It is hard to think and talk about our parents' deaths. As a result, many individuals avoid talking about estate planning with their elderly parents.
Sadly, as parents get older, many adults end up in difficult positions as they attempt to handle their parents' financial and healthcare demands.
Because they can quickly lose their ability to handle their own affairs, now is the time to make serious efforts toward creating an estate plan for your elderly parents.
This article will serve as your guide to help you manage the stress, anguish, pain, and lengthy family conversations necessary when talking with your parents about their deaths and understanding their preferences and any advance preparations they make.
Key Takeaways
It’s critical for elderly parents to have an estate plan so they can control what happens to their belongings after they die and avoid a lengthy probate process.
Your parents will need to choose beneficiaries, trustees, and personal representatives to manage their estates once they pass.
Having all estate-planning documents, including wills, titles, deeds, and bank account information in one place will make estate administration easier.
What Exactly Is an Estate?
In this context, the term estate refers to all a person has. Land, real estate, assets such as antiques and collectibles, and personal things such as automobiles, apparel, and jewelry, are all included.
A person's estate also includes financial assets such as bank account balances, assets, company capital, and life insurance policies.
A person's estate is essentially the net worth of their possessions minus any obligations they may have, such as outstanding loans and bills. Regardless of the size of an estate, it is critical to prepare how those goods will be divided at the end of someone's life.
Estate Planning for Elderly Parents: What Is it?
Estate planning is the process by which elderly parents can direct what happens to their assets.
Because elderly parents may enter into their senior years in less-than-ideal health, estate planning is the simplest and most reliable approach to ensure that assets go where they are supposed to go.
We frequently associate estate planning with wills, yet, a will is only one component of a comprehensive estate planning strategy. A complete estate plan for elderly parents should include a will, a living will, a power of attorney, and trusts.
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Why Estate Planning for Your Elderly Parents Is Important
Estate planning allows elderly parents to direct the distribution of the assets they’ve worked their whole lives to accumulate. Estate planning also allows elderly parents to make determinations regarding their own bodies, future medical treatment, and burial preparations while still mentally capable.
Given that humans can die at any time, there is no optimal age for estate planning. Elderly parents with significant monetary assets should be especially thoughtful about how they want their assets managed in the case of their death.
Having an Estate Planning Talk With Your Elderly Parents
Talking about estate planning for aging parents is challenging, but it's necessary.
Sadly, many families avoid having these discussions because they don't understand estate planning, believe the timing isn't right, or are concerned how their relatives would react. So, how can you begin a conversation regarding such a difficult subject?
The following tips for your talk may be useful:
Maintain Open Communication With Other Relatives
Try to incorporate other relatives, such as siblings, while talking about this with your parents. It is best to be open and honest with your family. You don't want the conversation to appear controlled or confidential.
Take Notes
Because this is an ongoing conversation, keep a full journal of your discussions with your parents. Since your parents' wishes may change, it is wise to have something to look back on.
Do Not Use Pressure Tactics
Try to avoid using this topic to argue about who receives what stuff. Instead, the discussion should focus on reducing the stress associated with end-of-life determinations and economic and medical supervision.
Use Empathy
Though this is a challenging topic for kids, it is also tough for parents.
Confer With a Reputable Estate Planning Lawyer
An expert estate planning lawyer can assist in the drafting of estate planning agreements. Still, they can also mediate and guide your family's conversation.
Assisting Your Senior Parents in Determining Their Estate Planning Objectives
You probably think about estate preparation for senior parents as simply creating a Last Will and Testament or Trust. The estate planning process for elderly parents is actually extensive due to the amount of thought that goes into it.
Assisting your parents in clarifying their estate planning objectives will be beneficial when deciding on the best estate plan for them. After you understand their objectives, you may discover that they require additional documentation to guarantee they maintain an acceptable estate plan.
If you haven't done estate planning in the past, you're undoubtedly wondering what objectives you should set for yourself.
The following are the everyday goals of people in estate planning for aging parents:
Transfer money and belongings to loved ones as soon as possible
Avoid going to probate court
Avoiding expensive legal costs and taxes
Protect special needs family members
Understanding the intentions of elderly parents when estate planning will help guarantee that the paperwork reflects their preferences.
Keep a Record of Your Parents' Debts and Assets
It would help if you documented your elderly parents' assets (cash, property, 401ks, investments, automobiles, etc.) before you begin estate planning for them.
Trustworthy simplifies the estate planning procedure, so you know how the rest of the estate will be divided among their preferred beneficiaries. Trustworthy can help you keep track of your parents' bills, such as vehicle loans, credit cards, and mortgages.
Having this information in one safe place can help you and your elderly parents understand the remainder of their estate.
