The idea of estate planning isn’t fun. It can be daunting and even morbid for a lot of people. After all, no one wants to think about what they want their final days to look like or how they want their property to be divided up upon their death.
However, the fact that estate planning is complicated is why it is essential to be proactive in establishing an estate plan sooner rather than later. If you have elderly parents, you must be the one to encourage them to put together an estate plan as soon as possible.
Here is how to discuss estate planning with your aging parents.
1. You should seek to understand why your parents haven’t done an estate plan already.
It may be because they think their estate and family situation is simple enough to allow their property to pass by intestacy. They may feel that leaving instructions with a trustworthy family member is sufficient to affect their estate plan. Or maybe they still need to get around to creating an estate plan. Seek to understand why they have put off estate planning before determining the best action.
2. You should explain the uncertainties of not having an estate plan.
Begin with the fact that an effective estate plan deals with more than just the disposition of property. It also deals with the uncertainties of one’s last days.
The legal documents that deal with these issues are a Financial Power of Attorney and a Health Care Advance Directive. These documents would address how your parents want their finances and health care to be managed if they lack the capacity to make those decisions. Creating these documents would eliminate the plethora of questions that come up during a severe illness, such as: Who will your parents want to ensure that their bills and debts are timely paid? Who will they want to do financial transactions for them? Are there any limitations in how they want their finances to be used? Who will they want to make their important health care decisions for them? Do they have any particular wishes for their care if they have a terminal illness or are in a persistent vegetative state? Do they want to be buried or cremated? If so, where and in what manner? Do they want to donate their organs, and if so, which ones and for what causes? I can go on to raise numerous issues that can arise just by needing a validly executed Financial Power of Attorney or Health Care Advance Directive. You and your siblings should not have to guess your parents’ wishes in their final days. Please encourage them to make their wishes explicit by having an experienced estate planning lawyer draft these documents.
Similarly, your parents need to consider creating an estate plan to ensure that their property falls into the right hands. Even if your family is small and straightforward, the Maryland Intestacy Laws do not guarantee that their property will be divided according to their wishes. There may be personal items that your parents want a specific family member to have. If that is the case, they should have a Will or Trust drafted to the effect of that bequest.
3. You should coney that unintentional issues can arise if your parents do not create an estate plan.
Suppose the total values of your parents’ estates exceed the state or federal estate tax exemption limits. In that case, they may be inadvertently incurring additional tax liability for their estates or even handing you or your other family members a tax bill without thinking of limiting that tax liability.
By not drafting a Will, your parents have not formally nominated a Personal Representative to administer their respective estates and to provide an estate accounting to the probate court. While a Personal Representative would eventually be appointed upon opening their estates, their failure to create a Will makes it so that any interested person can petition to become the Personal Representative of the estate – including a family member they may not prefer to be appointed.
Suppose your parents have any minor or disabled children or beneficiaries. In that case, your parents need to ensure that any bequest given to them is stewarded by a custodian or a person who can manage those funds in their best interest. Further, they must provide their bequest does not impact the beneficiary’s entitlement to public benefits such as Supplemental Security Income (SSI) or Medicaid.
- Revocable Living Trust
Your parents should consider whether they want the value of their estate to be a matter of public record; if not, they should think about creating a revocable living trust to serve as a will substitute and to administer their affairs privately and without court intervention. Avoiding probate in this way can save a family thousands of dollars in filing fees and attorneys fees. In addition, a revocable living trust helps with the administration of estates where there is real property in more than one state, saving you and your family in probate costs incurred in multiple jurisdictions.
4. Finally, it would be best to talk to your parents about parts of their estate plan that they likely haven’t addressed in a long time.
Are the beneficiary designations on their financial accounts, including bank accounts, brokerage accounts, retirement accounts, 401(k), and IRAs, up to date? While it only takes a little to update a beneficiary designation, failing to do so can lead to thousands of dollars ending up with the wrong person.
An effective estate plan eliminates the uncertainties that can arise in your final days and beyond. We are here to help put you and your loved ones at ease. If you have any questions about your estate plan, please get in touch with our office today for an estate planning consultation.
Founded in 1998 in downtown Silver Spring, Maryland, Andalman & Flynn has forged a distinguished reputation for legal excellence. The Firm practices family law, estate planning, and probate throughout Maryland and the District of Columbia, and represents individuals seeking disability benefits throughout the country. The Firm focuses on cases that impact the rights of everyone and is there for clients when responsive legal help is most critical. The Firm has provided legal analysis on national and local television and radio, and its attorneys often testify before legislative bodies and are routinely invited to contribute to prominent legal publications. For more information about Andalman & Flynn, please visit the website at andalmanflynn.com or call 301.563.6685.