Episode 73: How to Talk to Your Parents About Estate Planning

Acquania Escarne 0:00

Don't wait to talk to your parents about estate planning. If you wait, it might be too late. In this episode, we're going to talk about how to talk to your parents about estate planning. When is the best time to start the conversation? And what are the key things you need to know? Now let's happen to this episode.

Acquania Escarne 0:21

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Acquania Escarne 1:26

You are listening to The Purpose of Money Podcast, a podcast where we talk about ways to build wealth and create more freedom in your life today. I am your host, Acquania Escarne.

Acquania Escarne 1:38

Hey, guys, welcome back to The Purpose of Money show, I'm super excited to have you here today. We're gonna have a really important conversation about estate planning, and how you can have the talk with your parents. So I'm going to give you some tips to help you. And I'm going to hopefully provide you all that you need to have this conversation with your parents today.

Acquania Escarne 2:06

So let's start out with first, what the heck is estate planning? Because I don't want to assume you know what it is? And I'm not afraid to let you know. So you don't have to be ashamed to ask the question. What is estate planning? Estate planning is when you make a plan for what's going to happen when you die. So when it comes to your parents, it's a plan about what you want to happen when they pass away. But it's not just limited to when you pass away. It also includes what you want to happen in the event you're incapacitated. So what that basically means is, what decisions do your parents want to make sure that you do when they're unable to speak for themselves? Because they might be in a coma, they might be inaccessible. And then God forbid, when they do pass away, how do they want their affairs to be handled? And trust me, anybody who has an estate needs to do estate planning and estate just means stuff. If you have stuff you need to do estate planning. Estate planning could include making sure you have Life Insurance, Creating a Will, Creating a Trust, doing a Medical Directive, and completing a Power of Attorney. These are just some of the things we're going to talk about but that is normally what's included in an estate plan. So, let's talk about how to start the conversation.

Acquania Escarne 3:45

Now most people ask me this, you know, when is the best time to bring this up? I'm not really sure my parents are getting older, I know we need to have the discussion, but I'm not sure when. My rule of thumb is do it now. Talk to your parents, while they are healthy and able to make decisions for themselves. You want to be able to genuinely ask their opinion, and be able to get a clear and cohesive response. So the first thing I want you to do is to involve your parents in the conversation, sit them down, find the right moment to bring up the discussion. You may even want to plan for it so that they can think about some of these things before they get to that meeting. So you know, you can say hey, mom, dad, I'd really like to start thinking about what I should do or who should do these acts, actions after you pass away or if something was to happen to you. It'd be really good to know what are your wishes, what type of health measures do you want us to take?

