Holiday dinner: Never discuss religion, politics and... estate planning?
Wrong! While the conversation is difficult, it is extremely important to talk about estate planning. A recent client gathered his family and told them of his estate planning decisions. He was surprised when several children balked at the jobs he assigned them. "I don't want to make the medical decisions - Jane would do a better job!" "Why isn't Bob handling the finances, he is good at that sort of thing?" He reorganized his documents and the family was much more comfortable and supportive. Many people default estate planning assignments to the oldest child, but sometimes that isn't the best fit. A conversation with your loved ones can help clarify the responsibilities and get everyone on the same page. If you need help, here are 4 Holiday Conversation Starters, they are bound to generate interest and a lively debate. When all of you are sufficiently full and concerned for your estate planning, schedule an appointment using our online calendar and get the problems solved! Now... can you please pass the stuffing?
#1 Money, Money, Money
If you are unable to make financial decisions, who will step in and manage your accounts? Are you comfortable with the first person to volunteer as your Durable (Financial) Power of Attorney taking over your checkbook? Will they keep the bills paid and the lights on in your home until you are able to return or will they see a chance to dip into their inheritance early? Further, who will settle your estate as the executor or successor trustee when you die? Be careful with this decision as some people tend to get power (and money) hungry. We have had many phone calls from siblings whose sister/brother have commandeered the home/car/money because they have been designated the point person for distributing the estate. There are laws against that, but the integrity of the person is your first defense. Talk with your loved ones and get a feel for who will do a good job and keep the peace. As a side note, with regards to your personal items, put the post-it notes away and use this awesome book we recommend for divvying out the "stuff" left behind in a home. "Don't let the stuff you leave behind destroy your family" is a game changer! Order a copy today and have family peace tomorrow.
#2 Medical Decisions
To pull the plug or not to pull the plug - that is the question. Who will make that decision? Have you informed that person that they're responsible to make decisions when you are incapacitated and for your end of life care? As your Medical Power of Attorney, do they have any idea what you want and how you feel about the situation? Do yourself (and the responsible party) a favor and TALK about it NOW. Complete your medical directive and then clarify your thoughts. Your family will be much more comfortable making difficult decisions for you, if they know what you truly want. Having your decisions in a formal, legal document will also avoid family conflict if there are disagreements for your care.
This is a crucial conversation to have with anyone, but especially your aging parents. Without a revocable living trust, their home will likely go to probate. This is expensive and time consuming. In addition, there are capital gains taxes to consider. By having a trust in place, the home stays out of probate and gets a step-up in basis when the owners die - thus protecting the beneficiaries from the time and expense of probate and a large tax bill. If there is any kind of real estate involved, even if it is mortgaged, a trust is critical... trust us!
Ever the emotional topic, when things get dull at dinner ask, "Who will take care of the kids if we aren't around?" Do you hear crickets or are your sisters clamoring to be first in line? Is the first volunteer, your first choice? A client recently called and wanted to get his estate planning completed immediately for this very reason. He was at a funeral and his sister came up to him and said, "If anything ever happens to you, I will take care of your kids". She was the last person he wanted his kids to live with, so he quickly completed his estate planning to ensure that would not happen. So, do you really want your crazy sister stepping in, when your friend is a much better fit? Probably ought to get that guardianship figured out.
These conversations aren't easy, but they are very important. Take a few minutes this holiday season to talk about more than the weather and the dry turkey. You and your loved ones will be glad you did!
Ready to get started? Schedule an appointment today.