When I broached the subject of my parents’ estate plan, hoping to learn more about where their accounts, passwords, policies, and other important documents were, I was a little nervous. It can be a very delicate conversation between parents and their children. Knowing my mom, I wasn’t surprised to see her retrieve a plastic file case with labelled folders, complete with copies of statements, contact information, and instructions. She was an estate planning lawyer’s dream!
But not all families are the same. In fact, many parents will not voluntarily broach the subject of their personal finances with their children. They may refuse to even discuss it. When this happens, I encourage people to center the conversation around making sure their parents’ wishes are met, whether that means handling assets, making health care decisions, or making funeral arrangements. An estate plan does far more than answer the question “what will my inheritance be?”
As reported by the American Association of Retired People (AARP), anywhere from 50%-60% of those over 65 do not have a will or an estate plan. I tell my clients that estate planning is a gift to their loved ones – the gift of knowing that your loved ones are making decisions consistent with your wishes. Often, my clients also get a sense of relief from the process; they know that their affairs will be settled in the time and manner of their choosing. While some might find talking about their death morbid or uncomfortable, there’s no time like the present to start the conversation. As the last couple of years have shown, there is a lot about our health we simply can’t control. Good planning can alleviate some of the stress of a health crisis or accident.
Estate Planning with your Parents: A Short List of Documents You Need
Most people don’t have my mom’s record keeping system. Generally, I provide those interested in helping their parents with estate planning the following list of critical documents to pull together. Documents include:
- Insurance Policies
- Divorce Decrees
- Health Care Directives
- Powers of Attorney
- Citizenship Papers
- Real Estate Holdings (assets and liabilities)
- List of all Assets and Personal Property
- Liabilities and Debt
- Login and Passwords for Online Accounts
- Past Wills or Estate Plans
- Direct contact information for important advisors
Once you have this information in one place, you have the foundation to continue the discussion on formalizing the wishes your parents have on what they want to have in place to ensure their goals and legacy can live on.
Key Role: The Personal Representative
If your parents don’t have a will or an estate plan, you can use your persuasion skills – you know your parents best – to help them walk down the path toward formalizing the goals they have. Do they want to leave money to a church or non-profit organization, or set up trusts for their grandchildren’s college educations? Once they know the answers to those questions, they’ll need to know who they can trust to make their plans a reality.
In Minnesota, the Personal Representative (sometimes called the Executor) is “the person who is appointed by the court to be responsible for administering the estate of a person who has died.” (See this page on the Minnesota Judicial Branch’s website on Probate, Wills & Estates.) That means collecting assets, paying bills, completing tax returns, and filing all of the required court documents, among other tasks.
There are a number of important traits to consider when choosing a personal representative. You should choose someone who:
- Is highly respected by beneficiaries
- Is extremely organized and a process-thinker
- Has the time to take on the tasks required
- Is ethical and dependable
- Can understand financial and legal documents, and engage with professional help when needed
- Is fair and impartial
Broaching the subject of your parents’ financial situation at the level of detail required in the estate planning process can be challenging. However, if handled correctly, your parents will see your request as a labor of love to ensure their legacy lives on after they are gone.