Acquania Escarne 4:53

So in order to prepare your parents for that conversation, you can give them time to decide what they want to think about what they want, right? And then you set a date to have the initial talk, right? And when you sit down and you have this talk, I want you to start the conversation in a way that empowers your parents to feel like they're in charge and you're here to listen, okay? You don't want to tell them what to do. You want to be the person who's taking notes, you want to be the person who gently guides them through the questions that they need to answer, okay? And make them know for sure that you genuinely just want their best wishes to be carried out exactly as they envision them. So now they have all the power to paint the picture and to determine the outcome, right? Even if they're not going to be here, you need to let them know that you want to execute their vision according to their plan, right? So as you're gently guiding them through the process, one of the things that I want you to do is to focus on healthcare directives, okay? Because a part of estate planning is to ensure you know what's going to happen in the event, your family members incapacitated. So, if they're unable to speak for themselves, you need to be able to tell doctors, and even other family members, this is what my father or my mother wanted and this is what we're going to do. When you're in the moment, it's very difficult for some people to accept that this is how it's going to work but you need to discuss these things before the situation arises, where you need to make tough decisions. So, let's just give some examples because sometimes that helps you understand. You, when you're doing a Medical Directive, what you're essentially outlining on paper is whether or not your family member wants life saving measures to be taken in the event that they're on life support, or they're been hospitalized and you have to decide, do you want to have a surgery that could prolong their life, but might kill them? Or do you want to take them off life support because this is not how they wanted to live or be supported, right? So you're asking tough questions, what is it that you want? Do you want extreme medical measures to be taken, you know, new technology, testing, or even to keep you on life support for an extended amount of time, or you're asking your parents, you know, if they don't want that, how long before we make those decisions, so maybe they say, I don't want life support. If my heart stops in the hospital, I don't want to be resuscitated. That might be hard to hear. But for some people, that's genuinely what they want. And you may not agree with that decision, but you at least have to listen to them, and take note of it. And then you can continue to talk about it. But in your discussion about health directives and healthcare directives, you are talking about what is going to happen. If you're unable to speak for yourself, if you're in a position where you are on life support, if you do need a life saving surgery, or if you need something that might be experimental? What is it that you want me to do? So those are the kind of questions that you're going to ask your parents and you're going to take note of what decisions they have. But in your medical directives, you also want to outline who is the person that's going to make the decisions. So for some couples, especially if your parents are still married, and they both have their sound, mind and body, the other person to make the decisions could be the spouse. If it's your dad, it would be your other parent, your mom, right? If the your mom is incapacitated, maybe the decision maker is your dad. Either way it goes, it helps to put these things on paper. But you also may want to outline who can make the decision if that person is not available. So let's say God forbid, both of your parents are in a car accident, and they are both in the hospital and they are both incapacitated. Who's going to now make those decisions? Is it going to be you? Is it going to be another family member? Maybe the older sibling in the group? Is it going to be one of their siblings? These are the kinds of things you want to outline. So it's very clear who is the decision maker. You can always have the decision maker consult and listen to what other family members have to say, but they ultimately are the ones who make the final decision. And it should be based on the wishes of your parents, right? So deciding who is that person, what is going to happen is what you would outline in the medical directives. You also, in this conversation of estate planning, once you get through the Medical Directive questions and what to do when it comes to health care, you want to be someone who shows was empathy during the entire discussion, during the process, okay? You have to remind your parents that you are here to make sure that what they want happens. And you're not trying to get into their business, or know everything that they have that you can get rich, or you can take care of your kids and other people and other people's kids in the process, okay? But some parents especially like, if your parents are from the Caribbean like mine, they might be offended that you're like, let's talk about your estate, let's talk about your assets, let's talk about what you want to happen. They might be like, I'm not dying today. Why are you asking me all these questions? So before someone gets on the defensive, try to keep them at ease, keep them calm, and knowing that you're just trying to set the record straight, right? So that you can make sure what they want, is what is done. And it's not about who gets what, and where this money is gonna go is more so knowing what is in their estate, because sometimes people have things you don't know about. And then secondly, who do you want us to be passed down to, and that should cover everything, especially family heirlooms, life insurance, money, and even assets that they might have that you didn't even know they had, okay? And then another great opportunity for you to have this discussion is when real life events occur. That could be the spark that drives you to talk about these issues. So one example is, let's say you go to someone's wedding, or someone's funeral. And that suddenly becomes a discussion you have with your parents like, hey, are you gonna go to Auntie so and so's funeral? I can't believe she just passed away. What do you think's happening with her family now that they have to figure out her affairs. Something happens, everyone in the family is already talking about it, why not use it as an opportunity to spark the conversation about what your parents want to happen, when it's their funeral, it's natural to talk about these things when they're happening in your life and your parents might be more receptive to the conversation because they're experiencing the death of a loved one. And they might be thinking about these things for themselves. So this is a prime opportunity to have that discussion. It could also be at a major wedding anniversary, let's say your parents have been married for a really long time, and they're hitting a milestone 40 or 50 year wedding anniversary. And we still don't know what they want or what they have. This is another great time to have that discussion, and to bring both parents to the table. So if anyone ever asked me when to have the conversation about estate planning with your parents, I'm always going to tell you now. But if you're one who has parents who can tend to shy away from these discussions, or don't want to talk about money, use life, and other things that are happening in life, like weddings and funerals to spark the conversation with your parents. Another great time to talk about estate planning is when you've done your own estate planning, and you've gone through the process. And now you can go to your parents and say, I just worked with an estate attorney to do my estate planning. Here's what I learned. Here's what I did. Do you have any of these things in order? If so, where are your important documents that outlines what you want to happen? Who is it that you want to be in charge? Is it me? Ask these questions, because you shouldn't assume that it's you, who's going to have to take on a responsibility. But it also just opens up the conversation in a nice calm and relaxing way. Okay? So I hope you take note of those tips and you use them.

