Okay, you guys. This isn’t an easy topic, but it’s a crucial one. The reality is that talking about what happens to your parents’ things when they’re no longer here is, well, not fun. But not only is it super important to talk about estate planning with your parents while they’re still living, it also gets a whole lot easier over time.
Having tough money conversations is like exercising a muscle: The more you do it, the better you’ll get! Besides, this isn’t a one-and-done kinda deal. This can be a gradual process you go through together. And I’m here to show you how to get started.
3 Steps to Start the Estate Planning Conversation
It might not come naturally to you, but talking with your parents about their wishes is a really kind and loving thing to do. Seriously! Most of us have ideas about what we want to happen to our stuff after we’re gone, so finding out what those things are for someone else shows how much you care about them. It’s important you understand your parents’ wishes so you can make them happen when the time comes.
Unsure how to talk about your end-of-life wishes? Use this free guide.
And don’t forget, we’re not just talking about after your loved ones die. Emergencies happen all the time. You don’t want to be trying to figure out this stuff in the middle of a crisis.
There’s truly no time like the present to start having estate planning conversations with your parents. After someone is gone, unless they’ve tucked all their plans away in a file somewhere, it’s too late to find out what they wanted. And the last thing you’re going to want to deal with following the death of a parent is trying to find documents that may or may not exist. So, you’ve got to be brave and jump in there now!
1. Get your own estate in order first.
Ever heard the phrase, “Do as I say, not as I do”? If you’re going to talk to anyone about estate planning—especially someone who changed your diapers—you’ve got to have your own plans in order. Otherwise, you kinda look like a jerk. Because who wants to be told to do something by somebody that isn’t walking the walk themselves? Not me!
So, if you haven’t set up the bare minimums of a will, power of attorney and term life insurance for yourself or your family, this is where you start. Plus, when you set these things up, you’re all that much more prepared to help someone else do it too.
2. Look for your “in.”
Setting up your own estate plan gives you the perfect “in” for starting the estate planning discussion with your parents. Next time you see them or talk to them on the phone, mention how you got your will and power of attorney set up in just 20 minutes online (it’s seriously that fast with the right company). It was super easy and now you feel really good that you and your family are protected. Then you have a natural place in the conversation to ask them about things like their will or power of attorney.
Or maybe your estate is already in order. (Go, you!) That doesn’t mean you’re out of luck here. Instead, you could share with your parents that you read an article recently about estate planning that was really helpful or informative.
Maybe you saw a segment on TV, or one of your friends recently helped their parents with their estate and it made you think of them. When you create an “in,” the conversation just sort of naturally starts to bend in the right direction. Then your job just becomes to keep it moving along.
3. Schedule dedicated time to discuss estate planning.
Please don’t ambush your sweet parents! Estate planning can be overwhelming and people don’t love thinking about their own mortality, let alone discussing it. (Don’t forget, though, having these conversations is an act of love!)
So to avoid an ambush, here’s what you do instead. Once you’ve had an initial conversation or two, set up some time—like an actual date, time and place—for everyone who should be involved to meet. Mom, dad, your siblings, your mom’s best friend since the third grade—whoever it ends up being, you need to get decision-makers together plus anyone who will be impacted by the decisions your parents are making.
By scheduling time to have an estate planning conversation, it gives everyone time to mentally prepare and gather any documents needed to map out a plan. You know, things like a last will and testament, powers of attorney, and insurance information. They might not have all of those things yet, and that’s OK! It’s a great jumping off place then to get the conversation going.
Tread carefully here. You know your parents best. If you’re getting stonewalled in early conversations, don’t bully them. These types of things aren’t easy to talk about. If your parents have financial failures they’re embarrassed about or are just worried you’re trying to take away their independence or privacy, they could shut down. Instead, let them know you love them, you’re there to help, and that you’ll feel better knowing they’re protected.
What to Discuss With Your Parents About Their Estate
Once you’ve got everyone around the table, you can start collecting info. You might not get everything done in one sitting, and that’s okay.
More on this in a minute, but you probably want to bring in a financial planner or estate planning attorney to make sure all the i’s are dotted and t’s are crossed. You don’t have to be involved in those conversations, but you do want to encourage your parents to have a great team of advisors in place. And you can offer to help them get connected to some helpful pros in your area.
Remember, this conversation is about your parents’ wishes. If Uncle Danny tends to talk over everyone or your sister Sally thinks she knows best, you can gently remind everyone you’re all here to talk about what your parents want. Here are the basics to discuss with your parents about their estate.
Last Will and Testament and Medical Power of Attorney
A last will and testament is something most people are familiar with, but you’d be surprised how many people don’t have one. But you guys, your parents need a will. Get this done before you do anything else.
