Estate Planning Crucial
Almost everyone knows someone who experienced a financial nightmare following the death of a family member. Perhaps a valid will did not exist, the proceeds from a life insurance policy went to someone other than the person intended, or the heirs were unsure whether all bank accounts had been located.
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One recent study found that more than 60 percent of adult Americans have never discussed legacy plans with their heirs. That's understandable. Parents may not want to talk about dying or becoming incapacitated. Children or grandchildren may be reluctant to broach the subject for fear of appearing greedy.
Key Elements for Estate Planning
Find out whether your parents have a valid will, a trust, and a power of attorney in place. If they don't, encourage them to create these basic documents right away. Ask them also to make an inventory of insurance policies, financial and retirement accounts, mortgages, safe-deposit boxes, and any Social Security and veterans benefits.
Ask for the names and contact information of your parents' attorney, financial advisor, insurance agent, accountant or tax preparer, and others who are part of their financial team. You may want to inquire about the beneficiaries of their life insurance policies. It's a good idea to have this discussion with your parents before these arrangements are communicated on paper.
Ask family members to write a letter of instruction addressing personal issues that may not be covered by legal documents. Some examples might be instructions for a memorial service and interment, the disposition of items with sentimental value, and computer passwords.
We had heard about annuities and were investigating them for our IRAs. We also heard bad things about pushy brokers over the years. So when we went to the ImmediateAnnuities.com site we were skeptical about calling them. But whenever we called their staff was really friendly. They answered all our questions and one of their reps even told us that at our ages there was no advantage to buying the annuity with our IRAs. These guys are really honest!
Asking your parents about their estate plan can be a scary prospect. Despite the emotional and family issues that could arise when discussing legacy plans, leaving them unaddressed could potentially be more painful.
Professional Help to Navigate Estate Planning
The use of these approaches can involve a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional before implementing such strategies.