How and When to Talk About Estate Planning

Specific questions to help frame your thinking as you talk to your heirs.

The key part of estate planning is to discuss when and how to distribute your assets to your heirs. This process requires a series of considerations and trade-offs to avoid intense emotions within a family that could potentially tear them apart.

For many, focusing on the numbers is objective and straightforward. But things get confusing when it comes to this final set of issues, because emotional factors drive decisions now. There is no correct answer on how to distribute your estate.

Francisco de Jesús, Financial Planner for Popular One, recommends using these questions to help frame your thinking:

• Are you familiar with the approved inheritance laws in Puerto Rico and how they impact your final wishes?
• Do you know the implications of Puerto Rico being a Community Property and forced heirship jurisdiction?
• Have you considered the different tax rules that apply to individuals born in Puerto Rico to those born in the United States?
• What form does your estate take? Is it cash, investments, real estate, personal property, retirement assets, life insurance, business interests, or other assets?
• How much would you like to give to your family? Would you also like to give to a charity? If yes, how much?
• Will you divide your assets equally among your heirs? If yes, have you considered how Puerto Rico forced heirship laws impact how your estate will be distributed?
• Are there any family circumstances to consider? For instance, do you have minors or children with special needs? Have you considered the best way to protect them in case of a sudden death?
• Will you make current gifts or bequests? If you are considering gifting to loved ones, have you considered how the forced heirship laws would impact those lifetime gifts?
• How will you handle gifts of tangibles (art, jewelry, or furniture)? Are there items of sentimental value to heirs? Are there items your heirs might find particularly burdensome to use or dispose of?
• How and when will you communicate your plans to your heirs?

It’s Up to You

As you work through these decisions, remember that your assets are yours, and you are free to dispose of them as you see fit with certain limitations that apply in Puerto Rico. While you can have some control over what and how you give, you cannot control the recipients’ reactions, how they treat the assets, or how they treat each other.

Gifting equally to heirs, for example, may seem fair – or it may cause the richer heirs to feel guilty, and the poorer ones resentful. All you can do is try to lay the groundwork for healthy family relationships.

Finally, as with most aspects of the estate-planning process, the decision on when and what to communicate to heirs involves trade-offs that depend on individual personal circumstances.

For some heirs, knowledge of a future inheritance may act as a disincentive to provide for themselves or create expectations that may conflict with your final decisions. In other cases, heirs who are responsible and mature can and should be brought into the process early on.

Making decisions about the disposition of your assets can be emotionally fraught and time-consuming, especially if there are special family circumstances and business interests to consider. Take small steps and seek expert guidance to realize your plans for the financial care of your heirs and loved ones.

Our team of professionals at Popular One is ready to advise you with estate planning and help you manage your finances, investments, and personal and business risks. Contact your Private Banker today by calling us at 787-281-7272 or email us at popularone@popular.com

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