The State of Your Parent's Estate

Talking with a parent about estate planning is never easy. Here are some conversation starters that can help adult children and their parents plan.

In 2020, it is projected that Americans older than 65 now will total 56 million, a number that is expected to climb significantly as Baby Boomers retire over the next two decades. Even with this "graying of America," a recent survey showed that only 42% of adult Americans have any kind of estate planning documents at all, jeopardizing the smooth transfer of hard-earned wealth from one generation to another.

The issue is often around starting the difficult conversation of estate planning, which can involve such sensitive topics as incapacity or end-of-life issues. But adults with aging parents can open the lines of communication about the family's financial future and the need to have a plan.

Here are four questions to ask:

1. Have You Spoken with a Lawyer About an Estate Plan?

Your parents may not want to face the possibility of getting sick, having to give up control over their lives, or even a life-ending illness. Parents can also find it awkward to discuss their money. In a recent Estate Planning Awareness survey, 25% of respondents said they hadn't discussed estate planning because they don't like thinking about their own death.3 In a different survey, 47% of respondents said, "I just haven't gotten around to it," which may indicate procrastination on a difficult matter.4 In a similar manner, adult children, not wanting to appear greedy and focused on themselves, procrastinate as well.

2. Have You Drawn Up Any Paperwork So You're Prepared in Case of Illness or Incapacity?

Your parents' ability to handle future financial and Medical matters may deteriorate. It is crucial that they identify people they trust now, while they are still able, to make decisions for them in the event of incapacity. Now is the time to make sure they've done so, and to be involved in the decision-making to the degree everyone is comfortable.

Also, how do they feel about being cared for should the need arise? Some parents equate having their children care for them as being a burden on their kids. Think about whether you agree with their notion of the future and what you are willing to take on. You can help them visualize the future and what they want so you can help.

3. What Are Your Priorities for the Future Use of Your Money? What Causes Are Important to You?

It's important to understand that estate planning covers a wide variety of issues including charitable giving. Find out if they have explored gifting strategies to efficiently pass on family wealth. Another question might be about contributing to family educational needs, perhaps for their grandchildren.

Examine what they care deeply about and how your values are aligned. What are their charitable goals? Depending on your family's wealth levels, you can define family financial goals and objectives and even a philanthropic policy to direct wealth toward making positive social or environmental change.

4. Which Other Family Members Should Be Involved in the Planning Process?

When thinking about estate planning and the drafting of Wills, trusts and the division of assets, a family tree chart can assist in building a solid estate plan-particularly in large families. Creating a family tree with your parents and siblings will not only allow you to visualize your family hierarchy, but better understand your parents' relationships and gain knowledge about all of your relatives. A set plan may help avert conflicts between siblings in the future, as opinions will likely differ on what is best for mom or dad, or how their assets should be divided.

While these conversations can be difficult, they are important to have. An experienced Financial Advisor can provide guidance to help you create a plan that is tailored to your family's specific circumstances and provides a framework for the future.

Footnotes:

1 U.S. Census Bureau, "Projected Age Groups and Sex Composition of the Population", https://www.census.gov/data/tables/2017/demo/popproj/2017-summary-tables.html.

2 Caring.com 2017 Wills Survey, https://www.caring.com/articles/wills-survey-2017.

3 WealthCounsel, 2016 Estate Planning Awareness Survey.

4 Caring.com 2017 Wills Survey, https://www.caring.com/articles/wills-survey-2017.

Disclosures:

Article by Morgan Stanley and provided courtesy of Morgan Stanley Financial Advisor.

Susan S. Craig is a Financial Advisor in Tampa Office of Morgan Stanley Smith Barney LLC ("Morgan Stanley").

She can be reached by email at [email protected] or by telephone 813-227-2182.

Her website is: http://www.morganstanleyFA.com/Susan.Craig

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