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  • Writer's pictureSteve Coker, CFP

The Family Estate Planning Conversation

As we move into the holiday season families across the country will come together – and refuse to talk about money. Admittedly, talking about finances and estate planning can be a sensitive topic and getting mom and dad to admit they need a little help may be even more difficult. Here are a few tips for having a family estate planning conversation.

First, take stock of your parent’s condition. Can your aging parents still make decisions for themselves? This is a critical watershed. If your parents are still sound, then there is no better time to broach the subject of estate planning. Encourage aging parents to make decisions before there is a crisis. Many elderly fail to recognize or refuse to acknowledge when they have become incapacitated. Understandably, there is a fear of loss of control. Help mom and dad understand that a well-constructed estate plan will help them formalize their wishes. In a way, a good estate plan allows them to retain control of their future and the ultimate use of their funds.

Assuming your parents are still able to make decisions for themselves, consider: “Do Mom and Dad have an estate plan and if they do, does it reflect their current desires and wishes.” Estate plans that were created many years ago may not take into account family changes through the years: births and deaths of family members, college goals, or charitable goals. Estate plans should be updated regularly to reflect the current state of your life.

In my experience, two critical documents in any estate plan are a Durable Financial Power of Attorney, and an Advance Healthcare Directive. The Power of Attorney allows the “kids” or other named party to conduct financial transactions on behalf of the parents and has been critical for accessing everything from Social Security and bank information, to credit cards and household bills. The Healthcare Directive provides similar authority but over health decisions. This authority is critical to helping mom and dad make sure they are getting the medical care they need.

Next, it is important to make sure that the estate plan includes a Living Trust. A Living Trust is like a Will, but unlike wills, trusts are not required to go through probate, significantly easing the process, especially in California. Typically, both spouses in a married couple would be named as co-trustees of a Living Trust during life. However, upon death or incapacity however, the trust provides for successor trustees to step in to care for the finances during life and distribute the assets upon death.

Sometimes, finding the Trustee, that person who mom and dad can “trust’, is a roadblock. Admittedly, it can be difficult for parents to let go and allow children to be in control. If that is the case, perhaps another family member, a sibling or cousin would be more appropriate. Alternatively, attorneys will sometimes act as a professional trustee for the trust. You can begin the process by engaging an estate planning attorney and then reviewing the most appropriate option for your family.

As we age, thinking ahead is critical. What is the next step in life and are we prepared? In my family, my in-laws created their estate plan documents just in time. I look back and wonder about the difficulty we would have faced without some of the steps that they took months before they were needed. This year, after Thanksgiving dinner, I encourage you to have an honest and open conversation with aging parents to make sure they have their plans in place.

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