Acquania Escarne 14:03

Next time, we're going to talk about the key parts of estate planning in a little more detail. I kind of mentioned previously, a Will, a Medical Directive and a Trust and a Power of Attorney, but let's talk about what each of them are and how you want to bring them up in the discussion. So first and foremost, as a life insurance producer, I believe that life insurance is a guaranteed way to leave a legacy for your family. It also may be the most affordable way to pass down well. And for some people, they have no idea if their parents have life insurance. So, try to have that conversation at some point as well ask them Do they have life insurance policies? And if so, where are they? Are they currently paying for the policies? Are they up to date on their premiums? And how much life insurance do they have? You might be surprised to find that some parents plan really well for this and they just don't want to tell you, but you actually need to know they have life insurance. So when the time comes to use it, you know who to contact. But then you might also find out your parents don't have life insurance. And this might be a good time to have a discussion about life insurance and consider getting them coverage. In most states, an individual can get life insurance up to the age of 84. But, it is much more expensive to insure someone who's older and closer to what they would assume is death, than to insure someone who's young and healthy. And you have to keep in mind some of our parents develop health issues in their 50s, 60s, or higher that will impact the cost of life insurance for them.

Acquania Escarne 15:45

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Acquania Escarne 17:25

So I encourage you to have this conversation sooner rather than later, and to know all the facts, okay? Do they have life insurance? Where are the policies? How much life insurance do they have? And who are the beneficiaries? So that when the time comes, you're able to make sure that money is used for the right purposes, and is given to the right people. Once you've had that discussion, then you want to actually talk about the will and the trust. So a Will just basically outlines what you want to happen when you've passed on, right? But there's no such thing as a Living Will, which is something that your parents can create while they're alive. And they can actually make changes to while they're alive. But then when they die, it becomes irrevocable, which means no changes can be made. Whatever the document says is what is supposed to happen. A lot of people like to have a living will because it gives them the power to make changes while they're alive. But it ensures that when they pass away, no one can sneak in any new changes new beneficiaries or new information. But a Will can also just be a simple statement of what you want to happen when you pass away. Now though, there are a lot of ways to write a will, I do encourage you to hire a professional that's licensed for your state, potentially in a state attorney that can help you figure out a will for you and your family.

Acquania Escarne 18:55

Because without one, there are some states that may require you to go through probate or have a court process that then determines how your assets are distributed to your heirs that you've left behind. And nobody wants courts to determine where their money goes or the how their house is divided. And you might be surprised in some states they may require most of the money to go to a surviving spouse, or they may require that all the assets be equally divided among the children and may not even leave money to a second spouse or a surviving spouse, right? So these are things that you want to know and a state attorney for your state should know what the rules are, where you live, and will help you create a document that complies with the laws, okay? But if you have a sophisticated, a state, you have a lot of real estate, you have a house, you have a lot of assets and you feel like it might be more complicated, or you want to create something that a family can then benefit from and it's all in one place, you may want to talk to an Attorney about creating a Trust. A Trust is not required for everyone and it may not be the best solution for everyone but it's definitely worth talking to a professional about. Because a Trust is what you can use to kind of capture everything in one place. My husband, and I have a Trust that has our house included in it. So if something happens to us, that house will go into the Trust. And if so, the money from that sale will also be put into the Trust, and then the money will be distributed according to how we outlined it in our Will. But we also have a special needs Trust, which is to protect our special needs child. It is specific instructions on what happens to him, where the money from our Life Insurance Policies that he's going to get should go, and who's going to take care of him when we're not here, okay? So your Will might also appoint a guardian or a particular set of people who are going to be responsible for your children. It also should outline how to take care of them or who's going to take care of them. A Trust, on the other hand, might be what holds all your real estate, your bank accounts, your assets, and is then used to fund the responsibilities for your survivors, okay? But talk to a professional to figure out if you need a Will and a Trust, or if you just need one. I talked a lot about the Medical Directive previously but just to recap, a Medical Directive is just a document that says, if I'm incapacitated, or I pass away, this is what I want to happen from a medical perspective. So put me on life saving support, take all the measures, do the experimental treatment, I want it all, right? Or it might say, don't resuscitate me, if my heart stops, I don't want life saving measures to be taken. And I don't want to be on life support. Those are just some of the things that can be outlined. But a Medical Directive will also say, who is supposed to make medical decisions for you if you're incapacitated and unable to speak for yourself.

