By JJ Montanaro, CFP®, USAA
“Let’s talk about death and disability.”
At first glance, that doesn’t seem like a great way to start an enjoyable chat during the holidays, but before you dismiss it, read on. The inspiration to revisit this not-so-joyful topic hit me as I was writing a check to the memory care center where my mother is living now.
Thankfully, about a decade ago my mom was aggressive about having these types of conversations. And while it has done nothing to lessen the heartache over what’s happened, her foresight has minimized the headaches surrounding doing what needs to be done. So, that’s my personal endorsement for taking some time during your holiday get-togethers to iron things out.
Here are five questions to help start the conversation with your parents:
1) Can you tell us about your “what-if” game plan? I wrote “what-if,” but “when” is a more accurate characterization. Your parents have an idea of what they would like to see happen if they are incapacitated or pass away and that’s a start point. To make things happen according to their wishes, they will need to draft or update a suite of legal documents that may include wills, trusts, powers of attorney and living wills. A qualified estate-planning attorney can help them build the plan.
2) Who is doing what? Who do they want to make decisions if they can’t? Who will act as the executor or successor trustee to manage their affairs? Understanding their wishes in this area and ensuring those wishes are put into action in their plan can eliminate a lot of uncertainty and potential resentment within the family.
3) When did you last update your legal documents? If your parents have a plan, but did it decades ago, it may need to be dusted off and refreshed. For example, when I started in this business in the early 1990s, the estate tax kicked in at $600,000. It’s now only applicable to estates just over $12 million. If your parents’ plan was put together based on old rules, they (and you!) could face some unintended consequences. In the same vein, financial institutions may be less likely to recognize a 25-year-old power of attorney than one drawn up a couple of years ago.
4) What type of insurance do you have? Life, disability, long-term care and health insurance could all have direct or indirect effects on their day-to-day finances and overall estate plan. Are there gaps or areas of concern? Understanding this could be critical. For years, my mom wanted to cancel her long-term care coverage. Thankfully, at our urging during several of these kinds of conversations, she didn’t.
5) Who do we need to contact? If your parents already have a letter of instruction documenting their key contacts (attorneys, accountants, etc.), providers (banks, brokerages, insurance companies, etc.) and social media account details in a single document or notebook, that’s fantastic. If not, ask them to get it done. Are there special programs or services they’re eligible for? Perhaps they have or should go through the VA pre-need burial eligibility process or as USAA members they could take advantage of services offered through the Survivor Relations Team. Dig into the details.
6) How should we handle things when you’re gone? This question provides a blank slate to dig into the details of their wishes. There’s a lot of ground to be covered, but details might include your parents’ desire on a wide range of topics including preferred burial location, cremation, type of service, obituary details.
Yes, it may make sense for a gentler entry than I began with here, but don’t miss out on the opportunity to avoid countless headaches, heartaches, and financial damage. Have the conversation.