With Baby Boomers now entering retirement age, there has been and will continue to be a significant rise in the American elderly population. According to the Population Reference Bureau, as of January 2016, there are over 46 million Americans age 65 years and older and that number is expected to rise to nearly 98 million by 2060. Despite the fact that more Americans are entering retirement age, only 42 percent of U.S. adults have estate planning documents, such as a Last Will and Testament or a living trust, according to a survey by Caring.com. The lack of a properly executed estate plan may lead to difficulties passing assets down to from one generation to another. For this reason, it is imperative that adults with aging parents open the lines of communication to discuss their family’s financial future and put a plan in place that reflects their wishes. Recently, Forbes outlined four questions that adult children should ask their parents about estate planning:
Have you consulted a lawyer about putting together an estate plan?
Many people, including aging parents, do not want to think about their death. According to Forbes, a recent survey revealed that a quarter of respondents said they did not discuss estate planning because they don’t want to think about their own mortality. Additionally, parents may find it uncomfortable to discuss finances with their children. Similarly, adult children delay talking to their parents about an estate plan because they don’t want to come across as greedy or focused on themselves.
It is important to note that estate planning is emotional for parents and adult children alike. But regardless of personal feelings, it is crucial to have a plan in place should a parent’s death occur. An estate plan will also take current tax laws into consideration and will help parents keep control their resources until they no longer can.
In addition to the traditional estate plan, we believe it’s important to also ask parents if they have undertaken any asset protection planning due to the exorbitant cost of long term care. Typically an Irrevocable Trust is utilized to protect the home and other non-retirement accounts should care in the home or nursing facility be required.
Have you put documents in place to handle financial and medical decisions should you become incapacitated or ill?
An individual’s ability to make important financial and medical decisions may deteriorate as they age. For this reason, it is important that people establish their estate plans while they still have mental capacity and can identify trusted loved ones to make decisions on their behalf. A parent may appoint a durable power of attorney who will be able to make important financial decisions and a health care proxy who will be able to make health care decisions should they become incapacitated and unable to make these decisions themselves.
A parent may also want to specify their wishes for life-sustaining treatments should he or she become incapacitated. If a parent does not want to receive treatments such as mechanical ventilation, artificial hydration and nutrition, dialysis, and cardiopulmonary resuscitation (CPR), he or she may specify their wishes in a living will.
Do you want to designate funds to a cause that is important to you?
If an individual dies without a Last Will and Testament they die intestate. When someone dies intestate their assets are distributed in accordance with New York’s intestacy laws, usually to just spouses and direct descendants. For this reason, it is crucial that those who wish to designate a portion of their estate to a particular philanthropy or cause create a Last Will and Testament. Through a Last Will and Testament, an individual can designate part of their finances to the charitable organization upon their death.
Additionally, parents may want to designate a portion of their estate towards the educational needs of their family, perhaps a college fund for grandchildren. Resources may be passed directly to the grandchildren or their parents to be used for educational purposes or put into a trust, depending on which option is preferred.
Which family members do you want to include in the estate planning process?
Parents should take into consideration who they want to include in the estate planning process. It can be difficult to include all relatives, particularly if he or she comes from a large family, so parents may limit the process to their spouse and adult children. Through the establishment of legal documents, individuals can make their financial and healthcare wishes clear and help avert future conflicts. Without the individual’s wishes known, siblings may find themselves at odds over what treatments are best for mom and dad and how their assets should be divided.
Estate and long term care planning can be a complex and emotional process for both parents and their adult children. The Long Island estate planning and elder law attorneys at Tully Law, PC are available to further explain the steps of the estate planning process and will help you put a plan in place that reflects your wishes and protects your assets. Tully Law, PC has a Long Island law office conveniently located in Melville, New York. For more information or to schedule a consultation, contact our Long Island estate planning law office at (631) 424-2800 or fill out our contact form at www.tullyelderlaw.com.