Why Talking with Aging Parents about Inheritance Planning is a Personal Responsibility
No one likes to talk about their inevitable death or the death of a loved one, but the key word here is “inevitable.”
While conversations around planning for this eventuality with your parents may be uncomfortable, they are imperative. Why? Because having this conversation before it’s too late means you won’t need to deal with greater concerns on top of grieving when the time comes.
If there is no plan for your parents’ assets, it can cause strife or complications in the family when you should instead be focused on grieving and healing.
It’s not just what happens after your parent’s death, but other needs as they age as well. Here are the top things you need to discuss with your parents before it’s too late.
Living Will and Powers of Attorney
If your parents don’t yet have a living will, now is the time to create one! This legal document is a written directive with instructions regarding a person’s preferences for medical care and financial decisions if they are unable to make the decisions for themselves. This is extremely important if your parent becomes terminally ill, seriously injured, in a coma, develops dementia, or is near the end of their life. While your parents are writing up their living will, you should do one at the same time because unexpected end-of-life situations can happen at any age!
A power of attorney is a type of advance directive in which the individual names a person to make decisions for them when they are unable to do so. This can be health care or financial decisions. Speaking of finances, be sure to speak with your parents about getting important passwords for bank accounts and even social media accounts so that you can access them or close them when the time comes.
Will or Trust
Estate planning can be a difficult conversation to have, but having your parents divide out assets prior to their death can make everyone’s lives a little less complicated and cut down on strife from fighting over assets. The reason it cuts down on clashes between family members is because most people really want to honor their loved one’s final wishes of who gets what. Having it down in a legal document (a will) puts teeth behind those final wishes.
Arguments often arise over the most sentimental stuff (or debt that needs to be repaid). So start with those simpler sentimental items, like mom’s amber ring from her trip to Europe or dad’s Mercedes that he fixed up. Then move on to the bigger, harder financial assets, such as savings, stocks, and the house.
Like a will, a trust distributes possessions to people and organizations after you pass. Because the trust “owns” the property you put into it while still allowing you to maintain control, it essentially preserves your assets for your loved ones and can help avoid additional delays and expenses with the court later.
Special Needs Trust
Planning for a loved one with disabilities can present quite the challenge. If the funds or assets set aside to support them are not spelled out appropriately, they may not be eligible to receive them, or other public services. Appropriate planning, based on your state, is vital to ensure those with special needs are cared for adequately. OneDigitalTrust can automatically detect if a loved one with special needs may be at risk of being disqualified for public benefits.
Planning for the right health insurance can be complicated. Because of this, your parents shouldn’t wait until they turn 65 to start deciding on the type of Medicare plans they will need. Help your parents navigate Medicare and find the right options for them and their possible future health needs.
Probate is the process of proving and administering a will and settling the estate of the loved one who has passed. This process ensures that debts are paid and assets are distributed according to your will. Some people have more probate exposure than others. There are several main reasons someone may want to avoid probate, but the main ones we see are time and cost. Probate is a lengthy, and often expensive, process that can be mitigated by proper planning.
Some ways to avoid probate for certain items include joint ownership with right of survivorship and beneficiary designation forms. However, it is important to remember that probate is handled by the states, and this means that each state’s probate laws are different. The OneDigitalTrust platform actually has a proprietary built-in Probate Tracker which can automatically estimate the probate exposure of a person’s estate and allow them to explore options on what they can do to optimize probate.
Abnormal items, such as unequal distributions or even disinheritance can cause quite the stir for some families. While this can be done, it’s important for your parents to discuss with the family why they have made the choices they have made. Providing this understanding by discussing their intentions before they pass can help avoid misunderstandings and surprises after their passing. For families that may not have healthy relationships, this can go a long way in smoothing over tensions and avoiding negative feelings, such as an heir feeling like they were cheated or left out due to oversight.
The Complication of Blended Families
Blended families can also cause additional complications. Perhaps your parents wrote up a will during a previous marriage and haven’t changed it since. It’s important to update existing wills to add or change beneficiaries. Remarriage can also bring up the complication of equal or unequal distribution for heirs. For example, your mom remarried in her 60s and her new husband moved into her home, but your mom may want her house to go to you and not be split between you and your step-siblings or even her spouse if she passes first. This is just one example of the special considerations blended families will need to think about during estate planning.
Estate Planning Made Easier
Estate planning is already complicated enough with all the considerations you have to think about, and having to call up your lawyer every time you want to make a change can be inconvenient and costly.
Estate planning made easier has arrived! As we’ve just seen, there are numerous things to have on your radar as loved ones age, and it can be overwhelming to start. Instead, use the most complete platform to create and maintain your estate and inheritance plan. OneDigitalTrust removes the stress and gives you peace of mind that your legal documents are in order. Learn more about this powerful digital solution today!