Here’s the smart way to find out
In the next three decades, trillions of dollars is expected to pass from Baby Boomers to their children in what’s being called the Great Wealth Transfer. For those of us whose parents are still living, it’s natural to wonder whether a share of this wealth will wind up in our bank accounts.
Broaching the subject can be tricky. Many of us feel an innate sense of discomfort when discussing money. Still, it’s a conversation worth having, and taking diplomatic approach is the first step.
The average inheritance in this country amounts to less than $50,000. Of course, many Americans receive much larger sums when an older family member dies, and some get nothing at all.
The costs of long-term care can quickly deplete a person’s assets, and some people will deliberately spend down their resources in order to qualify for Medicaid. Long-term care insurance can guard against these outcomes, but the premiums are expensive, and many applicants quickly discover that they are simply uninsurable.
In cases like these, it’s understandable why parents might not be able to leave their children an inheritance. But sometimes, it’s simply a matter of having failed to plan.
If Mom’s will is out of date, it might not include a bequest to the stepchildren she considers to be her own offspring. If Dad’s 401(k) names his older child as a beneficiary, but not the one who was born later, the younger child may lose out. When a parent doesn’t understand that beneficiary designations on assets like retirement accounts and life insurance policies take precedence over provisions of their will, one child may inadvertently receive significantly less than another – or nothing at all.
There are many reasons someone doesn’t receive an inheritance. But a lack of planning shouldn’t be one of them.
One of the best ways to find out whether your parents have their ducks in a row is to take care of your own estate planning first. A quick phone call to an estates & trusts lawyer will get you started. The initial consultation can probably take place over Zoom. Draft documents can then be emailed before you and your lawyer meet in person to get everything signed and put your plan into effect.
In addition to preparing your will, your attorney can draw up a power of attorney for financial matters and an advance medical directive. These documents can be important in case you ever need someone to manage your finances or health care during a period of incapacity.
When preparing your plan, you should also ensure that the beneficiaries you have named on your own life insurance policies and retirement accounts are up to date. These designations should work in tandem with your will to provide for the people you care about – whether that’s a partner, spouse, child, or loyal friend.
Once your estate plan is complete, you can use the experience as a conversation starter with your parents.
“I just met with an attorney to have a will prepared, and it was easier than I thought it would be. I also got a power of attorney and advance directive and updated my 401(k) beneficiaries. It’s such a comfort to feel ready, in case something unexpected happens.”
Once the topic has been broached, Mom may volunteer that she needs to update her own will. Or Dad may say he’s been meaning to take care of that and doesn’t know how to start. Offering to have them speak with your attorney might be all it takes to help them get started.
Then you might say, “The attorney asked whether my estate might include an inheritance, and I wasn’t sure what to say.”
Regardless of the response you get, be sure to emphasize how hard it will be for you when they’re gone. “I’ll be a wreck and just want to make sure that everything’s in order, so we’ll know what your wishes were.”
This can be a difficult conversation to have, but it might go surprisingly well. Either way, if it prompts your parents to get their affairs in order, it could ultimately save you and your family time, money, and a lot of stress.
By taking a diplomatic approach, can encourage your parents to make estate planning a resolution for the New Year.
Lee Carpenter is a partner at the Baltimore law firm of Niles, Barton & Wilmer and an adjunct professor at the University of Maryland Carey School of Law. He can be reached at 410-783-6349 or email@example.com. Learn more about LGBT estate planning at Mdlgbtestateplanning.com. This article is intended to provide general info, not specific legal advice.
Lee Carpenter is a partner at the Baltimore law firm of Niles, Barton & Wilmer and an adjunct professor at the University of Maryland Carey School of Law. He can be reached at 410-783-6349 or firstname.lastname@example.org.
Learn more about LGBT estate planning at mdlgbtestateplanning.com.
This article is intended to provide general information, not specific legal advice.