Talking to Your Parents About Estate Planning
From the time we were little kids, my grandmother used to tell me and my siblings that if we didn't behave, we'd be “out of the will” (her version of “time out”). We had no clue as to what a will was, but we figured we wanted to be in it. As we got older, we understood she was just joking, but we also learned that it was taboo to ask her what was in the will. Like most American families, we knew our grandparents and parents wanted to pass things down through the family. We also knew not to talk about it.
Turns out we were in the norm. Many surveys report that the majority of Americans rarely discuss estate planning with their parents. Adult children have no idea of what their parents would want them to do with their wealth if Mom or Dad became incapacitated.
There are three basic reasons why people write wills or create trusts:
- They want to pass their assets on to their family members rather than let government take over their assets.
- They want to keep peace in the family by identifying who gets what before they die.
- They want to plan ahead for the costs of incapacity, including the care of their spouse.
These are all very noble and smart reasons for your parents to write a will, create a trust, and engage in smart estate planning. But what is your role in all of this? If your parents have saved and invested wisely, you really don't have much of a role. If they have not, and you're concerned that they haven't protected their assets, you may need to broach the subject with them.
Here are some suggestions on approaching your parents about their estate planning (or lack of it):
Don't go behind your sibling's back to assist your parents in their estate planning. Your influence— though well meaning—may be interpreted as greed by your brother or sister. If you value your relationship with your sibling, be above board. Fairness is more important to siblings than equally dividing up pieces of the estate. But fairness will be achieved only through open lines of communication.
- Begin the conversation with wanting to understand what your parents want; something like, “Dad, I really want to carry out your wishes, but I need to better understand them. Do you want to pass down property to the family? Do you want to be able to draw down money from your assets to help care for you and Mom? Have you thought about ways to avoid high taxes and lengthy probate?”
- Acknowledge that you fully understand that this is their money. Advance planning on their part means that they can keep control. Your goal is to help them keep control—not relinquish it to government or strangers in some courtroom.
- Stay focused on your parents' concerns. This is about them—not your needs or wants. Perhaps they're worried that they'll outlive their resources, or that the kids will fight over the estate and the family will break apart. They may be struggling with finding a fair way of dividing up what they'll leave behind. Rather than confront these issues, they'd rather not talk about them or just plain avoid them altogether.
- If you feel they're uncomfortable talking with you, ask them to see a financial planner.
- One way of approaching the issue more subtly is to share with them your experience of setting up a will or doing your own estate planning: “Mom, you'll never believe what I learned the other day, if I set up a trust I can ….” Or, “I just filled out my living will, and did you know that …” or “Dad, I want you to know that I named Jeff [husband] as my durable health care power of attorney. This is how it works …” These create an opening to discuss how your parents have addressed or not addressed these issues.
- Share with them an actual story of how someone who didn't have a will caused his or her children to lose a great deal of their parent's hard-earned wealth through taxes and probate.
- If you know of a smart and better way for your parents to leave you money (for example, via a trust) you might try, “Dad, I don't know what you're leaving me, and that's okay, but you might want to consider setting up a trust so that the money will be protected in case someone should sue me in my work.”
Money has long been at the root of many a divorce. Fights over how money is spent hits many a household. Tread carefully in bringing this up with your parents. This is their money. Your motive ought to be about helping them (if they need the help) meet their needs and wishes regarding the preservation and handing down of their assets. And remember, an inheritance, if you receive one, is a gift, not a right.
More on: Aging Parents
Excerpted from The Complete Idiot's Guide to Caring for Aging Parents Â© 2001 by Linda Colvin Rhodes, Ed.D. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.
To order this book visit the Idiot's Guide web site or call 1-800-253-6476.