Often we try to avoid uncomfortable conversations to make our gatherings as shiny and bright as possible. You certainly don’t have to tackle all of your communal money-related questions during the holidays, but one key conversation should be at the top of your “to-do” list: estate planning.
What Is Estate Planning?
Estate planning is the process of organizing your estate and what happens to it after you pass away. An estate plan helps to build a legacy, ensure your family is taken care of, and indicate how you want your medical care and estate to be handled if you’re unable to communicate your wishes after an accident or medical emergency. It also encompasses other things like how you want your children to be cared for through a guardianship clause in your will, and more.
A good estate plan should have a few key documents, including:
What Conversations Do You Need to Have?
There are a variety of conversations you need to have with your family regarding their estate plan. Sometimes it can be easier to break them into categories, and approach them when the subject feels comfortable or comes up organically in conversation.
Medical
This is one of the most important discussions to have with your family members regarding their estate plan. You need to know what healthcare directives exist for parents and close family members, and who their power of attorney is in the event that they can’t make medical decisions for themselves. Asking about medical preferences can also be incredibly helpful. For example: do your parents have a preference for what medical treatment they’d like to receive when unconscious, or if they’d like to be resuscitated in a life or death scenario? These conversations aren’t easy to have, but this knowledge will help you make decisions if you (or your siblings) is their power of attorney.
Responsibility
Several roles need to be filled in an estate plan. Your parents may have you as part of their strategy without you even being aware of it, and it’s best to be in the know! Here are a few responsibilities to ask them about:
Insurance
Many parents and grandparents don’t have life insurance as they near retirement. However, if they do, it’s worth discussing their coverage and who they have listed as their beneficiaries.
Estate
Do you know what’s included in your parent’s estate? Being clear about what’s included, and how they want to divide their estate among you, your siblings, loved ones, and charities or organizations they support is critical. You and your family don’t want to feel surprised by how the estate will be divided.
A Case Study: What Happens When You Don’t Talk About Your Estate
Joan* is a successful entrepreneur who believes in caring for her family. Specifically, Joan allocates part of her budget toward caring for her grandmother – who raised both her and her siblings. Joan’s family is incredibly close, and all four of her siblings love their grandma. They’re all very attached to their grandma’s home where they grew up – and know that it’s likely worth quite a bit of money as it’s an up-and-coming neighborhood and has been well maintained.
Recently, Joan’s brother mentioned feeling torn about whether they should all sell the home when their grandma passes away, or whether they should keep it in the family and continue to maintain it. Joan was surprised because the mortgage is in her name, and she pays it monthly. The grandmother hadn’t told the siblings that Joan pays for her mortgage, and wants Joan to keep it quiet, as well.
This situation is problematic because Joan’s siblings assume that they’re entitled to a portion of the family home when their grandma passes on. However, the home is in Joan’s name, and so it isn’t part of her grandma’s estate. Although revealing the “big secret” that Joan is paying for the mortgage now may hurt her siblings, it will prevent a future incredibly uncomfortable conversation when the family is grieving – and could potentially save their relationships ahead of time.
How to Start the Conversation
You can avoid a situation like the one outlined above. If you’re unsure about how to start a conversation about estate planning with your parents and siblings, have your financial planner help you. Remember: The best gift to give your family is the shared knowledge of what your parents and grandparents want, and how you can all help them to carry on the family legacy.
Ready for some actionable tips on how to start the conversation? Here’s how to get started!
How to Start the Conversation:
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CONTACT US
OUR LOCATION
10975 Grandview Drive
Building 27, Suite 190
Overland Park, KS 66210
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