Don't ask. Don't tell.

That's how many American families approach the subject of inheritance.

Grown children, fearing they'll look greedy and insensitive, don't ask. Their parents, reared when discussions of money were taboo, aren't about to tell.

So why broach the subject at all?

Well, because death is final. Many financial mistakes and emotional traumas can be avoided with plain talk and planning.

Parents of the baby boomers are expected to leave 115 million bequests worth more than $10 trillion, in 1989 dollars, between 1993 and 2040, according to a 1993 Cornell University study.

The vast majority will come from the nation's wealthiest 10% of families. Middle-class parents, however, can easily leave estates of $1 million or more, due to the increase in stock values in the 1990s and the recent run-up in real estate prices.

Without a will or a trust, the assets from the estate will be distributed according to state law, not necessarily the wishes of the deceased. Yet even parents with large estates or family-owned businesses often do little or no estate planning.

Such avoidance can be costly.

Currently an individual can leave an estate with up to $1.5 million worth of assets -- such as stocks, real estate, IRAs and life insurance -- free of federal estate tax, but any amount over that is taxed at a rate as high as 48%. But one spouse can leave an unlimited amount tax free to the other spouse, whose estate will later be subject to IRS limits. (See chart for future changes in the estate tax exemption.)

With good estate planning, though, parents can leave much more to their heirs and to charity -- not to Uncle Sam -- by employing trusts, family limited partnerships, life insurance, charitable giving and annual gifts.

A Taxing Amount of Changes
Taking a look at federal taxes on estates
Year Individual Exemption Top Estate Tax Rate
2004 $1.5 million 48 %
2005 1.5 million 47
2006 2 million 46
2007 2 million 45
2008 2 million 45
2009 3.5 million 45
2010 repealed 0
2011* 1 million 55
Note: Under the 2001 Economic Growth & Tax Relief Reconciliation Act, amounts exempted from federal estate taxes increases and top tax rates decrease until 2010 when they are repealed. *But in 2011, to conform to federal budget requirements, the estate tax reverts to roughly 2002 levels, unless Congress acts before then.

There's much more to estate planning, however, than avoiding estate taxes.

It's particularly important for grown children of divorced parents to have frank discussions about estate planning. With the nation's divorce rate at around 50% and increased life expectancy rates leading to remarriage in later life, many children in so-called blended families are at risk of being inadvertently disinherited.

If Dad remarries after Mom dies, he might find it too painful and embarrassing to discuss estate planning with his new wife. But if he dies first and without a will, depending on the state where the couple lived, wife No. 2 could automatically inherit half his estate, all his retirement plans and even treasured family heirlooms.

Disinheritance, whether accidental or intentional, is painful. Many attorneys urge parents not to cut children out of their estates, even when the parents have good intentions. At the very least, they recommend that both generations talk first.

Parents sometimes want to leave little or nothing to a child who is successful in favor of another child who has a history of money, mental or substance-abuse problems. Some want to reward the child who cared for them in their final years.

These might all be valid reasons, but for the child who is left nothing, especially without warning, it can be the ultimate rejection.

A parent who disowns the child who was always the black sheep might feel vindicated, but could be setting up the "good children" for years of strife when they would prefer to reconcile with their fallen sibling.

Having a frank family discussion could help parents pick the right child to be executor, not necessarily the eldest.

Some of the most important items to be passed on are often forgotten in estate planning -- personal possessions. Parents might not realize this unless children tell them that they would like to have Mom's emerald ring, Dad's golf clubs or Grandpa's baseball gloves.

Timing, Tact and Tenacity
Some estate planning do's and don'ts
Consider your parents' financial history. Having lived through hard times, they might consider you a know-nothing spendthrift.
They may still consider you a child, who lost his lunch money most days at school.
Find a good time. Before an overseas trip or surgery could present an opportunity to ask if everything is in order. If a family friend dies and leaves an estate in shambles, ask if they are better prepared.
Find a conversation starter, in a magazine or on television -- not at the Thanksgiving dinner table.
Include your siblings, so you don't appear to be cutting a side deal.
Be gently persistent. Don't expect to get through to your parents overnight.
Use tact. Remember that the discussion is ultimately about death and disability. Nobody likes to feel old.
If all else fails, get your own estate planning done and talk about the process with your folks. This is usually the best approach.

An excellent resource for handling personal effects is a workbook called Who Gets Grandma's Yellow Pie Plate? ($12.50) created by the University of Minnesota Extension Service, available at

Susan Richards, a Chicago certified financial planner and author of Protect Your Parents and Their Financial Health ... Talk With Them Before It's Too Late, encourages grown children not to let their parents rebuff them, as she was when she asked her late father about his estate plans and financial affairs.

When her father suffered a stroke, she was left to supervise his medical care without knowing what kind of health insurance he had, to repair his car (damaged when he suffered the stroke) without being able to locate his insurer, and pay his bills without having access to his checking account.

"If you don't know where things are," she says, "it's just such a tremendous hardship."

Even if parents are unwilling to discuss their estate plans, their children should strive to have them sign two critical documents to allow another trusted individual to manage for them should they be incapacitated: a durable power of attorney for financial matters and a durable power of attorney for health care.

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