What to Discuss With Your Parents About Their Estate
There’s truly no time like the present to start having estate planning conversations with your parents. After someone is gone, unless they’ve tucked all their plans away in a file somewhere, it’s too late to find out what they wanted. And the last thing you’re going to want to deal with following the death of a parent is trying to find documents that may or may not exist. So, you’ve got to be brave and jump in there now.
Here are the basics to discuss with your parents about their estate:
Last Will and Testament and Medical Power of Attorney
A last will and testament is something most people are familiar with, but you’d be surprised how many people don’t have one. Get this done before you do anything else.
A medical power of attorney (which, yes, also includes a piece of paper) names who can make medical decisions for your parents if they can’t make those decisions for themselves.
Powers of Attorney
While you’re getting the will done, go ahead and have them appoint their medical and financial powers of attorney. This is the person (or persons) who can make decisions—financial and medical—for them on their behalf if they can’t.
Long-Term Care Insurance
This falls through the cracks all the time, but it’s really, really important, especially if your parents are over the age of 60.
The sad reality is, nursing homes, assisted living communities, in-home caregiving—none of that stuff comes cheap. And what’s even sadder is that most health and disability insurances don’t cover long-term care.
But by helping your folks get long-term care insurance in place, you’re protecting their future.
Overall Debt Picture
The goal though is to begin to get a clear picture from your parents on what, if any, debt they have. Amounts, type, terms—all of it. The number you want to ultimately get to is what they own minus what they owe.
If you have cosigned on anything with them, remember that you’ll be responsible for those debts after they die or if they can’t pay on them any longer.
Everything Else
Once you start getting the top priorities (like a will and powers of attorney) checked off, then you can start getting the full picture of your parents’ financial state. Here are some other things you don’t want to forget about, or want to remind them to share with their financial planner:
- Social Security benefits
- Retirement funds, including 401(k)s
- Pensions
- Any investments, including mutual funds
- Health savings accounts (HSAs)
- Rental properties, including timeshares
- Any land they own, plus location of any property deeds
- Car insurance rate and policies