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No one wants to think about what will happen when they’re gone. It’s a sensitive subject for most people, and it can be even more intrusive when kids broach the subject with their parents before they’re ready. But if your parents don’t have an estate plan, there’s a good chance that California courts will get involved should they pass away or become incapacitated.
A Ventura estate planning attorney can help you navigate these uncomfortable conversations and develop your parents’ estate plan to avoid legal stress and financial loss in the future.
Why Estate Planning Matters
An estate plan consists of numerous documents that explain the estate holder’s wishes if they are unable to make decisions for themselves at any point regarding:
- Their finances and medical care should they become incapacitated
- Their estate and assets should they pass away
- The care of any dependents should they pass away or become incapacitated
When someone dies without legal documents to distribute their property and assets, the estate goes through a probate process.
What Is Probate?
Probate is a legal process performed by the county court. The probate process aims to settle the deceased’s estate using their Last Will and Testament or the state’s applicable law.
There are some issues with this, depending on the probate process to settle your parents’ estate:
- You and your siblings understand your parents’ estate planning wishes better than the court, but you may not agree, or the court may deem your opinions irrelevant.
- The probate process takes a long time. Property and assets could lose value during the process.
- The probate process is public. Information regarding the value of your parents’ property, assets, and holdings will be available for all to see.
- The probate process is expensive and includes both attorney fees and probate fees.
The good news is that with a detailed estate plan, you may be able to eliminate a lengthy probate process. Speak with an experienced estate planning lawyer to learn about your options.
5 Documents to Ensure Your Parents Have a Legal Plan in Place
Even if you get your parents on board with setting up an estate plan for their property, assets, and savings, the estate planning process is complex. It can be challenging to navigate all the documents needed to ensure your parents’ estate planning wishes are fulfilled should the worst happen, particularly if your parents have significant wealth.
While every estate is unique and may require different routes as far as legal planning goes, here are some common legal documents your parents should consider having in place.
Power of Attorney
Designating a power of attorney means the person you appoint is legally permitted to make decisions regarding your financial and medical affairs when you can’t make them yourself.
Powers of attorney typically step in when a person becomes incapacitated due to mental illness or medical emergency, and they can:
- Handle financial decisions regarding your estate and assets
- Sign documents on your behalf
Your power of attorney has the same powers as you do over the matters in your life, but only if you cannot do so. That’s why the process for giving someone your power of attorney should include a notarized document signed in the presence of witnesses and stored in a secure place.
Advance Healthcare Directive
Once a trusted power of attorney is designated, setting up an advance healthcare directive is essential. This document details what you want your medical care and treatments to be should you become incapacitated. This document prevents all of your healthcare decisions from being squarely on one person’s shoulders.
What Is a Will?
When a person passes away, the probate process will determine who gets which property and estates based on their legal relationship with you. Depending on deceased relatives, this often includes their spouse, children, siblings, or parents.
However, if the person has a Last Will and Testament, the state can understand how the deceased wanted their holdings distributed. That’s because a will is a document written and signed by the deceased and outlines who will receive which of their assets—including life insurance policies, bank accounts, retirement accounts, real estate, business assets, and personal property – and who will gain guardianship over any dependents.
The Benefits of a Trust
So, if your parents have a will, do they need a trust? The benefits of a trust, either in place of or in addition to a will, are overwhelming.
A trust is an arrangement that allows the use of a third party—or the “trustee”—to hold onto the money or assets of the person who set up the trust—or the “trustor”—until the recipients (“beneficiaries”) named in the trust document can collect the assets.
Benefits of this arrangement include:
- Assets allocated to the trust help with avoiding probate
- Assets allocated to the trust aren’t subject to creditors
- Assets can be distributed to the trust over multiple generations
Depending on the type of trust set up—whether revocable or irrevocable—there are also certain tax benefits and a certain level of control retained over the assets.
HIPAA Authorizations
The Health Insurance Portability and Accountability Act (HIPAA) protects patients’ sensitive health information and prevents it from being disclosed to others. What this means for your parents is that should they become incapacitated, their health information will be restricted from their children, who will then struggle to make good decisions for them.
While your parents’ medical power of attorney will have access to their medical information, this isn’t always the same person caring for them. Whoever the caregiver will be for your parents during their twilight years should have HIPAA authorization to understand their medical conditions and required care.
How to Talk to Your Parents About Estate Planning
It’s easy to understand why a legal plan, a will, and other documents are necessary for estate planning for senior citizens. However, this discussion is often a touchy one for people to discuss. After all, it has to do with what will happen after they’re gone, and no one wants to think about that.
In addition, depending on the family dynamic, some uncomfortable and hurtful decisions must be made.
Here are some tips for how to talk to your parents about the need for an estate plan:
- Be proactive. It’s a good idea to tell them you want to discuss their legal plan for the estate and set up a time in advance. This subject shouldn’t be thrown at them over Sunday dinner.
- Explain your intentions. Help your parents understand what could happen to their property and assets should they fail to have a legal plan. Let them know their wishes are paramount to you, and you want to ensure they’re carried out.
- Give them time to consider their wishes. Don’t ask for answers at the moment. Allow them to mull over their estate planning goals so they can make the decisions that make them happy. This will help avoid making difficult and expensive changes to the plan down the road.
- Be sensitive to their feelings. Be kind in the way you approach the subject of estate planning with your parents. These discussions can quickly turn hurtful if either party isn’t sensitive to the other’s feelings.
An Experienced Estate Planning Attorney Can Help
Estate planning can be wildly complex, especially if significant holdings are a part of the estate planning conversations or there will be several possible beneficiaries. Contact us today at Hermance Law and let a California estate planning lawyer help your family members through the process.