Do Your "Rents" Have an Estate Plan, or Is Your Older Sibling Getting It All?

Regardless of your age or family's financial status, you need to know whether your parents have an existing estate plan. Although your parents make the final decisions and details pertaining to their plan, creating a thorough plan is an absolute must. The same is true for those of us with parents who created an estate plan over five years ago. Circumstances change. We want to ensure our current plan mirrors our current wishes.

Most people find themselves feeling a bit uneasy when they're forced to think about what happens when they die. That's what makes having this sort of conversation with your own parents extremely difficult. Nonetheless, having this conversation is a key component to ensuring that your parents are able to live their later years without financial worries and that their wishes are respected once they pass. Plus, if that older sibling beats you to it, you may find yourself SOL. (Kidding, of course).

You Can't Plan for your Parents but...

Most of us admire our parents to some degree, so initiating talks about their future can be tough. This is especially true when it comes to finances, medical care, and funeral/memorial wishes. But these topics are what matter most, so addressing them sooner than later benefits everyone involved and provides greater peace of mind for the future. If you're unsure of what to discuss, you should chat about what happens when one parent predeceases the other (assuming still married), what happens if one parent has a medical emergency that results in them being alive but unable to speak for themselves or if both parents die at the same time in a tragic accident. Find out who they want managing their affairs, financial and otherwise, in these critical situations. Often times, people find themselves in these situations when its too late to plan.

To help ensure that their estate plan is thorough and aligns with how they want things to go, consider talking about these key areas with your parents:

• A TEAM Approach. Strongly encourage your parents to make a list of their trusted advisors, starting with legal and financial professionals. This list should include the contact information of all those listed. It should also include your parents' doctors so that whoever they nominate as their health care agent can reach them if necessary. Even if your parents are hesitant in sharing such a a list, they can make it and let you know where it's stored if the need arises.

• Living Trust vs. Last Will & Testament. If your parents don't currently have any foundational estate planning documents, like a Revocable Living Trust or Will, they likely have not created other essential documents and tools which are regularly part of a comprehensive estate plan. If they do have a Will, confirm the following: (1) when was it created, (2) who the personal representative or executor is, and (3) where the original wills are stored. Likewise, if you discover that they have a Trust, confirm: (1) who the trustee is, (2) whether they have properly funded property into the trust, and (3) where the original trust documents are stored. If they say you are being pushy, stress that you do not need to read any of the documents, but knowing where to find the originals when needed is crucial to ensuring their wishes (and not your older sibling's) are carried out.

• Medical Directives (ICE). Crazy things happen all the time. When talking to your parents about their plan, confirm whether they have a Living Will (aka advance directive) and a Medical Power of Attorney (POA). These documents allow someone to make medical decisions on their behalf if they are unable to make or communicate their own medical decisions. If already in place, perfect. Still encourage them to talk with the person(s) they have selected to eliminate the risk of miscommunication and ensure they understand your parents' feelings and wishes about both their medical care preferences and end-of-life care.

• Insurance Policies. It is critical for you or your parents' trusted decision-makers (yes, even if it's that GD older sibling) to know what insurance policies they have and where all the policy documentation is stored. This is especially important if one or both of your parents become incapacitated. Specific policies to consider are health insurance (private or Medicare), life insurance, homeowner's insurance, automobile insurance, disability insurance, and long-term care policies.

• Financial, Investment, and Retirement Accounts. Hopefully, there's no money in the mattress. Or hopefully there is? Encourage your parents to make a list of their bank accounts (checking, savings, brokerage, mutual fund, pension, and retirement accounts). The list will ideally include the following: (1) where each account is held, (2) account numbers, and (3) contact information of any key contacts at the institution. Equally as important, they should have a Financial Power of Attorney in place so that a trusted individual can step in and manage these accounts if your parents are traveling, sick, injured, or otherwise unable to manage their affairs. An experienced estate planning attorney can draft this Financial POA, but it is also prudent to ask whether their banks require their own POA forms, since they streamline the overall process and are more readily accepted. Having a valid POA ensures that someone can access and manage your parents' accounts, whether checking, investment, or retirement, so that day-to-day expenses are covered and long-term financial needs are met during incapacity and beyond.

Why Does This Matter?

Failing to put together an estate plan often leads to excessive costs and taxes, unnecessary time spent in court, too much court involvment, delays in distributing inheritances, potential hurt feelings, inadequate incapacity planning, chaos, and even unexpected outcomes after death.

The fear and discomfort that can keep you from having this conversation with your parents needs to be pushed aside for the greater good. As an estate planning attorney, I can provide your parents with guidance and advice on what options are available to them so that their wishes are followed upon their death.