Have Estate Planning Conversations with Aging Parents
Let’s start with this idea: maybe your parents are going to leave you a generous bequest as part of their estate plan. Do you know this for a fact, or is it wishful thinking? The only way to know, advises a recent article from Yahoo! Finance titled “How To Talk to Your Parents About Their Estate (Without Making It Awkward),” is to have a conversation, or a series of conversations. It’s not the first awkward conversation you’ll have with your parents, but it may be a bit stickier than you expect.
No matter how you approach it, this is a sensitive issue. How do you avoid appearing greedy or selfish? There is actually a lot more to know beyond the inheritance issue. You need to know how to ensure that your parents’ wishes are carried out, while they are living as well as after their deaths.
It will be helpful to be aware that the prospective inheritance amount may change over the course of your parents’ remaining lives. You also don’t want your parents thinking that you consider yourself entitled in any way to the assets they have built over the course of their lives.
Instead, start the conversation by talking about their estate plan. Explain that you want to be able to follow their instructions. You might reference an article or blog post that you have read about the importance of estate planning. You can also talk about your own estate plan, explaining that you have created an estate plan to protect your children and family members and to be sure that your instructions are followed.
Keep in mind that there may be no inheritance at all, especially if parents fail to plan for a possible stay in a nursing home. For only ONE YEAR in a nursing home, it can cost upwards of $66,000 to $84,000. If a proper plan has not been set in place, all assets can go out the window and to the nursing home.
Don’t be afraid to acknowledge how difficult this conversation is for you. Reassure them that you are not looking forward to their demise, but you have concerns about whether they have an estate plan in place and how things will work out when the time does come.
Depending upon your family dynamics, holidays may be a good time to address estate planning. This provides an opportunity for all family members to be included and for concerns and plans to be shared among involved siblings.
This does not mean discussing inheritances at the dinner table. Focus on what your parents’ wishes are and include a conversation about what values they would like to pass on to the next generation. If there are family histories or stories to share, this is also part of your inheritance.
Regardless of when or how you approach the conversation, you do want to be sure your parents have an estate plan in place, so there is a path for whoever will be taking care of them and their assets. Ask if they have these key legal documents:
- A Last Will, also known as a Last Will and Testament
- A Power of Attorney to designate someone to make financial and legal decisions, if they are not able to do so for themselves.
- A Health Care Power of Attorney (and/or Living Will or health care directive) that will designate someone who can make healthcare decisions and address end of life care for them.
- A Revocable Trust to avoid probate.
- An Irrevocable Trust to qualify for long term care benefits (particularly if there is no long term care insurance policy has not been purchased).
In your conversation, ask where your parents keep these estate planning documents, and how you can find them when the time comes. Are they in your father’s night table, or in a lockbox in the attic? If they have a financial advisor or estate planning attorney, who is that person? You’ll need to be able to access the documents and speak with their estate planning attorney.
A few awkward moments now will help all of you as your parents, and you, move through the coming stages of life.
BOOK A CALL with Ted today to discuss how you can get a good plan going for your parents.
Also, check out these additional articles on estate planning: What is Louisiana Forced Heirship? and How Do I Write a Will? and What Is the Social Security Increase for 2022? and How Do I Align Retirement Planning with Planning for a Special Needs Child?
Reference: Yahoo! Finance (March 25, 2021) “How To Talk to Your Parents About Their Estate (Without Making It Awkward)”