Their will outlines what happens to their things (property and assets) after they pass. This can literally be accomplished in 20 minutes. You can’t even get a pizza delivered in 20 minutes! And look, you don’t have to actually see your parents’ will. Tell them you just want to know how to find it so you can be helpful when the time comes.
A living will is a document that outlines someone’s wishes for end-of-life medical care in the event they can’t speak for themselves. If someone is terminally ill or in a coma, a living will protects their wishes for what happens next.
But a living will is not the same thing as a medical power of attorney. Think of it like this: a piece of paper (living will) vs. a person (medical power of attorney). Paper vs. person, make sense?
With a living will, a doctor is limited to making decisions based on what your parents wrote when they created the document, even if your family knows they’ve changed their mind since then. A medical power of attorney (which, yes, also includes a piece of paper) names someone who can make medical decisions for your parents if they can’t make those decisions for themselves.
Powers of Attorney
While you’re getting the will done, go ahead and have them appoint their medical and financial powers of attorney. This is the person (or persons) who can make decisions—financial and medical—for them on their behalf if they can’t. Basically, this person has a legal right to act for your parents. There are a few different kinds of power of attorney (financial, medical, durable), so you’ll need to discuss who is doing what.
Long-Term Care Insurance
This falls through the cracks all the time, but it’s really, really important, especially if your parents are over the age of 60. Long-term care insurance is basically exactly what it sounds like: insurance to help your parents pay for their own long-term care if they can no longer take care of themselves.
The sad reality is, nursing homes, assisted living communities, in-home caregiving—none of that stuff comes cheap. And what’s even sadder is that most health and disability insurances don’t cover long-term care.
But by helping your folks get long-term care insurance in place, you’re protecting their future. This kind of insurance keeps your parents from burning through their retirement fund and means you won’t have to dip into your savings either. Don’t skip long-term care insurance.
Overall Debt Picture
Before we dive in here, remember, some of these conversations are going to happen gradually, over time. If your folks have had trouble with money over the years, then it’s totally normal they might be sensitive talking about their debt. But just like with your own estate planning, if you can speak to your debt journey, people are less likely to go on the defense here.
The goal though is to begin to get a clear picture from your parents on what, if any, debt they have. Amounts, type, terms—all of it. The number you want to ultimately get to is what they own minus what they owe.
If you have cosigned on anything with them, remember that you’ll be responsible for those debts after they die or if they can’t pay on them any longer.
Depending on the situation, your parents’ overall debt picture can be a hot-button issue. If that’s the case in your family, bringing in a neutral third party, like a trained financial coach or a financial planner, is a great way to ease everyone’s nerves. Your coach or planner doesn’t have a dog in the fight and is there to help everyone move forward together.
Term Life Insurance
Last but not least, talk with your parents about term life insurance. It might not be something they need at this point if they’re retired, but if anyone in your parents’ household is relying on their income, then they need term life insurance. I always recommend 10–12 times your annual income.
And whatever you do, do not get them hooked up with whole life insurance. If they don’t do anything with the cash value of a whole life policy before they die, the insurance company keeps it! Not cool. If that’s what they have currently, I’d have them cancel it and switch to term life.
Once you start getting the top priorities (like a will and powers of attorney) checked off, then you can start getting the full picture of your parents’ financial state. Here are some other things you don’t want to forget about, or want to remind them to share with their financial advisor:
- Social Security benefits
- Retirement funds, including 401(k)s
- Any investments, including mutual funds
- Health savings accounts (HSAs)
- Rental properties, including timeshares
- Any land they own, plus location of any property deeds
- Car insurance rate and policies
Get Help With Estate Planning for Your Parents
Look, I know this sounds like a lot. You don’t need to get this all done in one fell swoop though. (But you do need to get it done.) So, don’t put all the responsibility on yourself to get this figured out. Pull in other family members or close family friends you and your parents trust. And if your parents are still healthy and able to help, then they get to take the lead. This is their life and their wishes after all!
And definitely talk to an estate planning expert. There are lots of ins and outs to move through, and a financial planner or estate planning attorney will be a huge help. They’re going to make sure nothing is forgotten. Plus, your parents may feel more comfortable talking to someone outside the family who can help them get organized. That way they don’t feel like their independence or privacy is threatened, and you get to be a helpful, loving child. Win-win!
You can save yourself so much trouble, time and money if you start this conversation with your parents about their estate now. It shows them how much you love them and care about their wishes!
If you’re ready to dive in, start with a will. You can help your parents (or yourself) create one online in less than 20 minutes.