In many ways, this is one of the most important issues that I see, and one of the least frequently discussed within the family ranks. The topic is family awareness of the aging parents’ financial situation and estate plan.
All too often adult children are surprised at the poor planning that their parents did to plan for their incapacity or ultimate passing. These children frequently find themselves in a difficult situation with an attorney who may or may not be competent, communicative, or cost effective to settle the estate and minimize and tax bite.
In short, elder parents should not be so private about these matters. Anyone who has a role to play or receiving assets under your estate plan should have some level of awareness as to their roles or the financial consequences of the death of a parent. I understand that there may be sensitive issues that you’d have a tough time discussing or may rather keep private – but this is not always in everyone’s best interests.
To the children or elder parents, know what questions to ask. So you don’t feel like you’re nosing in on something that your parents may want to keep under wraps, ask these questions in a way that may show that you are simply trying to help. These questions may include the following.
How old is your will? Do you have trusts? Do I have any roles as an executor or trustee after your passing?
What about health care powers of attorney and living wills? Are these documents that you have and are they less than a few years old?
You would think that you are asking simple questions where your parents would have answers. But in many cases, they do not. If you are lucky, they may be able to find the documents and show you copies so that you can answer the questions yourself.
Also ask about the competency of the attorney who drafted their current documents. Ask if the attorney is an estate planning professional or someone who practices general law who also claims the ability to help with estate planning and administration. If the documents are very old, it is likely that the documents may not memorialize their current wishes and desires and will need revisions.
One significant word of caution to the parents: Don’t talk to your family about this until you are rock solid that your plan is a good one. A good plan is one that is current, where you’ve done everything humanly possible to avoid probate and simplify the estate settlement process, reduce taxes and avoid a family feud over the decisions made. Because this is frequently a tough conversation to have, many families invite their advisor team to participate or even lead this discussion.
We’ve all heard stories of poor planning and family feuds. The bad stories are optional. Get yours fixed now and let your postmortem legacy include what a great job you did to set up your final affairs.
John P. Napolitano CFP®, CPA, PFS, MST is Founder and Chairman of Napier Financial in Braintree, MA. Visit napierfinancial.com for more information. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Legal counsel should be consulted for specific advice or recommendations about any individual’s personal legal circumstances. Investment and financial planning advice offered through US Financial Advisors and Great Valley Advisor Group, Registered Investment Advisors.
