Welcome to this fifth and final blog in our series on Estate Planning. I would encourage you to start from the beginning of this series if you have not had a chance to yet. In this blog we look at why leaning into tough conversations with your parents today can prevent future confusion and unanswered questions.
It might be difficult to think about, but preparing for your parents’ passing can give you peace of mind and alleviate some of the emotional stress that comes when losing a loved one.
Often, it’s not until after our parents pass away that we prepare to administer their will, estate, and everything else included with the transition. However, discussing things in advance will provide for a much smoother process during the grieving period. If their affairs are not in good shape, then you may face some challenges as a family on their passing:
- It becomes harder to honor them in the best possible way
- Frustrations arise, increasing the odds of sibling and family conflict
- You may risk losing part of the inheritance to unnecessary taxes, fees or poor organization.
Personally, I have witnessed instances where things were left in such a state of disarray it resulted in unnecessary resentment between family members. Therefore, to help make the best out of a difficult situation, I recommend doing several things in advance to prepare for your parents’ passing:
Have a List of Account Numbers and Locations
Do you know where your parents do their banking, keep their investments, and manage their assets? If not, this is a great place to start when discussing end-of-life plans.
Be sure to get the details regarding their banking institutions, investment accounts, stocks and bonds, and safety deposit boxes. Keep a list of their account numbers in a secure place – a place you’ll remember for future reference. Revisit this list every year or two just in case their banking institution(s) has changed.
By having this list readily available, you’ll save yourself a lot of frustration during an already emotional time. I’ve included a handout titled, Things to Consider When Preparing for Your Parents’ Passing, feel free to download it as a valuable resource to have on hand.
Make Sure They Have an Updated Will/Trust
If your parents were to pass today, are you confident their will/trust is updated and includes their current intentions?
When it comes to wills/trusts, it’s easy to have the mindset of “set it and forget it.” However, it’s recommended that all wills/trusts be updated every three years to ensure that all the information is still relevant.
Here are a few things to know about your parents’ will:
- Know where the original copy (with original signatures) is filed.
- Know whether the will/trust is properly executed and validated.
- Make sure the will/trust is clear on how items are to be distributed among family members, including priorities, personal property distributions, and how to settle any disputes.
Know whether they have a will or trust and whether they have chosen someone to manage it. If it’s a will, moving to a trust can save the family from probate and other potential challenges. (Previous generations often defaulted to wills and trusts weren’t common. Today however, a trust is almost always the better option.) Whatever option they decide on, remember to keep it current and encourage them not to leave the family with an outdated plan. In rare circumstances, you might discover your parents don’t have a will at all, which could be a real eye-opener to the state of their affairs. That’s why I highly recommend discussing this with them and helping them develop an updated will that defines their true wishes.
Be Aware of All Life Insurance Policies
Are you aware of your parents’ life insurance policies? Knowing about these before their passing ensures their benefits will be paid out to the designated policy holder.
When discussing these policies, here are some important questions to ask:
- Where are the original policies?
- What is the name, phone number, address, and email of both the insurance company and agent?
- Are there any current loans against the cash value of the life insurance policy?
- Are insurance premiums current on the policies? (A call might be warranted to the insurance agent to make sure the policies have not lapsed, and if so, reinstated if possible.)
Keep in mind that your parents’ life insurance policies might help with funeral expenses, outstanding debts, or other expenses having to do with their passing. That’s why it’s so important to be aware of these policies ahead of time.
Ask About Financial Obligations, Loans and Receivables
As you may know, any financial obligations your parents have upon their passing must be paid by their estate. These might include credit card debts, mortgages, and loans, and should be disclosed before they pass. After all, no one wants to be blindsided by a creditor they knew nothing about!
Although this might be a sensitive topic, reassure your parents that you have their best in mind and want to make sure their assets are protected as much as possible. Consider helping them form a plan to pay off their debts so that their estate is free from financial burden and can be distributed accordingly.
Ultimately, it’s not the most comfortable conversation to have, but preparing for your parents’ passing, by having access to their financial portfolio, will give you peace of mind and alleviate some of the stress during the grieving process. I hope this post was helpful and encouraging.
Other Helpful Resources
I have more helpful resources which were mentioned in my previous post How to Prepare Your Wife for Your Passing. Also included is a handout Things to Complete for A Memorial.
Action Step
Give your parents a call today and set up a time to discuss their estate. Be sensitive as you approach the topic with them and ask how you can help them so as to prevent unnecessary stress in the future. Take the handouts with you for reference.
I hope you have found this series useful, and you’re able to apply the insights learnt towards your own estate plan. I encourage you to keep revisiting the blogs as often as you need to and share them with family and friends.
Do you have an experience related to what you have read? Please share it with us in the comments section and if any questions arise, please email me at paul@paulslifelessons.com.
