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Aging Parents’ Estate Planning… Why Bother?

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There are advantages as to why our parents should establish binding estate plans; yet statistics confirm that many people don’t bother to do so. One assumption is that estate planning is only a concern of the wealthy.  Also, married people assume that their affairs are legally in order because they own everything jointly.  Another reason why people don’t put their legal affairs in order is they simply do not know which questions to ask.

For example, many people ask lawyers to formulate estate plans essentially based on the question: What happens to my money and assets when I die? That’s certainly an appropriate question; but not the most salient one. In an age where people are living one-third longer than they thought they would, it is wiser to ask this question: What happens if I live long and become incapacitated?

Estate planning is less intimidating and easier to grasp once you and your parents understand the terms. Use this list to open the dialogue.  

 


 

Durable Power of Attorney:

Gives a person legal right to sign his/her name to business transacted in another person’s name. This power must be arranged while the individual is still competent, and can be terminated at any time upon the person’s written request. NOTE: Financial institutions and banks typically do not honor power of attorney forms other than their own.

Trust:

A way to leave money that takes advantage of tax benefits and accomplishes the desires of the person setting up the trust. A trust controls the release of money before or after death.  A Testamentary Trust is one that is created by will, and does not take effect, until the death of the creator of the will.

Living Trust:  

Transfers stocks, property, and other items from one living person to another, avoids probate and protects in the event of incapacity. A revocable living trust gives the creator of the trust the right to change the terms of the trust or even terminate it.  

A Will:

Describes how an individual wants his/her estate to be distributed upon death. The document may include provisions for a trust and usually names an executor. Parents should resist the temptation to draft their own will. There are specific legal requirements that must be met for a will to be valid. A simple will can cost as little as a few hundred dollars.

Trustee/Executor:

Individuals designated by the creator of the will who will see to it that the will is properly executed. A trustee manages a trust and an executor sees that specific provisions of the will are followed, pays estate taxes, debts, and expenses. The trustee and executor can be the same person.

Letter of Instruction:

A document that is prepared for the beneficiaries of the will and trust. The letter is meant to serve as a guide for closing out the affairs of an individual upon death. Although this letter is not a legal document, the composition should be consistent with the individual’s will. The Letter of Instruction should also include a list of the people to notify when death occurs, as well as covering the disposal of possessions and specifying any wishes regarding funerals and/or memorial services.

 


 

Locating the services of an estate-planning attorney can be accomplished through personal referrals. People on fixed incomes may qualify for free or discounted  legal services by contacting the local Agency on Aging, and the local Bar Association. Also, call a local law school to find out if community services are offered.

Finally, legal documents and important instructions don’t do a bit of good unless the rest of the family is made aware of their existence. Ask your parents to discuss and distribute copies of legal documents with designated family members, and inform you of where the originals are stored.

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Joy Loverde is the author of the best-seller, The Complete Eldercare Planner (Random House, 2009) and Who Will Take Care Of Me When I Am Old? (Da Capo, 2017). Joy’s media credits include the Today Show, CBS Early Show, CNN, and National Public Radio among many others. Joy also serves as a mature-market consultant and spokesperson for manufacturers, corporations, law firms, financial institutions, insurance, associations, healthcare organizations, senior housing, and other members of the fast-growing eldercare industry.

Comments
  • Thank you so much for sharing this list of common terms used in estate planning. Sometimes people avoid planning for when they pass because they simply do not understand what estate planning is or what is required to get the process underway. I would love to say that regardless of age, anyone who has even modest assets should consider enlisting the help of an experienced estate planning attorney. This will help protect heirs and beneficiaries and help to lower estate taxes. Thanks again for sharing, I am sure many readers are grateful for this information.

    December 17, 2016
    • You are very welcome, Dilip. Thank you for taking the time to comment on this important topic.

      December 21, 2016

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