Are you fortunate enough to have aging parents? If so, are you having money conversations with them so that their money and belongings go where they want it to go when they leave this earth?
Having recently lost a parent, I can tell you firsthand that having many financial solutions in place was a huge relief during the most challenging time of my life thus far.
While most investment firms and large banks have specialized estate departments to advise you, a good financial planner or estate attorney can provide tailored financial solutions for your specific situation. This can be money very well spent.
Here are a some things that my family and I had done or considered…along with a few other concerns that you may want to address, depending on the size of your parent’s estate and the current tax laws for inheritance. Steps will also vary depending on whether both parents were still alive and married to each other.
Know how all bills are paid. Are they paid by check or automatic payment online?
Set up online access to financial accounts and have passwords and user names in a safe place.
Meet with an estate attorney to make sure the right legal documents are in place, including wills and medical directives. Clarify the best wealth transfer plan based on the net worth of involved family members, such as trusts or transfer on death arrangements.
Discuss whether probate will likely be necessary.
Talk with your accountant or financial planner to evaluate whether it makes sense to skip a generation for inheritance. In other words, the deceased’s estate could go straight to your children avoiding a layer of taxes.
Make sure medical directives are in place. This conversation and the necessary decisions are a lot easier when everyone is well.
Consider setting up a Power of Attorney so you can sign and act on accounts should a family member become seriously ill. (Warning: The POA ceases to be in effect when the family member dies.)
Know where all money is held and any outstanding debt.
Consider a codicil (simple addition) to a will that states which heir will receive special items, such as jewelry, silver or antiques to alleviate stress and make inheritance of such items more meaningful.
Develop a relationship with your parent’s banker, attorney, CPA and financial advisor.
Be on the signature card for the safe deposit box and know where the key is.
Handle ownership of real estate, such as your parent’s home, beforehand.
Ask your parent to review all beneficiaries annually to make sure they are still the desired people and divisions. Inquire about contingent beneficiaries.
Be aware that assets and accounts will be frozen as soon as financial institutions know that the account holder has died, and that there are legal issues with financial transactions after someone has died.
Live well, with the knowledge that we are all here for a limited time. And most important of all, tell your parents just how very much you love them while you can.