In many ways, this is one of the most important issues that I see, and one of the least frequently discussed within the family: awareness of the aging parents' financial situation and estate plan.
All too often adult children are surprised at the poor planning that their parents did for incapacity or ultimate passing. These children frequently find themselves in a difficult situation with an attorney who may or may not be competent, communicative or cost effective to settle the estate and minimize tax bite.
In short, elder parents should not be so private about these matters. Anyone who has a role to play or receiving assets under your estate plan should have some level of awareness as to their roles or the financial consequences of the death of a parent. I understand that there may be sensitive issues that you’d have a tough time discussing or may rather keep private – but this is not always in everyone’s best interests.
Know what questions to ask. So you don’t feel like you’re nosing in on something that your parents may want to keep under wraps, ask these questions in a way that may show that you are simply trying to help.
How old is your will? Do you have trusts?
Do I have any roles as an executor or trustee after your passing?
What about health care powers of attorney and living wills? Are these documents that you have and are they less than a few years old?
You would think that you are asking simple questions where your parents would have answers. But in many cases, they do not. If you are lucky, they may be able to find the documents and show you copies so that you can answer the questions yourself.
Also ask about the competency of the attorney who drafted their documents. Ask if the attorney is an estate planning professional or someone who practices general law who claims the ability to help with estate planning and administration.
If the documents are very old, it is likely that the documents may not memorialize their wishes and desires today and will need revision.
One significant word of caution to the parents: Don’t talk to your family about this until you are rock solid that your plan is a good one. A good plan is one that is up to date, where you’ve done everything humanly possible to avoid probate and simplify estate settlement, reduce taxes and avoid a family feud over the decisions made.
Because this is frequently a tough conversation to have, many families invite their advisor team to participate or even lead this discussion.
We’ve all hear stories of poor planning and family feuds. The bad stories are optional. Get yours fixed now and let your postmortem legacy include what a great job you did to set up your final affairs.
John P. Napolitano CFP, CPA is CEO of U. S. Wealth Management in Braintree, Mass. Visit JohnPNapolitano on LinkedIn or uswealthnapolitano.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200.