Do you have any idea what your parents’ estate plan is? Do you know if they even have one? Unfortunately, when a parent passes away, you as their child most likely have an obligation to close their estate and finalize their financials. Below is a list of questions you should go to your parents with and have them answer. Start having these conversations now to understand the role you will play in finalizing their estate.
1. Do you have an Estate plan in place?
If the answer is yes, what documents do they have and where are they located? The four most common documents are; a Will, Trust, and Durable Power of Attorney (DPOA) for Finances and Healthcare. Once you know what documents they have, ask to review them and make sure you understand their wishes for burial and the division of their assets. Encourage your parents to meet with an estate planning attorney as soon as possible to create a plan if they do not have one. Having these documents allows you to be able to take legal action without having to go to court to get appointed.
2. What am I required to do?
Read the documents they have. Are you a successor trustee of the Trust? The Agent on a Healthcare or Financial DPOA? What roles will you play and who will play the others? Discuss with other siblings or named agents, whom you will have to co-sign or make co-decisions with, about working together or separately. Having to make decisions jointly can slow down the process, especially if co-signers live in different cities or states. It can be better to separate some tasks between siblings based on individual skills. If you are good at handling financials, you could take the job of Agent on the DPOA for Finances. If you and your siblings decide there are decisions and tasks you cannot handle, ask your parents to delegate the work to an estate or trust company. Companies offer this service, for a fee, but it can be worth it if the tasks seem too overwhelming.
3. Where are the other important documents?
You will need to know the location of important documents. In the house? A safety deposit box? In the cloud?
Know where to find items such as:
– Tax returns and income statements (examples include W-2, 1099, K-1)
– Social Security cards and birth certificates
– Titles to homes, cars, boats, trailers and any other motor vehicles
– A balance sheet or list of assets and debts
– A list of beneficiary designations for retirement accounts, life insurance, and pension plans
Also, if your parents manage their bank accounts, investment accounts, and credit cards online, make sure you know where to access logins and passwords when the time comes. You can use a family password manager such as 1password to share these safely on an encrypted server. Having these documents and passwords easily accessible after a passing makes the process go much quicker than having to contact all the individual companies for duplicate copies.
4. What items are important for me to keep and what is of actual value?
Do your parents have family heirlooms that have been passed down for generations or a collection they want to make sure you keep? Find out what physical items your parents want you to hold onto. Ask if they have specific pieces they would want you to sell, donate, or gift to someone else in your family. Also, have your parents tell you the location of collections and obtain an inventory list of the collectibles and their approximate value. You can always have an appraiser come to look at items before or after a parent’s passing to make sure you don’t throw out something of value.
5. What are your digital assets?
In this digital age, we have collected more than just physical things. We also have to plan for our Digital Assets. What do they want you to do with their cell phone’s data like pictures and messages? Would they want you to keep their Facebook or social media accounts open? Electronics like computers and cell phones host a massive amount of data that either needs to be distributed or deleted upon a person’s passing. Airline miles or credit card points are good examples of other valuable digital assets*. Ask your parents to maintain a digital asset inventory list.
6. Who am I supposed to contact?
Your parents probably have financial professionals who will have access to some important documents and could help you through different aspects of the process. Ask your parents to write out a list of professionals they have a good relationship with and who you should call if you need help.
Professionals could include:
– Financial planner/Investment Manager
– Insurance agents
– Real estate agents
Being prepared saves you time, money, and stress. Schedule a family meeting when your parents turn 60 and at least every five years after to revisit any new changes to the plan.
While this is not a fun conversation to have, and you may get pushback from your parents to have it, remind them that no one wants to have this conversation, but it is one that needs to happen. It is a challenging period after a loved one passes and consecutively trying to discover the answer to these essential financial and estate planning questions only makes it more difficult. We never know when someone will pass, and for that reason, it is never too early to plan.
This article contains general advice. We are not attorneys and are not giving legal advice. Always review your plans with your estate planning attorney.
*You can read more about digital assets in our previous blog post.