Are you in the “sandwich generation” (someone who is caring for both your children as well as your parents simultaneously)?, If so, you need to know whether or not your parents have an estate plan. While it is still your parent’s choice to make estate planning decisions, having a plan — no matter how late in life it is created — is an absolute must.
Speaking with your parents about their finances and estate planning probably can be tough. Nonetheless, that conversation is the key to helping make sure your parents are able to live their golden years without financial worries, that their wishes are carried out after their death, and that your care for them doesn’t extend beyond their death to straightening out the mess left behind because there was no estate plan.
Estate Planning for Your Parents
Talking about the future with your parents — including their estate matters, finances, and memorial wishes — is one of the most important conversations you can have with them. And, the earlier you address this, the better off all of you will be. Below are some key topics you need to discuss with your parents to make sure their estate planning is in proper order:
- Make it a team effort: If your parents have legal and financial professionals that help with their matters, make sure to get a full list of these individuals’ contact information. You should also have the contact information of your parents’ doctors, in the event end-of-life decisions need to be made for them.
- Last Will and Testament and a Trust: If your parents do not have a Will written up, they likely do not have any other Estate Planning documents. If they do have Wills in place make sure to:
- confirm when they were drafted;
- who the executor will be; and
- where the original documents are located. A Trust may also be appropriate depending on your parent’s circumstances and wishes. For most people, estate taxes are no longer the driving factor as to whether a trust is needed. A revocable trust can be very useful in managing your parents’ assets when and if they are no longer able to manage your own affairs.
You do not need to read the terms of the trust, but you should at least know where the original document is so their wishes are carried out.
- Advanced Directives: Your parents should have Living Wills and Healthcare Advance Directives (Medical Power of Attorney) so that someone will be able to make health care decisions on their behalf if they are unable to do so. Also, knowing their respective feelings about end-of-life decisions, such as life support, and how their financial and medical affairs should be handled will relieve your stress when and if those hard healthcare decisions fall to you.
- Insurance Policies: Find out what Insurance Policies your parents have and where the Policies are located in the event one or both become incapacitated. This includes knowing about Health Insurance (private or Medicare), Life Insurance, Homeowners, Auto Insurance, Disability Insurance, and Long-term care policies.
- Financial and investment accounts: Your parents should also consider compiling a list of their brokerage, bank, and mutual fund accounts as well as the account numbers. This will make things easier if someone needs to step in and assist with financial matters due to their death or incapacity. There again, a revocable trust can be a useful management tool if your parents are ever unable to manage their own affairs.
Why Estate Planning Matters
Failing to put together an estate plan often leads to:
- unnecessary costs and taxes,
- potential hurt feelings,
- delays in asset distribution, and
- even unexpected outcomes after death.
For example, some folks believe that putting a child’s name on a bank account or other property is good estate planning because it costs very little. However, that kind of estate planning often results in unequal distributions, unintentional exclusion from the inheritance of loved ones, and even a surprise seizure of the assets by the creditors of the joint-owner child, not to mention the hurt feelings of adult children who were left out as a result of the parents’ asset distribution.
Do not let fear or discomfort keep you from sitting down and having this important estate planning conversation with your parents. As estate planning attorneys, we can give you and your parents advice on what options are available to them so that their wishes are followed upon their death.