leaving out a legitimate heir from the will or naming them specifically in the will. 

Beneficiaries on the other hand, are people who are not legal heirs who are entitled to collect a share of the estate, as stated in a will, trust, insurance policy, or another binding arrangement. 

It is not rare for someone to leave a part of their property to a friend, a caregiver, housegirl/farmhand or even a pet!  

So, who are your heirs and beneficiaries? Make sure to get this right and save your family the pain of having to navigate conflicts brought about by direct on indirect inheritance. 

You want to leave your family as united as ever and your death should not become a source of a total breakdown of your family. 

You may also be giving your inheritance when you are alive as some choose to do in their retirement. Making a list of what you want to give now against a list of your heirs can be a great way to fairly give your loved one a financial boost while you can still see them grow.

You can then make a will for the percentage of your wealth you will be left with between the date of giving early inheritance and death. 

3. Have A Candid Conversation With Your Family

Before engaging your family in conversation, start by asking, “How candid am I in my self-talk?” 

For instance, you have thoughts and dreams of what you'd want your family to be, and experience. And you most likely have many thoughts as to what this looks like without you in the picture. Are you sure that the thoughts playing out in your mind are realistic?

With that in mind, since you have your will mapped out, do not lose sight of how testing these conversations' are for both you and your family/heirs.

Here are some factors to consider for a candid yet respectful conversation:-

I). Every family is unique. 

Your family has its way of working and resolving matters and this should guide you on how to approach any family discussion. Consider and include the right people and adapt your language based on whom you are having these conversations with. 

Always stick to your conversation plan and avoid veering off into small talk and jargon. You want to field as many questions from your loved ones so that there is no room for ambiguity. 

II). Discuss what “makes up an inheritance”

An inheritance includes material possessions, administrative, financial matters and may include cultural/spiritual values you’d like to pass on. 

For example, some families’ may set cultural/spiritual requirements for an heir(s) to get their inheritance 

For others, it can be a chance to lighten the sombre mood of coming to terms with the idea of your loved one dying. 

Here's how - rather than setting your spiritual/cultural legacy as a requirement, this is when you can ‘share-and-bond' over hopes, values, lessons learned and, priorities you’d want to pass down

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III.) Remember, this discussion is about your last wishes and it’s not a negotiation. 

Do not avoid or delay the conversation or be impatient no matter how difficult you find it.

You’re discussing with your heir(s) because you want to manage expectations and to make sure the future is well-planned for, as well as, to discuss and explain your choices. 

Openness is encouraged, and your final wishes respected. If you note any changes, only you can make any changes, after which, you should inform your heir(s) as soon as changes to your will are complete.

Note that you may choose to make your decision-making a conversation or negotiation if you so please and find this as the best way to mitigate against future conflict.

4. Seek Help From A Lawyer Or A Professional

Consult a wealth management expert to ensure that you’ve thought of and included all that’s needed. 

• Take for instance, if you start a will in your 20's or 30's you may have a couple of decades to grow with and enjoy your family life. By including a financial adviser, they will help with budgeting/cash-flow planning in a legal, tax-efficient manner
  

• If you start on your will later in life, a financial advisor / wealth management expert will help with budgeting/cash-flow planning, in a legal, tax-efficient manner making sure you're financially secure at each stage of retirement 
  

Another reason to have an expert involved is that - they are impartial. By having an expert on-board, to guide you through the finance, documentation, tax and other obligations, they can bypass any emotional entanglement a family may experience, all the while being considerate. 

This way, discussions remain focused, there's more clarity offered regarding your decisions and the procedures required to ensure your final wishes are carried out correctly.

Take The Time And Do It Right 

By thinking of why you set out to protect your legacy, you can talk about inheritance as many times as is required without feeling guilty and awkward.