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Estate Planning 101, It's Never Too Early to Start that Conversation

Mark Zaifman   |    Wed, May 22, 2013 @ 11:08 AM

 estate planning

It’s one of those topics no one likes to discuss – especially between parents and their children. It‘s a combination of the big four - death, money, sibling rivalry and taxes.

Receiving an inheritance.

I recently worked with two separate clients who had issues over their elderly parent’s estate plan. Reminding them that ultimately it is their parent’s decision as to what they want to do with their money is not always easy to hear, here is the gist of those recent discussions:

Client A– One of 4 children, client A’s parents are in their late 80’s and in poor health. His three siblings live near the parents and are more involved in the day-to-day care and visiting as my client lives across the country. BUT, he states, prior to moving across the country, he spent a huge part of his parent’s younger, working years helping them establish their successful retail business, AND he emphasized, he never got paid.  (Client A actually referred to it as ‘slave labor’, but that’s an issue for him and his therapist…) Client A’s father recently announced that he wanted to reward the eldest sibling who in his estimation has given much more time and energy to the parents. The reward is about $250K more than the other three children. My client is upset and hurt that his father would make a decision like this.

My response to him? It’s your parent’s estate and they alone have the right to do whatever they want with it. The best I could do is listen to the rant and the frustration, which I can tell you, was ‘passionate’ to say the least.

Client B - His parents, in their late eighties in relatively good health, have a small amount of cash on hand. The main part of their estate is in their home which has no mortgage. They expect they will have to move from their home and into an assisted living type facility in the future. When they do, they plan to sell the house and distribute the money to their three kids evenly. Client B's (very valid) concern is that his parents, depending on how long they live, will need the proceeds from the sale of the home to live on and need to hold off on distribution. His father, being old school, wants to be sure all the kids ‘get a little something’ – and is holding his ground on this decision.  His very personal decision is based on him watching his own father (pre-Medicare days) get sick and use up all his savings for medical care toward the end of his life, leaving nothing for his family after working hard his entire life.

That’s a tough one, because 1) my client is right, but 2) he’s dealing with an emotional issue for a parent who is showing signs of dementia.  What will likely happen is that as his father slips more and more into dementia, the trustee of his estate, in this case Client B, will take over all financial decisions and hang on to the proceeds of the sale of the house for his parent’s care as they age – with the hope that it’s enough to last.

Starting the estate planning discussion with their parents and asking questions earlier could have helped both of my clients. Who will be the executor of the estate? Who gets the jewelry? Will the estate be divided equally? Who is in charge of distribution once the parents pass on?

If you yourself are a parent, please consider this great article written by Jean Chatzky for AARP, titled, How to Leave an Inheritance to your Kids, where she reveals 5 simple steps to avoid problems for your kids down the road.


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