Preparing Your Aging Parents’ Estate Plan
Locate Their Estate Planning Documents
It is highly likely that your parents have some sort of estate plan in place, whether it is a will or trust. However, the will or trust might not exactly meet the needs of your family if you do not know where it is or what attorney drafted it. Generally, one spouse takes on the financial responsibilities of the household. When drafting a will or estate plan, it is important that both parents are present so they can communicate their desires and can be on the same page. Bringing up the topic can often be difficult as many people assume you are concerned with your future inheritance. In fact, you’re not even asking to read the documents, but you are ensuring that a proper plan is in place in order to protect their assets.
Who Is The Executor Of The Estate?
As part of the estate planning process, your parents will name an executor of their estate. An executor is responsible for carrying out their wishes that are set out in their will. Typically, parents will name one of their kids as the executor of their estate. Appointing a child as the executor can be problematic for a couple of reasons. First, being an executor can be a lot of work with very little payback. The executor will be responsible for all of the parents’ financials and assets while also potentially being consumed with their own challenges in their life since it is only a part-time job. Second, naming one of the children as an executor can create a rift in the family. Depending on the family dynamics, many siblings may be upset when the inheritance information is revealed. Even though the executor is only carrying out the wishes of his or her parents, issues of perceived inequity often arise. If possible, it would be beneficial to name a third party as executor in order to shield the estate from interfamily issues. Also, it is important to know who the third party is since they will be in charge of the entire estate.
What If Your Parents Become Incapacitated?
A very important aspect of estate planning is what happens when one of the parents becomes incapacitated and cannot participate in their medial care or financial responsibilities. Incapacitation can happen in a variety of ways and can be temporary or permanent. A healthcare proxy and power of attorney can be assigned while creating the estate plan. The proxy and attorney will relieve some of the responsibilities if one of the parents becomes incapacitated, so the other spouse can devote their time to the healing process.
The adult children should be aware of these types of documents and know where they are in the unfortunate event incapacitation takes place. These events can be very time sensitive, so it is important that you are able to quickly locate this information. It is important to have these documents taken care of before incapacitation because without them some family members may be responsible for unexpected bills. Further, without a healthcare proxy, doctors may be unable to speak to you about your parent’s condition and you may not be able to advise the doctors about your parents wishes even if you know what they are.
Organizing Your Parents’ Estate Plan
Whether your parents are enjoying their retirement or are just beginning to wind down, they may require some help to get their finances organized. Many aging parents are concerned with being a burden on their loved ones and are often afraid of asking for help. By offering to help them out, you probably are alleviating a lot of their stress while decreasing your responsibilities when they eventually pass away. Below is a list of questions to get your parents started:
- Where are the wills located or how do I locate them?
- Who is the executor of the estate and how do I contact them?
- Who is the attorney or law office that drafted the estate plan?
- Ask your parents to make a list of their financial accounts including:
- Bank account number, financial institution, log in info
- Bank and individual investment accounts
- Trust information and how it is funded
- Life insurance policies, pensions, annuities, and social security claims
- Credit Cards, outstanding debts, any reoccurring payments/subscriptions, and expenses in general to the extent they are able to.
- Real and personal property; this may be a sensitive topic to discuss, but it is important to gracefully share your opinion if you are or are not emotionally attached to a specific item to make the decision process easier for your parents.
- Information on the healthcare proxy and the power of attorney
Once you have located and identified all of this information, you can take the information to an attorney if you want anything changed. The attorney may ask for information on other assets or possibly may not need all of the information you gathered. Either way, reassuring their estate plan lines up accordingly with their wishes will give them a peace of mind and potentially save you from headaches in the future.
Estate Planning For Young Families
While you are working on the details of your parent’s estate plan, it is never too early to begin yours. The earlier you organize your estate the easier it will be in the long run. Although it may be meticulous to keep all your financial records, it will give you peace knowing that your family will be taken care of in the event tragedy strikes. Specifically with young families, there probably will be significant costs ahead like college tuition that is difficult for families with two incomes let alone only one. Therefore, it is important to consider life insurance policies that will be a crucial foundation of your estate plan. While organizing your parents’ estate plan, take time to consider what you want your estate plan to look like.