Talking with your parents about estate planning is probably one of the last things you're interested in doing. But not having that discussion is far worse, as avoiding it can leave you in the dark about your parents' plans, assuming they have them in the first place.
There are five things in particular everyone should talk with their aging parents about: legal documents, the location of important papers, their long-term care plans, their living situation, and the real reason you're asking them such personal questions.
Talking point 1: Necessary legal documents
No one wants to fork over money to a lawyer, but preparing certain legal documents is important and necessary.
If your parents haven't drawn up a will or other documents, they're not alone. According to a recent Gallup Poll, only 44% of Americans have prepared a will. If they've been putting off this task, encourage them by helping them find an attorney or suggesting a timeline. Here are five documents they should consider creating and why they are important.
- Will: A written document that describes how a person's assets should be distributed after death. If your parents die without a will, the state will determine this for them.
- Trust: A legal arrangement that transfers assets to a trust, where a trustee will manage them for the grantor's benefit and the benefit of the beneficiaries. A trust allows assets in the estate to avoid probate, the legal process through which a court ascertains the validity of a will.
- Health Care Proxy: A legal document that empowers another person to make healthcare decisions on a parent's behalf in the event that doing so becomes necessary.
- Living Will: A written statement describing a person's desires regarding their medical treatment in circumstances in which the person is no longer able to express informed consent.
- Durable Power of Attorney: A document that appoints someone to handle a person's legal or business matters and sign that person's name to documents if he is unable to do so for himself.
Parents may not be receptive to questions about estate planning. If that's the case, stress that by making these choices in a formal way, they are ensuring that they will be able to live and have their assets distributed according to their wishes and desires.
Talking point 2: Disorderly document deluge
Do you have any idea where your parents keep their important paperwork? While your parents may be able to locate all of these things, would you have any idea where to start looking without their help?
It's likely that if you need access to your parent's important documents, they may not be able to help you look. You don't want to end up searching through their home for paperwork while you are grieving or stressed.
Encourage or assist your parents to organize the following paperwork and store it in a safe place that is known to you or their trustee.
- Essential Documents: Will, letter of instruction, trust documents.
- Proof of Ownership: Housing, land, proof of loans and debts owed, vehicle titles, stock certificates, savings bonds, brokerage accounts, partnership and corporate operating agreements, and tax returns.
- Bank Accounts: List of all accounts, user names and passwords, and safe deposit boxes.
- Health Care Documents: Personal and family medical history, durable healthcare power of attorney, authorization to release healthcare information, and living will.
- Life Insurance and Retirement: Life insurance policies, IRAs, 401(k) accounts, pension documents, and annuity contracts.
- Marriage and Divorce: Marriage license and divorce papers.
Talking point 3: Long-term care planning
According to the Family Caregiver Alliance, 69% of people aged 65+ will develop some type of disability before they die and 35% will eventually enter a nursing home.
No one likes to think about becoming less self-reliant or needing assistance for daily living. However, most people will need some type of care, either by family or informal caregivers, home and community based care, or nursing home care.
It's important to discuss your parents' plans (or lack thereof) in case they need care in the future. Ask if they've considered purchasing long-term care insurance, if they've considered moving to a retirement community, or if they want to remain in their own home as long as possible.
Talking point 4: Living arrangements
The idea of leaving the family home and downsizing can be emotionally fraught, but it is something that needs to be discussed.
Consider the following issues:
- Are the living areas on multiple floors?
- Will your parents need to carry laundry or groceries up or down stairs?
- Will it be a challenge to keep up with the housework or yard work because of the size of the home or lot?
- Do they have the means to pay for assistance?
Moving may be appropriate if these issues will create challenges as your parents age.
Talking point 5: You ask because you care
Families delay having these conversations because, let's face it, it's hard to talk about the fact that someday our parents will die. It's also uncomfortable because you don't want your parents to think that you have an illicit agenda.
Stress that your agenda is to make sure you are able to honor their wishes and choices for their future by talking and planning now while they are able minded and bodied. And remember that they don't want to think about losing physical or cognitivie abilities or their death either, so be empathetic to their response.
Because you love and care about the well being of your parents, you need to have this difficult conversation now. Making decisions and arrangements before they're needed allows your parents to have the most input and control.