By Melanie Hasty-Grant
WHEN YOU ARE THE SANDWICH
Helping your senior parents prepare their estate, talking with your aged parents about money, their home and private affairs is never easy. Talking with them about the inevitability of their passing away is even harder. It is one of those family talks that many avoid and procrastinate having until it is too late. However, just like other uncomfortable and awkward talks (like the birds and the bees with your children), you will feel much better once it is done. They will likely feel less burdened and more resolved with their decisions as well.
The following are three topics to cover in your talk.
- Do they have a will or a trust? A will is a legal document containing instructions as to what should be done with their money and property after their death. A will contains information about who gets what and names a person to carry out these wishes. However, a will does not exempt the estate from going through probate. Probate can be lengthy, costly, and is public.
- The other option is a Living Trust. A Trust is a legal document created by them (the grantor) during their lifetime. Just like a will, a living trust spells out exactly what their desires are with regard to their assets, their dependents, and their heirs. The big difference is that a living trust bypasses probate enabling the successor trustee to carry out the instructions as documented in the trust at their death. It also names the person they want to manage their financial, healthcare and legal affairs if they should become incapacitated.
- If they choose not to create a will or a trust, at a minimum they should name beneficiaries on their banking and investment accounts and have non-retirement accounts registered with a transfer-on-death document or with rights of survivorship. This last option will only cover the specific accounts that they are listed on and not for other assets such as their home, cars, and other miscellaneous stuff. I have visited with lots of folks who’s estate planning included putting their children as joint owners of their accounts. I personally don’t like this option. Here’s why. Older mom adds adult daughter as joint owner of her financial accounts. Adult daughter gets in a car accident. The other people in the accident sue the adult daughter for damages or death of their loved one. The joint account that she holds with her mom could now be included as her assets. That could be a potential mess! Now, what if adult daughter gets a divorce? Hmmmmm……
- Do they have a Healthcare directive? This is a written document that allows a patient to give explicit instructions about medical treatment to be administered when the person is terminally ill or permanently unconscious. It describes their wishes as to what medical intervention they want. It helps to preserve personal control and eases the decision making burden of the family. These are fairly simple. You can even pull one of these forms off of the internet. Make sure they sign with a witness present and preferably a notary.
- Do they have Long Term Care Insurance? This insurance helps provide for the cost of long-term care and includes a range of services from home health care to assisted living to nursing home care. Long Term Care insurance covers care generally not covered by health insurance or Medicare. In Oklahoma, the average cost of one year in a nursing home is $53,290 according to seniorhomes.com. The older you are when you start long term care insurance the more expensive it becomes. You are also more likely to have pre-existing conditions that could make it impossible to get. Plan early! $53,290 a year eats up the estates assets very quickly.
If you need help having these talks with your parents or your children, give us a call at 918.272.1120 or visit our website at www.waterstonewealth.com.
Melanie Hasty-Grant, Experienced Licensed Professional Counselor and Founding Partner/Wealth Advisor of Waterstone Private Wealth Management.
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