Tomorrow, families across the United States will gather to celebrate Thanksgiving. Both immediate and extended families will be spending a significant portion of the next few days with each other and inevitably, interesting discussions will emerge. One discussion point that will be less likely to emerge than most is about estate planning, specifically the plans parents and grandparents have in place. But while talking about this topic may not be the happiest way to spend your holiday, having a conversation with your older relatives is essential to protecting them, their assets and your own planning.
There are several reasons why a child (or grandchild) should be concerned with their parents’ and grandparents’ estate plans. First, knowing what your senior relatives plans are will allow for a smoother transition and administration of their assets if they die, become severely disabled or incapacitated. Second, with nearly 75% of all adults over 65 having some form of a long-term care event during their lifetime, children and grandchildren may have to coordinate the payment of their elder relatives long-term care expenses. Third, in the event of death, severe disability or incapacity, children and grandchildren may be asked to serve as fiduciaries for senior family members as executors of their estates, trustees of trusts or agents under power of attorneys and health care proxies. Finally, children and grandchildren may be named as beneficiaries of their parents’ and grandparents’ estates. An inheritance can raise issues for the inheriting children and grandchildren including tax and creditor related problems.
Understanding why you should speak to your parents and grandparents about estate planning is significantly easier than actually speaking to them about the subject. Each family member has their own temperament when it comes to discussing financial and other personal matters, so an awareness of how a relative will react is key to avoiding unnecessary conflict. If they are open to having a discussion about estate planning, explain that you are coming from a place of concern. Inquire about what they have and have not done in terms of their planning.
If, like many parents and grandparents, they don’t want to discuss this issue, there are other ways to ensure that they are protected. If they have already worked with an estate planner, encourage them to check in with their advisor to ensure their plan is up to date. If they have not prepared an estate plan, offer them the names of attorneys, financial planners and accountants that you work with and with whom you trust. While some older relatives may not want to openly discuss their planning with their younger relatives, many will appreciate the opportunity to speak with a professional with no personal connection to them.
Once you are able to begin the discussion, by yourself or through a professional, there are certain subjects that should be discussed. Among them:
1) Nature and location of the estate planning documents;
2) What assets do they own and where are they located;
3) Who are their professional advisors;
4) How are they planning to pay for any long-term care expenses;
5) Who are the beneficiaries of their estate; and
6) Who are the fiduciaries that will be in charge of their affairs if they die, become severely disabled or incapacitated.
Having an estate planning conversation with your parents and grandparents will be difficult. Even if they are completely transparent and willing to talk, the subject matter can be difficult to think about. Nevertheless, as a loving relative, it is important that your relatives are protected and that their ultimate wishes as to their estates and well-being are known and able to be fulfilled in a timely and proper manner.
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