Beneficiaries Selection
The most important stage in estate preparation for aging parents is selecting beneficiaries. Beneficiaries are people to whom your parents want to leave their funds and possessions.
Typically, this includes children, grandkids, a surviving partner, or a charitable institution.
Choosing a Successor Trustee or a Personal Representative
Choosing a Personal Representative or Successor Trustee is just as important as choosing beneficiaries. Your parents should appoint someone they can depend on to carry out their estate plan.
The obligations and roles of the Personal Representative and Successor Trustee are identical. Still, there is one key difference: a Will doesn't circumvent the long and expensive probate court procedure.
Rather, the Personal Representative oversees the estate's probate process to disperse assets to your family This process can be completed in as little as 6 months, but it might take years riding on the amount of the estate and whether or not anyone opposes the Will.
With a Trust, the Successor Trustee can disperse the assets secretly within days following your death. This is due to the Trust avoiding probate.
A Successor Trustee and Personal Representative's general tasks include:
Manage the estate
Pay off debts
Fill out all relevant paperwork
Distribute resources
Choosing an Agent to Handle Your Elderly Parents' Financial Affairs
Choosing an agent to handle their financial matters is an important part of estate planning for aging parents. People don't want to be concerned about financial access after a terrible accident, incapacity, or poor diagnosis.
Who would handle your parents' expenses, loans, mortgage, or file taxes if any of these unfortunate scenarios occurred?
These types of incidents are always unpredictable, and no one is readied for them.
It is critical to make a Financial Power of Attorney when estate planning for elderly parents. Making this paperwork will save you from going to court to get access to your parent's financial affairs.
Your parents' Agent is the individual they choose to handle their monetary affairs. In the event of incapacity, the Agent takes charge of their matters, or the Agent could handle their matters during their lives if your parents prefer.
Once your parents select an agent, they must verify that the individual is willing to serve. They should be in frequent contact to guarantee that the Agent acts for your parent's best welfare.
Picking a Patient Advocate When Estate Planning for Senior Parents
Similar to a Financial Power of Attorney, it's critical to consider your parent's medical care if they become incapacitated before their passing. It is wise to plan for incapacitation ahead of time.
You need to sit down with your elderly parents and examine their precise medical wishes, such as resuscitation and other preferences.
Some essential inquiries that you should ask your parents are:
Do you wish to be revived?
Do you have any particular medical intentions?
Do you wish to give away your organs?
If your senior parents can't talk, you want to ensure someone they respect is in charge of their medical determinations. You can create a Medical Power of Attorney and name someone their Patient Advocate.
Gather Important Documents
When you start estate planning for elderly parents, gathering all essential documents and keeping them in one place is essential. It is easier to initiate estate administration when these documents are in one place.
Some records that Trustworthy can help you keep together are:
Titles
Deeds
Bank account details
Keeping these records with your parent's estate plan will help the procedure go better and be less painful.
What Happens With Taxes?
Several variables should be considered when preparing for what should happen to an estate. There are two kinds of taxes regarding estates: the estate tax and the inheritance tax.
Estate Taxes
The estate tax must be paid before the money and other assets included in the estate are released per the Will. Basically, these are taxes paid by the deceased (or specifically by the estate itself) (or specifically by the estate itself). A federal estate tax applies to assets that surpass a specific value.
Some states demand an additional estate tax to be paid to the state government, though the rate and thresholds for exemptions differ from place to place. It is most useful to check on these specifics for the location where the Will will be executed.
Inheritance Taxes
Inheritance taxes are paid by the individual receiving the assets from a Will or Trust. This tax rate will differ depending on the place, and in some states, particular inheritors (such as spouses or kids) are exempt from paying this tax. In others, estates are taxed in numerous ways.
Maryland, for example, requires that an estate be taxed by the federal government, by the state, and then again as it is inherited by those appointed in the Will.
Talk About Long-Term Care Planning
Sadly, injuries or diseases that demand long-term care are often unpredictable, so you should plan for these.
Paying these expenses out of pocket can reduce your parent's wealth, and they may be forced to sell significant assets to pay for care.
Suppose your mother needs long-term care, but your father doesn't.
Will your dad have the cash he needs to live and pay the bills while bearing the expense of $8,000-$9,000 every month to pay for your mother's hospice?
Will you need to sell the house to cover the expenses?
These problems are genuine for families with aging parents who need help in everyday life.
Trustworthy Can Make the Process Easier
Trustworthy can help make the process of estate planning for elderly parents easier.
Planning for the death of an elderly parent can be extremely stressful. On top of managing difficult emotions, there are many essential documents to keep track of.
With Trustworthy, you can store your parent's estate planning documents in one safe place. This makes it easy to share documents and make crucial updates in collaboration with family members.
Start your free 14-day trial with Trustworthy today and put your paper files behind you.
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