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Helping Parents start Estate Planning and Financial Planning Process

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  • Helping Parents start Estate Planning and Financial Planning Process

    Before calling a brokerage house, are there any suggestions where to start with parents who don't know where all their money is and who don't have updated estate planning documents. Initial meeting with estate planning attorney is scheduled in 2 weeks. Specifically are there traps to avoid walking into when calling a Schwab or Fidelity? Who would be best equipped for helping parents in 80s form a financial plan at this point and how crucial is this before setting up estate planning documents. Mom having memory problems and recently gave away SSN to a junk phone caller claiming to be from Medicare. Is getting condo out of their names and into multiple children's names the most ideal scenario?

  • #2
    You really need to find a way for them to make an inventory of all the assets. If they don’t know where all their
    money is, there is no access and nothing to plan for.
    So much depends on the family dynamics. Parents in the 80’s are all over the place. Completely independent to 100% dependent on a caretaker. Not enough info.
    Safeguarding assets, spending on needs, investments if appropriate and will or estate plan. Who is responsible for preventing elder financial abuse? It is not the brokerage or estate attorney.
    Claiming ownership and establishing beneficiaries are much easier now then later. Much can bypass an estate. You need to do some unclaimed property search’ as well. Assist your parents in locating any suspected assets including statements and tax returns.


    • #3
      1. Make sure your parents have a will.
      2. Make sure your parents have a general and medical power of attorney.
      3. Get a listing of assets. This may require a bit of investigation on your part.
      4. Gain online access to bank accounts and then you can see what comes in and goes out. Then you know what bills must be paid every month.
      5. Know what credit cards they have and are using.
      6. It seems that going to an estate attorney is probably a good idea. However, you will need to go in with information for the initial meeting.
      7. Some type of trust will probably be recommended. Assets have to be retitled into the trust. This can be a painful (and time consuming) process. Your parents will need help with this particularly if there are varied assets.
      8. Make sure beneficiaries and contingent beneficiaries are current on assets, accounts and insurance policies.
      9. I would be heading to the estate planning attorney before working on the financial plan. Do they really need a financial plan or just organizing and making things simplified?
      10. I would make sure that you or one of your siblings attends all meetings with your parents.
      11. Do your parents have online access to their investment accounts? I would make sure you have logins and passwords.
      12. Do you have a list of doctors and medications?
      13. Your parents need help. You are right to get involved while they are still able to communicate and make decisions. These are tough conversations to have with parents who are beginning to fail with health and memory issues. Make sure you write things down and form some type of a notebook with information that would be handy for you and your siblings.
      14. Good luck!


      • #4
        A first step is assessing how much help they are willing to accept. Do they realize they need some help with finances and estate planning? Are they willing to accept help from children?

        If they are willing to accept help, then the next step is creating a list of what they have in terms of assets, what they have in terms of income, and where they stand in terms of expenses. Next steps might be to determine plans for long term care. Is there adequate income or assets to cover the cost of possible long term care? What are their preferences if they need you to make decisions on their behalf?

        In terms of titling of property, the details matter. It is often best to keep assets in the elders' names to take advantage of the step up in basis when they pass. However, depending on long term care plans and needs, it may be beneficial to get title to property and assets out of the elders' names. This will also depend upon the state where they live and may require the advice of an elder law specialist. Typically, an estate attorney may be able to offer advice on these types of decisions, but at a minimum, the estate attorney will be able to refer you to a qualified elder law specialist.


        • #5
          If your parents have a good estate planning attorney, they can get started right away with that work and do their financial planning at the same time. Their estate planner should be able to work with their financial advisor to come up with the best plan for them. I would not normally recommend putting their condo in their childrens' names. Updating their foundational estate plan and addressing your mother's memory problems will be top priorities. Since I don't know what state they're in (and I only practice in 2 states), their net worth and details I would ask about in an initial consult, I can't make other specific recommendations, but you could always get a second opinion if you are unsure of their needs after they meet with their attorney. I'm very glad to hear they're meeting with an attorney, and that you're concerned and helping with their work!


          • #6
            Good advice above. The issue isn't so much with financial planning but most of the time for estate / long-term care planning (medicaid lookback etc). Unless they're rather wealthy.

            Also yeah agree with WBD, consider treading lightly. And don't post this on bogleheads you'll probably be thrown out by a bunch of elderly internet finance nerds..


            • #7
              Great advice given already. You are wise to do this now, in March 2021 my brother and I were traveling to visit our parents for the first time since Covid - on our agenda was discussing their estate planning. We weren't sure how our dad would take it, but we had reason to be nervouse. My mom has dementia (70 yo) and my dad was 10 years older than her (80), so we were concerned about what would happen if he went first. Literally during our flight for the visit, dad had a medical emergency. A 4 day trip turned into a 6 week stay for me. He ultimately passed away at a point when we thought things were getting better. Mom had to move directly to an assisted living near my brother within a week of dad's passing so we could resume our lives. Fortunately, we were able to execute POA and health directives for both of them while he was still with us, but unraveling their finances has been a real chore because we didn't ask enough questions while he was still alive. I did start an excel file with every bank, etc. listed, and I keep notes of what order we plan to spend the money for her care. The POA has been key to accessing things and speaking on mom's behalf with brokerages, banks, selling real estate, etc. The only real hiccup we have encountered was that their house was titled as tenants in common rather than as married or joint tenants, and their cars were all titled in his name only, so we had to go through probate - so definitely check titles. Dad's "half" of the house is tied up for at least 6 months or more, so if the money from their home would be needed for the survivor's care, make sure it's titled where it would pass directly to the survivor. My understanding is that adding kids to the house ruins your step up in basis and also makes it an asset that can be taken in a lawsuit since your name is on it. If nobody knows where the money is, a good place to look is tax returns from prior years, that's how I found different interest income, dividends, distributions, etc.


              • #8
                Sorry for your loss. Your point about POA is valuable. One misconception is how long a POA is valid. It terminates upon the death of the individual. Some institutions completely shut off if you mention anything about death when you are just trying to get information. Simple questions like balance and beneficiaries require the court documents or the POA of the beneficiary.
                Had a situation where a box was marked with an X, rather than initialed. Rejected!
                When speaking with an institution, ask for all accounts for the social security number. If you ask by account only, you get what you asked for and miss the rest.
                Some make it more difficult than it needs to be.