Although talking about your parents’ eventual death may not be a great subject to bring up at the family dinner table, it is still an essential discussion to have. Failure to talk about how to administer your parents’ estate can result in headache and significant financial costs in the future.
Why estate planning is important
Having a comprehensive estate plan can give you and your parents peace of mind about the future by settling important decisions such as who they prefer to be their primary caregiver and how to pay for healthcare when they are older. Of course, how to distribute property after death can also be decided.
On the other hand, everybody is different with their own access to resources and their own estate planning objectives. This means your parent’s estate plan should be customized to fit their specific needs. Also, an effective estate plan will help to mitigate tax liabilities for your parents as well as their intended beneficiaries.
Understand the documents
Having a basic grasp of the essential documents of an estate plan is the first thing you should do in preparation for discussing estate planning with your parents. Some of these documents may include a will, power of attorney or a trust. Be ready to explain to your parents the basic details about what each of these legal documents do.
Family dynamics
Every family is different with certain family members being more influential and even more respected than others. For example, if you have siblings, one sibling may be closer to your parents than another. This could mean this specific sibling should play a larger role in approaching your parents. Just make sure all of your siblings and other concerned family members are on the same page.
Select a time to talk
The best time to bring up this important topic is as soon as you can. However, it can be challenging to start the conversation which can be confronting and uncomfortable. Make sure to choose a day and time when your parents are not distracted by having to work or handling household chores or errands. Try to aim for a time when everybody is less likely to be stressed about daily life stuff.
For example, choose a day when you yourself have a day off from work or do not have to take care of the kids. Maybe avoid having this conversation when your parents may be exhausted from returning from their vacation cruise. A busy family holiday party may not be the best time despite the convenience of everybody being all in the same place.
Consider professional advice
Estate planning can be quite technical in nature and will require you have some understanding of applicable rules and regulations. You will also need to stay current on the latest changes to tax laws which can affect your estate planning strategies. Let us help guide you through the process and explain all of the options available to you and your parents.
Any opinions are those of the author and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a complete description, nor is it a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we do not provide advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.