Inheritance and estate planning are too easy to postpone. Even though life is fragile, we tend to think we will live forever. You can probably come up with a number of reasons to postpone your estate planning. I don’t want to hear them.
Your parents can probably come up with the same list as yours. However, according to the Center for Retirement Research at Boston College, the average household can look forward to an inheritance that ranges between $64,000 to $335,000 per household in the next 15 years. To make sure this transition goes smoothly in the future, helping your parents with estate planning and inheritance issues is critical.
If you don’t worry about whether your aging parents have their affairs in order now, you will worry about it later. You are the one who will have to pay unnecessary taxes and endure the time-consuming probate court procedures that come when good estate planning and inheritance issues are not in place. If estate planning isn’t done, probate will eat 2-5% of the estate on top of estate taxes which absorb 37-55%.
Attention to your parent’s estate planning is not a selfish act: helping your parents shows them the love and respect you have for them.
Inheritance and Estate Planning Questions
Once you decide to help your parents with their estate planning and inheritance issues, some important conversations need to take place. The following questions will help guide your discussion. You will be able to determine what your parents have already prepared, what they may need, and what information must be found to help to complete the task.
1– What Estate Planning documents, if any, do your parents (or parent) have?
- Is there a Will, a Trust, a Durable Power of Attorney or a Living Will?
- When were they drafted?
- Are they up to date with the current law?
- Have they been properly funded?
- Are they effective for the state of the family?
2– Where are the Estate Planning documents?
There’s nothing worse than being unable to find the paperwork when needed.
- Who has been appointed executor or trustee? This person should know about and accept this responsibility.
- Have any steps been taken to avoid probate and cut taxes?
3 — Is there a distribution list of personal property, including emotionally charged items?
- This is not stuff that can be bought at Walmart, but irreplaceable items.
- These items may not have physical value, but sentimental value
4 — Are life insurance policies protected with an insurance trust?
5 – What if you need long term care?
- How do you intend to deal with this increasingly common issue?
- Are you interested in Rest Home Insurance?
Undoubtedly there are other questions you need to ask your parents about estate planning and inheritance, but this list will help you get started. Please don’t wait. Now is the time to help your parents get their estate planning and inheritance completed. The good news is that proper estate planning can greatly alleviate expensive and time consuming procedures. The bad news comes with the reality that discussing money, especially in this context, is very unpleasant for most families. We have found that many people would rather get a root canal than discuss estate planning with their parents.
Now is the time to take action. Without some estate planning in place, your inheritance will be a financial hornets’ nest. It is worth the time and effort it takes to firm up your parent’s estate planning. They have undoubtedly worked hard for what they have and helping them preserve and plan for its future shows respect. It also will give them a comforting peace of mind. We see it all the time with our clients. Once their affairs are in place, they get a new lease on life.
If you do not know how to approach your parents or are afraid to try, I get it. Some parents are so authoritarian, or unapproachable. If that is the case, give them a copy of Protecting Your Financial Future. It is a very fun and readable book. Once folks start to read it, I know they will want to get their planning done. For many families, the sooner this discussion takes place the better. The worst time to have to worry about these matters is when a parent is in intensive care. Get the financial decisions out of the way, so that if there is a crisis or emergency, you will be able to focus on compassion, comfort, and healing instead of paperwork.
Lee R. and Kristy Phillips