A parent’s estate plan can be a touchy subject so many adult children avoid the discussion, unless parents bring it up. Yet, it could be one of the most important discussions you ever have. It can help ensure parents have taken appropriate action to document their wishes and protect their assets.
If your parents haven’t started thinking about what they want their estate plan to look like, asking them to make multiple decisions at once can be overwhelming. Breaking the topic down into smaller steps can help make the process more manageable.
The First Step: Wills
Both parents should have wills stating how their property should be distributed when they die. Without a will, state law typically determines the distribution of the person’s assets. A will should also appoint an executor (or personal representative) to help settle the estate. The executor can be a relative, a friend, or even an institution.
The Next Step: Advance Directives
Making decisions about your parents’ care can be challenging and stressful if they haven’t made their wishes known. Consider encouraging your parents to include legal documents known as advance directives in their planning. Advance directives include:
- A living will spells out a person’s wishes for receiving or not receiving life-prolonging medical treatment
- A durable power of attorney for health care — also known as a health care proxy — authorizes someone to make medical decisions if a person is unable to do so
For more information on advance directives, check out this previously recorded Quick Bite Webinar.
Another Step: Protecting Finances
Who will pay the bills if your parents are unable to attend to their finances? A durable power of attorney for finances designates someone to act as an agent in financial matters if your parent is mentally or physically incapacitated.
Putting it All Together
Once you’ve had the conversation, it is important to document all decisions. There are numerous ways to do so, including using an estate planning attorney. But if you are looking for a simpler approach, check out this Guide to Medical and Legal Decisions offered by the State Bar of Michigan.
You will also want to ensure your parents’ beneficiaries are up-to-date. This will save time and effort to access funds when they pass. If they have a MERS retirement plan, they can log in to their myMERS account to add or edit plan beneficiaries. For other financial and retirement accounts, they should contact their financial institution or previous employer directly to verify accurate information is on file.