A very timely and informative article, written by Kimberly Palmer, appeared in the U.S. News and World Report for August 3, 2010. In it she transmits tips from financial planner Alexandra Armstrong and author Deborah Jacobs.
Their suggestions include: 1) Don’t be afraid to talk about it; 2) Talk about celebrity deaths to get the ball rolling; 3) Don’t just talk about giving money away now; 4) Show your concern for their financial security; and 5) Remember that it’s not your money. There are several important points that the article did not cover.
Talk about how, not how much. Parents want the money they leave to go to their families, not creditors, predators or the IRS. If you tell your parents that you would like them to put your inheritance in a lockbox so that you can get it when you need it, but your creditors cannot get it, they are likely to listen. Similarly, leaving money in a special needs trust for a disabled grandchild, or in a 529 plan for the grandchildren’s education, can be a very effective way of relieving you of a burden, while making for an easier conversation starter than “How much will you give me?” and “When do I get it?”
Get the whole team involved. The issue is broader than the extent of the estate tax bite. It is about having your parents’ estate plan work. They would be wise to use this opportunity to review their retirement goals, overall financial situation, investment strategy, and insurance portfolio. The most tax-efficient documents in the world will not help if a parent insists on driving with the minimum liability coverage, or if they have not thought about how to pay for the costs of nursing home care.
It’s not just about money. The Allianz Insurance Company did a survey a number of years ago, and found that Boomers had a strong desire to get more than money from their parents. Seventy-seven percent of them thought it was important that they receive a legacy that included stories, values and life lessons; a similar percentage of the Boomers’ parents wanted to pass on a full legacy. Only 39% of the parents, and only 10% of the Boomers felt it was important that the parents pass on money and property. There is more information about legacy planning, along with access to legacy tools on the Boston Legacy Planning website.
Talking about legacy, dealing with the big picture, and discussing how your parents can really help you are three ways to make the estate planning conversation much easier.