Nearly 70% of older Americans haven’t talked to their heirs about inheritance. Why avoiding this talk could mean passing down problems instead

This is a bad plan — not just for the adult children who may be blindsided by expenses and inheritance issues after the death of a parent, but also for today’s retirees who may not be sufficiently prepared for their end-of-life and estate planning.

These conversations are critical to ensure that finances are properly managed in the case that a parent becomes incapacitated by a long illness, or dies unexpectedly without a will or complete estate plan.

Here’s why it’s critical to talk about inheritances with your children or other heirs and why keeping them in the loop is compassionate — for them and for you.

The great wealth transfer — with strings attached

According to the same Fidelity survey, 95% of adult children say they’re ready to manage inherited wealth, but 25% of their parents disagree.

This serious gap points to how few families are discussing finances openly — a real problem since the baby boomer generation is projected to pass down $124 trillion in assets between now and 2048 (2).

There are a number of reasons why some parents are hesitant to have these important talks with their children. These can include plans to leave unequal amounts of money to siblings, a fear that the adult child is irresponsible with money, or creating unrealistic expectations for the future.

However, most experts recommend at least broaching the topic and sharing as much detail as you want.

Speaking to CNBC (3), managing associate at Henssler Financial K.C. Smith advised, “You can share some basic information about the structure of your estate plan, but you can keep the exact numbers undisclosed if you think it would be problematic.”

“When parents explain the thinking behind their decisions, adult children almost always respond better, even if the plan isn’t perfectly equal,” said Mitchell Kraus, founder of Capital Intelligence Associates.

“It gives them context and prevents that classic moment down the line when someone asks, ‘Why did Mom do this?’ at a time when no one can answer.”

They also advise that an estate plan isn’t only for those with lots of assets, but should also cover your wishes including powers of attorney for financial or health care decisions and a living will which specifies your end-of-life health care plans.

The issue with financial secrecy

David Kozlowski, president of Verus Financial Partners, says that while some parents are best advised to avoid talking about inheritances “when they are still enabling their adult child” in financially irresponsible behavior, for the most part, adult children should be aware of their parents’ final wishes — for finances, health care and funeral planning.