This time of year, with Mother’s Day and Father’s Day, is the perfect time to celebrate your parents.
But these months can also serve as a reminder to talk to them about estate planning and how they want their lives and assets to be managed as they age.
It’s important to have these conversations with parents early. After all, according to the 2024 Wills Survey, a study by Caring.com, only 32% of Americans reported having an estate plan. You shouldn’t wait until your parents encounter a major health event or a diminished-capacity situation. While the conversation may be uncomfortable, it is vital to maintaining peaceful and productive family relationships.
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Here are a few things that I often share with my clients so that they can plan ahead with their families.
1. What are your parents’ personal desires?
To properly plan, you should understand what your parents’ preferences are as they age to ensure everyone in the family is on the same page, especially since these decisions can often carry a financial burden.
These can include their wishes regarding where they will live. For example, do they prefer to stay in their own home, or are they open to a retirement community or nursing home? And how will that decision align with their finances?
Another item to address: their health care wishes, including whether they’d like to have a DNR (do not resuscitate) or other medical directives in place, and who will be entrusted to make medical decisions on their behalf if needed. You’ll also want to be sure you understand their end-of-life wishes and plans, such as whether they want a burial or cremation, whether they’ve purchased a cemetery plot and how they’d like their life to be celebrated.
These can be difficult conversations to have, so you shouldn’t be afraid to pull in outside assistance. Often, I’ve found it helpful for an adviser, either me or another adviser from my team, to sit with the family and facilitate the conversation. By doing this, we can make sure all questions get answered and shift some of the responsibility of directing the conversation, especially the challenging parts, away from the family.
2. What is your parents’ financial situation?
It is important to have a fairly detailed picture of your parents’ finances to understand if they will need support from you or your siblings. This involves evaluating their savings, income, expenses and net worth to determine whether they will outlive their money.
Make sure you understand what assets they have, where they are managed and how to access the information once your parents are gone.
You should also understand what types of insurance they have, including both long-term care insurance and life insurance. You and your parents should meet at least annually with a financial adviser to assess your plan and make any necessary adjustments.
3. What is your parents’ estate plan?
It’s critical to make sure parents have the proper estate planning documents in place and that you have a copy of them. These include documents like wills, trusts, financial powers of attorney and health care powers of attorney, as well as clear documentation about the roles they want you and your family members to play (e.g. executor, power of attorney or health care power of attorney).
These documents should lay out how their assets will be distributed according to their wishes, whether that is to philanthropic endeavors, family members or other beneficiaries. If these documents are not in place, it is important to consult with an estate planning attorney as soon as possible. A financial adviser can also help ensure these assets are well positioned to maximize their value both during and after your parents’ life. They can also clue you into important regulatory changes that may impact estate planning matters, such as the recent SECURE Act changes to beneficiary distributions of retirement assets.
4. Who is on your parents’ trusted team of advisers?
Finally, make sure you know who is on your parents’ team of advisers — their CPA, insurance agent, financial adviser, estate attorney or others, and make sure they are aware of your parents’ holistic financial plan. In some situations, one of these may be able to oversee or coordinate the entire team on your behalf, which we often do at MAI for clients.
You should also make sure you know their doctors, so if there comes a time that you need to make major decisions regarding their health care, you already have a relationship with them.
It’s natural to want to avoid these conversations, but putting off these vital discussions can cause confusion down the line — or, at worst, can result in your parents’ wishes not being carried out correctly. Life happens — but being prepared can help.
MAI Capital Management, LLC is an investment adviser registered with the U.S. SEC; we do not provide legal advice. This should not be considered a recommendation to buy or sell any security or product, or of any particular asset allocation.
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