Helping Elderly Parents With Estate Planning

Posted on Wednesday, July 01, 2020

If you're caring for elderly parents (and possibly, minor children as well), you probably don't have a lot of extra time to think about estate planning. But if your parents have neglected to make a will and prepare other important legal documents that help ensure their wishes are carried out, make it a priority. The absence of any estate plan can lead to a lengthy probate process and hard feelings between family members.

Times change

Perhaps your parents made an estate plan long ago that's no longer relevant — for example, their financial situation has changed or they now have grandchildren they want to include in the distribution of assets. Or maybe they never got around to making a plan.

Depending on their health status and other factors, your parents may resist your efforts to assist them. They could be oblivious to changes or dismissive of your concerns. And their attitude might range from being cooperative — including handing the estate planning process over to you — to highly resistant.

Family meeting

To overcome resistance, involve the entire family by initiating a family meeting. Invite all the key players — your parents, siblings and, as appropriate, their spouses — to the gathering. This could be difficult to arrange, especially if certain relatives reside in far-flung places, but it helps if you can meet face-to-face.

Now isn't the time to be evasive. Dialogue should be frank and honest, particularly if your parents have health conditions that are likely to be terminal. Emotions can run high, so be prepared for some handwringing or pushback. 

You may not be able to accomplish all your objectives in a single session. Consider meeting again with as many family members as possible. In fact, you might broaden the circle to include an attorney or other estate planning professional.

Estate planning tools

After you arrive at some decisions, your advisor can draft documents that meet legal requirements. The complete list will vary family-to-family, but here are some basic components:

Will. If a legally valid will has been executed, your parents' assets will be distributed in the manner described within. In addition, an existing will may have to be modified or replaced due to extenuating circumstances. For instance, your parents might want to add a grandchild to the list of beneficiaries or change direction due to a divorce in the family. Review the last updated version of the will periodically.

Beneficiary designations. Check beneficiary designations for life insurance policies, bank, brokerage firm and retirement accounts, and other assets. If forms aren't current, update them. Your parents can't depend on their will or a living trust document to override beneficiary designations (even outdated ones). As a rule, whoever is named on the most recent beneficiary form will get the money automatically.

Durable power of attorney. This document authorizes someone to handle your parents' affairs and health care decisions in the event of disability or incompetence. This might be you or a sibling. Typically, the power of attorney, which expires on death, is coordinated with a living will and other health care directives. 

Letter of instructions. Although it isn't legally binding, the letter can be as important as a will. It generally provides an inventory and location of assets; account numbers for securities, retirement plans and IRAs and insurance policies; and a list of professional contacts. It may also be used to state personal preferences, such as funeral arrangements.

Living will. A living will spells out your parents' desires relating to life-sustaining measures in the event of a terminal illness. It specifies what means should be used and not used, but doesn't provide legal authority for anyone to act on their behalf. For this reason, it may be coupled with a health care power of attorney.

Revocable living trust. By transferring assets to a revocable living trust, your parents can continue to manage those assets while they are still alive. A revocable living trust avoids probate, keeps personal information private and allocates the trust assets to one's heirs.

Start talking

Depending on their wealth, potential tax liability, desire to donate to charity and family circumstances such as divorce and remarriage, your parents may want to consider other types of trusts. The important thing is start talking to an estate planner as soon as feasible.

And while you're there, establish an estate plan for yourself. That way, you won't be in the same vulnerable position as your parents.

Posted in Estate/Trust

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.