Financial planners know that when their clients don’t talk about end of life planning with their family members, disputes and other unpleasantness will happen. It’s important to hold family meetings to discuss how your assets will be distributed and to whom.
Take the example of a divorced daughter who moved in with her elderly mother. She convinced her mother that she needed access to her bank account in order to pay bills, and that she wanted her mother to make her the beneficiary of her retirement accounts. When the mother passed away, everything went to the daughter leaving the deceased woman’s 3 sons with nothing. Family members were hurt and became estranged, which is not what the mother would have wanted at all.
These types of problems happen all the time when someone dies. It’s a good idea to meet with your loved ones while they’re still alive and healthy, rather than wait until it’s too late.
If you are not able or willing to meet with your family members, then consult an attorney and/or tax adviser to complete your estate planning documents. Kevin Thompson, CPA, a Trust and Estate expert for more than 30 years says “this meeting does not have to be painful. But like an annual physical, regular teeth cleaning or that daily walk, this meeting is important.” If there is some family dysfunction, tell your adviser. “We have held these meetings to discuss the plans for the estate, recommendations for the future and, for gifting meetings too.” “Once” Kevin said, “the parent with an extensive estate called the meeting to do his annual gifting, tell his beneficiaries about his charitable vein and then he invited everyone to attend the annual family cruise. That cruise went on for the remaining 12 years of his life.” But the great news, adds Kevin, “the family continued the tradition by setting aside a portion of the estate to provide funding for the event for decades to come.”
Some elderly people feel they need to invest aggressively in order to add to the value of the trusts they want to leave their relatives. Aggressive investing may not be a wise move, in many cases, and it’s important to get advice from a professional you can trust to avoid making costly mistakes.
Check your beneficiary provisions regularly, especially if the primary beneficiary has already passed away. Kevin Thompson tells of a story out of New York; “a woman was married later in life. She lived with her husband for more than 25 years and when she passed, he thought he was to inherit her 401K. Unfortunately for him, she had named her Sister as she was unmarried at the time she became eligible for the plan.” The bad news was the Sister-in-Law did not like her Brother-in-law and she did not share the proceeds with him. Neglecting to update beneficiaries will cause problems with surviving family members. They may have to wait for funds to sit in a trust for a long period of time, or be subjected to dealing with other red tape that will cause more delays.
Funeral and cremation plans also need to be discussed as soon as possible. One unfortunate man had planned every detail of his funeral, including which songs where to be sung. He only told his wife about his wishes. Both he and his wife were both killed in a car crash. No one found his plans, which he had hidden in his bible until his sister cleaned his house several weeks after he died.
Life insurance, legal directives, IRA beneficiary designations and final wishes all need to be planned out in advance. This may even include how you would like your obituary to read. Discuss all of this with everyone that may be potentially involved. If you’re estranged from a family member, at least discuss plans with your primary executor.
Include details such as a list of lawyers, accountants, and other advisers.
You may even want to give the go ahead for your spouse to date, should you pass away before him or her. Sometimes spouses feel tremendous guilt and never date or remarry. Simply giving them permission to move forward may be the greatest gift you can bestow on them.
For tax help and information please contact Kevin Thompson CPA at
email@example.com or call him @ (310) 450-4625.