Family and financial discussions don’t always mix. Many adult children only find out the extent of their parents’ estate after they have passed. Unfortunately, this leaves no opportunity for planning. Communication before the parent passes away can lead to more understanding, better planning and fewer headaches and family disputes at the time of the estate settlement.
Tools like our Financial and Personal Account Inventory can help keep all of this information together in one place, while questions like the ones below (which do not relate to asset amounts) will help you get started.
1. Can we document important account and insurance information?
This task will help your parent get organized and will make the task of settling the estate much easier for the executor, without actually revealing the size of the estate. This also presents an opportunity to learn about CDs at alternative banks, stock certificates in the attic or cash in the sock drawer that would otherwise be overlooked. Remember, the value of individual assets isn’t important at this time—only who and where the beneficiaries should contact when the time comes.
2. Are there any accounts you have been meaning to close or move?
Your parent might have assets held at an institution they would prefer not to. Whether the task keeps falling further down their to-do list because they’re putting off the paperwork headache, they need help navigating the process, or they simply haven’t gotten around to doing it for some other reason, you can help facilitate completing this task. Having a conversation to help them move this asset to their preferred location not only helps them manage their finances, but it also makes the job of the beneficiary or executor easier later.
3. Can we check if there are named beneficiaries on all your accounts?
Whether an asset has a named beneficiary is not always clear from looking at a statement. Individually owned assets like bank accounts, houses or taxable investment accounts can sometimes show that there is a named beneficiary on the statement using acronyms like POD or TOD, but not always. Taking the steps to call a custodian, make an inventory of who is listed, and offering to help parents name whomever they choose as a beneficiary could avoid probate and save hours of research for the beneficiaries and executor.
4. Can we make a list of all your trusted contacts?
This list could go beyond points of contact that you might initially think of (i.e. financial advisor, estate attorney, tax preparer, insurance agent, etc.) to include other important contacts depending on their situation (i.e. primary care doctor, specialty doctor, human resource officer, union benefit representative, and possibly other friends or caretakers). You should also revisit this list regularly to keep it updated as things change. Raising this question opens the door for your parents to introduce you to these important players in their estate and could save headaches later.
5. Can we store contact information for where your income comes from?
There are assets that provide income for retirees via systematic withdrawals, and then there are more traditional income sources like pensions, Social Security, and annuities. These may not all have a cash value like an IRA does, but knowing how to contact these institutions to understand what will happen at the death of the first spouse, and subsequently how to stop them at the second death, will be part of the estate settlement process.
6. How and where do you store your usernames and passwords?
The answer to this could very well be a napkin in a drawer, or it could be something more high-tech. If they are comfortable with these methods, the goal isn’t to change their use (or lack of use) of technology, but simply to help them organize this information to access when you need it. When the time comes to settle their estate, you don’t want the added stress of trying to figure out their account login information.
7. How do you want your estate settled?
Things like charitable donations, any hidden personal effects, or other wishes for their estate may not automatically be included in a will or other legal document. Depending on their wishes, you might even want to encourage your parents to meet with their financial advisor to ensure their estate plan accomplishes those goals. For example, if they want to equally divide assets between their children, they must make sure the inheritance takes their children’s tax situations into account to ensure they receive equal portions. Ultimately, let them share, take notes and—most importantly—promise to implement.
8. Where are your will and other legal documents stored?
If your parents don’t have these documents drafted or they are out of date, it presents an opportunity to help them arrange a time with an estate attorney. If the documents are already written, and you both are confident they are current and valid, the location of (and how to access) the documents is a simple, but often overlooked next step. For example, who owns the key for the home safe, or are they held at an attorney’s office or safe deposit box at a local bank? If a local bank is used, check into the executor’s ability to access the safe deposit box—especially if the document used to identify themselves as the executor is stored inside the box. If there is an easier process, it can be arranged now while everyone is alive and able to make sound decisions.
Organizing and setting up a family meeting can be intimidating. As difficult as it may be, it’s critical that you and your family are on the same page when it comes to your parent’s estate. Clear communication now can save you and other loved ones from headaches down the road. Financial advisors, like the team at Wealth Enhancement Group, can provide resources like our Account Inventory to help family meetings run smoothly. Your advisor can also attend and/or lead these meetings as a support system to lean on and simplify the process.
CFP®, CLU®, Series 7 Securities Registration,1 Series 66 Advisory Registration† Brian has almost 20 years of experience in the financial services industry, focusing on retirement planning, investments and insurance protection for individuals of all asset levels. He also has a special interest in assisting individuals who work in the public sector. A passionate educator, Brian enjoys sharing his in-depth knowledge through TV appearances, public speaking...Read More