I got a call a few weeks ago from someone who I thought was a potential client. But his financial advisor had told him to make sure his parents had a revocable trust for their home in San Francisco, and incapacity planning in place to ensure that he knows how, and would have the legal authority, to care for them should they lose capacity.
One of the most important things an estate plan can do is maintain family harmony and eliminate unnecessary stress and costs in times of crisis. If your parents do not have a plan, please speak to them about creating one right away. It does not matter if they don’t have money and you do not expect an inheritance. It is vital that your parents have a durable power of attorney and an advance health care directive that specifically state how they would like to be cared for should they become vulnerable.
It is crucial to ask your parents if they have long term care insurance. I love this article from Forbes, although I think the numbers are low for California.
It is also important to think about whether you need to name your parents in your own estate plan – do they rely on you for money, companionship, caregiving? What would they do without you?
The Sandwich Generation
If you find yourself in the “sandwich generation” (someone who is caring for both your children as well as your parents simultaneously), you need to know whether or not your parents have put together 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.
The thought of speaking with your parents about their finances and estate planning probably makes you want to run as fast as you can in the opposite direction. Nonetheless, having this conversation is the key to helping make sure your parents are able to live their golden years without financial worries and that their wishes are carried out after their death.
How To Help your Parents with Expectations Around Estate Planning
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.
Please know that the relationship between your parents and their attorney will be private – you will not be invited to meetings, and you may not have the documents explained or given to you. This is often for your own sake – especially where there are multiple siblings, and even more so when those siblings to do not get along.
Below are some key topics you could discuss with your parents to make sure their estate planning is in proper order:
A team effort: If your parents have legal and financial professionals that help with their matters, they can be a terrific resource. It is helpful if your parents will share their contact information with you, so that you know who to call should the worst happen. 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 how long ago 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. Stress to them that you do not need to read the terms, but that you should know where they are so you can help ensure their wishes are carried out.
Advanced directives: Make sure your parents have advance health care directives and powers of attorney so that someone will be able to act on their behalf and follow their wishes. Also ensure you understand their respective feelings about end-of-life decisions, such as life support, and how their financial and medical affairs should be handled should they become incapacitated. Email me if you would like links to tools to facilitate this conversation. If you are named as an agent on their advance health care directive you should ask for a copy.
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.