By Jody Gastfriend, LICSW, VP Senior Care
Several months ago my sister made a surprising suggestion: Let’s sit down with Mom and figure out how this whole inheritance thing is going to work. Awkward, right? As a senior care expert, I give out a lot of advice about proactive planning, but I’d avoided this one myself. The truth is that we’ve never really talked about money as a family, so we didn’t know the details of my mother’s finances. And I’m not alone. While researchers expect about $20 trillion will be transferred in bequests over the next decade, most inheritors are unprepared and uniformed about the process. However, planning ahead can save time, money—in inheritance taxes—and heartache. It can also help your mom pay for long-term care down the road, should she need it.
According to a study by Ameriprise Financial, the number one reason adult children don’t address estate planning with their parents is that they don’t feel it is their place to bring it up. Parents are often unwilling to share financial information with their adult children. Viewing money as a private matter is ingrained in our culture, particularly for the generation that came of age during World War II. We were lucky. My 90-year-old mother thought the meeting was a good idea, but she is in the minority. Only 21% of parents have told their children how much inheritance they will receive, the Ameriprise research found.
It can be tricky, but experts say it’s better to initiate estate conversations by focusing on a parent’s wishes and concerns, rather than on who-gets-what. My mother’s financial advisor suggested we ask basic questions, such as if Mom had thought about her preferences for long term care as well as the cost? According to Mom’s advisor, one of the primary goals of a family meeting is to insure that proper estate planning has been completed. For example, is there a will (a document detailing how assets are to be distributed after death)? When it comes to planning for the hereafter, when you have a will, there is a way. Still, close to 60% of Americans do not have a will and the number is higher for younger adults. This can really make a mess of things when a person passes away unexpectedly and their heirs are left to sort things out. Both Prince and Aretha Franklin died intestate (without a will).
My mother had a will and she had given each of her three children a copy. But experts will tell you that a will itself is not enough. A complete estate plan should include a living will (medical instructions in the event a loved one becomes incapacitated) and a health care power of attorney (someone authorized to make medical decisions on another’s behalf). Some estate plans also include trusts, legal arrangement in which assets are held for designated beneficiaries without requiring probate (a public court process).
Another significant obstacle to estate planning is family conflict, which can often intensify after a parent has passed away. The main causes of sibling discord include how inheritance is divided, whether one sibling supports a parent more than another and the perception that parents are being unfair in how they divvy up the pie. Add to the mix blended families, second marriages, step-children and regular old sibling rivalry, and things can get ugly. My siblings and I were advised to have an open and honest discussion upfront and insure proper legal documents are in place to avoid family squabbles.
Fortunately, my brother, sister and I are on the same page. Our biggest concern is that Mom have enough money to last the duration of her life, especially if long-term care is needed. If limited funds are available, your loved one may need Medicaid, which pays for long-term care for those deemed poor enough to need it. Perhaps your mom is ineligible because she’s considered over-income. To qualify, she may need to transfer assets to you or your siblings a full five years ahead of time. That’s where planning ahead can make a big difference.
Another way advanced planning is helpful is to clarify who-does-what. Should my mother become incapacitated, I’ll assume the role of financial power of attorney and will manage my mother’s finances. As the designated health care proxy, my sister will make health care decisions on my mother’s behalf. And as the executor, my brother will insure the estate is distributed according to the wishes outlined in my mother’s will. The truth is that while we have separate roles, we will not perform them in isolation. We will lean on each other for support and seek out expertise when we need it. This is a journey best taken together. In fact, the vast majority of families who have talked about estate planning say the discussion went smoother than anticipated. Although estate planning can be tough to initiate–particularly since it focuses on two much-avoided topics: money and death- there is also an unforeseen gift that has nothing to do with money. It is about honoring our parents’ legacy and cherishing their ability to give, even after they’re gone.
Jody Gastfriend is vice president of senior care at Care.com and author of My Parent’s Keeper: The Guilt, Grief, Guesswork, and Unexpected Gifts of Caregiving. For caregiving support, information and resources contact a Senior Care Advisor at Care.com. We are master’s-level social workers specializing in adult and senior care. Call us today at (855) 781-1303 x3 or email questions to careplanning@care.com
