While most families are open about all kinds of topics, they are reluctant to talk about some subjects, such as being death and money. For all adults – parents and children, death is a sensitive matter and is not discussed until it is visibly unavoidable. Another issue of concern is privacy around financial matters.
That being said, families must strive to overcome this discomfort and converse about possible deaths and transfer of assets. Here are some tips on how families can get started without any awkwardness creeping in the way.
When it comes to estate planning, a sensitive and transparent conversation between family members can go a long way. For instance, the parent may wish to have a specific survivor to manage their assets, but in reality, has no idea whether the person would be comfortable doing so. Having a heart-to-heart conversation in this regard will help the parents’ perspective.
Furthermore, survivors also may have a desire to know what plans you have for your assets and estate and will appreciate knowing them from parents directly – while they are still living. Additionally, the scope of misunderstanding and conflict will reduce if there are multiple beneficiaries.
When estate plans have not been adequately drafted and/or communicated, it may also lead to a possibly dramatic reduction in the amount that the beneficiaries.
Last but not the least, survivors may take drastic actions based on the deceased’s wishes, if the latter is not communicated to them in time. Not only does this cause a waste of vital money, it is also an inconvenience in terms of time and energy on the part of the survivor – not to mention missed growth opportunities and outdated portfolio.
The benefits of dialogue:
Having an open dialogue on estate planning brings several benefits to both the adult parents and the adult children. These include the following (among many others):
– Conversations can prove to be very effective if the beneficiaries extend beyond the main household
– Adult children can know what the intention of parents are about their estate, and will know what to do should they pass away or become incapacitated
– In case the children are minors, the appointed interim guardians will have a clear picture of the parents’ plan (as will the children themselves)
– Parents will have the piece of knowing that their descendants (which may sometimes span their nieces, nephews, grandchildren or any extended family members) know about their plans, and any of them who will face responsibility of managing the same will be comfortable doing so.
– The family as a whole will gain a sense of empowerment, armed with sound knowledge and good control over their collective future.
Starting the conversation:
While this conversation is important, it is admittedly difficult to begin. While there is no one specific way or “format” to starting the discussion, one parents try any one of the following ways:
– Start the conversation during a peaceful time in life. It is best to not wait to speak till a crisis occurs, or worse, when the parents are deceased or incapacitated
– Let your survivors know that you mean well, and are sincere about your intentions, and that they understand your intentions fully.
– Encourage an open conversion – let your survivors speak-up if they feel that something is incorrect. Not only will this will make them comfortable, it will help parents update their plans, if needed.
Several people think that estate planning is an activity that is required only by the wealthy. This could not be farther from the truth. Everybody requires a solid estate plan, no matter what their income or net worth is. Having an estate reduces any scope of confusion, cuts all unnecessary costs, and lifts off any financial or estate-related stress from survivors.
According to a recent piece on Yahoo! Finance, which featured WealthCounsel, estate planning tends to be a difficult issue for several families. They, should, nonetheless make sure to do it. When families fail to prepare and document their assets properly – such as houses, savings accounts and retirement plans, they may be left hanging for years in settling matters, and in some cases may have to hire expensive legal professionals to resolve issues.
In order to avoid future troubles, all families must have the following estate planning tools:
An up-to-date trust or will
While wills can be easily created, they need distribution of assets to go through probate. Probate is a legal process which involves the following actions:
– Validating the will of the deceased person
– Identification, inventory and appraisal of the property of the deceased
– Payment of debts & taxes; and
– Distribution of the property in accordance to the directives of the will
Trusts are generally more expensive and need the assistance of a professional, but offer several benefits which wills cannot. When structured properly, trusts can be instrumental in avoiding conservatorship or guardianship should you become incapacitated. Furthermore, wills become active after your death, whereas a trust works all the time, including the time when you may be incapacitated.
A well-drafted power of attorney
A power of attorney is a legal document which authorizes assigned individual to instantiate legal and/or financial decisions on the owner’s behalf should they become disabled, hospitalized, or incapacitated.
There are several different kinds of powers of attorney – for instance, some become valid immediately after they are signed while other come into effect at a specified date. While some power of attorneys are made to stay active for only short periods of time (such as when the owner is vacationing overseas and needs someone to deal with legal matters at home), others are fairly long-term. Regardless of the type, the power of attorney must be durable and well-drafted and should make all intentions and directives very clear.
Updated beneficiary designation forms
Beneficiary designation forms on life 401(k) accounts, insurance policies, and other forms of assets usually override any and all conflicting provisions within a trust or a will. The estate owner must make sure to check and update all forms regularly – at least every year.
While it may seem complicated, these tools are fairly simple and will go a long way in making sure that your estate remains protected and goes to your loved ones after your demise. You can also enlist the help of an estate planning professional, who will help you create and/or update these tools and offer suggestions if needed.
There are far more single people today than there were in the past – according to data obtained from the US Census, over 50 percent of the American population aged 15 and older today consists of single people – a huge jump from one-third in 1970.
No matter what the reason of their single-hood is (i.e. whether they are divorced, widowed or have never married in their life), singles must pay as much attention to their estate and its planning as their married counterparts – an issue that has been highlighted in great detail in a recent article in the Wall Street Journal. Contrary to popular belief, those who are single also face issues related to estate planning, which require lots of time, careful planning, and the timely assistance of a professional.
Here are some of the more involved estate planning issues that singles face:
Heirs: For married people who die but have no will, the assets get automatically get transferred to their partner. However, that cannot be the case with single people. When a single person dies without a will, their assets are distributed along their bloodlines – first to the children (if they have any), then to parents, and finally to siblings and/or other relatives. Single people who have no surviving relatives at all might have their transfers end up becoming property of the state.
In order to make sure that their assets end up with their relatives, descendants (if any) and charitable organizations of their choosing, single people must make a will – or at least create an irrevocable trust which states exactly how they would want their assets to be transferred after their death.
Decision making: Many situations, such as an accident or a health event can leave us incapacitated and unable to make decisions. For married people, it is the spouse that makes the necessary decisions. Single people don’t have this convenience. This makes it all the more essential for them to designate a family member, friend or any other trusted or loved one who will make decisions and manage assets when they themselves are unable to do so. If the person fails to make proper directives, the decision-making task mat go to distant relatives or even to otherwise strangers who are appointed by the state.
In order to avoid this from happening, single people must an HIPAA authorization, a general power of attorney, and an advance health care directive. All of these allow them to choose a particular individual who will be entrusted to make medical and financial decisions on behalf of the person if and/or when they are incapacitated.
Beneficiaries: Some accounts, such as retirement plans, need the holders to list a beneficiary during the time of enrollment. This assignment is normally upheld upon the passing of the originating entity, regardless of whether it was given to another person in a will. Widowed singles and those who were previously married must reevaluate their designations for recipients in order to ensure that their transferable accounts are not given to those whom they don’t want to give (such as former spouses).