Protect the Estate – Get Your Parents House in Order

Protect the Estate - Get Your Parents House in OrderAlthough it may sound like it, this is not an article about good housekeeping.  This is a wake-up call to those of you who have not adequately assisted your aging parents with their financial and legal affairs.  It continues to amaze me to see just how many people have taken absolutely no steps whatsoever to help plan for their families interests in case of a significant disability or even death.  What am I talking about you wonder?

We sit down with dozens of seniors every year and the sad truth is that most of them have completely failed to plan for the following:

1-     Life Insurance Review

2-     Will & Advanced Directives

3-     Medicaid Spend Down & Long-Term Care insurance

4-     Trusts for Special Needs Children & Grandchildren

5-     Inheritance

If you are like most of our clients, you are married with several children and your parents are getting on in years.  They have spent the majority of their life working hard to provide for their family.  Mom and dad have had some measure of success and are enjoying their golden years.  And yet, after literally decades of caring, suddenly they become incredibly apathetic regarding their financial and legal affairs.  We have all seen it time and time again.  Unnecessary taxes being paid, hundreds of thousands of dollars for health care, homes being lost and even family squabbling over inheritance.

So consider a few easy suggestions:

1-     Review all of your parents life insurance and annuity policies to verify they are registered to the correct owners and that the beneficiaries are properly designated and still alive.

2-     Review the plans for funeral arrangements are properly funded.

3-     Review all of your parents advanced directives; there should be an executed and (updated) Will, Living Will, Health Care Proxy or Power of Attorney.

4-     Review the legal arrangements your parents have made to protect their assets and each other in case one or both get sick.  There is a (5) year look back period on all gifts and transfers in order to be eligible for ‘Extended Medicaid’.

5-     Review their Long-Term Care insurance.  This health insurance policy guarantees the vast majority of their money is protected and that they can remain in their own home for as long as possible.

6-     Review the arrangements your parents have made to protect special needs children & grandchildren.  It is essential that the trust is established prior to your parents passing way and the estate being probated.  Clients need to select trustees now, whether trusted family members and/or corporate fiduciaries, as it is critical if the legacy of the directed funds is to last.  Further, Special Needs Trusts are required to be funded prior to the grantor’s death if the child is to continue to be eligible for Medicaid benefits.

7-     Discuss what your parent’s plans are for their children’s’ inheritance.  Sibling rivalries, in-law resentments, business complications and unchecked egos all can cause serious problems once mom and dad are gone.  It is important that these issues are cleared up well before the funeral.  Your parents need to explain to everyone involved who gets what and why.  It is not easy, but the alternative usually breaks up a family.

Remember, an estate plan can be amended time and time again to satisfy all family members involved, but once it is too late, it really is too late.