Acquania Escarne 22:11

And the last thing that's important is a Power of Attorney. A Power of Attorney is just a document that says, if I'm unable to take action for myself, this other person has the legal authority to make decisions and take action on my behalf. A Power of Attorney can be a general document that basically give someone else the authority to make decisions for you. But keep in mind that it may not give them the power to do everything for you. For example, some banks have their own Power of Attorney document, and they won't accept the general one that's blanket and says, Acquania can do all things for her parent, right? So you may want to check with your bank in your financial institutions to see if they have a particular Power of Attorney form that has to be filled out in order for someone to access your bank account. But a Power of Attorney that you have could, that's general could be used to do a lot of things and have nothing to do with estate planning actually. For example, I've had clients use a Power of Attorney to allow someone to close on a house for them, because they can't make the closing themselves. So you have a Power of Attorney that might give your parent the ability to close on your house for you or another family member, right? Because you're not able to physically be present. So a Power of Attorney is not just related to estate planning, it could be the document that just gives the authority for someone else to do something on your behalf if you're unable to do it. And it could be exercised at any point like maybe you're traveling and you're not even in the United States to make a decision. So you choose someone here who is to do something for you, okay? But most of the time, we include those in the estate plan, because it is possible that as a child, you may have to be the Power of Attorney for your parent, and you may have to make decisions for them. But just know that for bank transactions, you may need a very specific form that is from your bank or your parents bank, okay?

Acquania Escarne 24:16

Now, I always like to give you guys tips so you can be successful at whatever it is I'm trying to teach you to do. And so in this case, I'm going to now give you some tips on how to be successful when it comes to having the estate planning conversations because I think you should have more than one with your parents. Tip number one, I want you to include other siblings, or major family members that have an important influence in your parents lives. I'm an only child so I don't have any other siblings that I need to consult on my parents affairs. But if you have other siblings and you know that it might be an argument, if they find out after the fact what the plan is, you may want to include them at the planning table. So in addition to having your parents there, you might want to have your other siblings too. Let your brothers and sisters be included in the conversation so they don't feel left out. But also so that there's transparency in the process, because what you don't want to happen if they weren't involved in a process, and then when you are executing the wishes of your parents, they challenge you the entire way, because they don't think that's what your parents wanted, because they weren't a part of the conversations they hear for themselves. So maintain the appearance of fairness and also transparency by having all the siblings and your parents at the table. The second thing I want this, tip number two, is don't try to figure this all out in one day, or in one meeting. Estate planning is a lot, it can be a lot to talk about it can be, it can be emotional, and for some of your parents very sentimental, right? Because they might be telling you about heirlooms and things that they collected that they want to go to specific people and in a process, they're going to tell you the story behind that thing. And that can be emotional. So don't try to fit this in into one two hour conversation or one half day, because it might be too much for your parents and you to do in one setting. So have several meetings and in those meetings, have objectives for those meetings, and understand that every time you meet, you're getting closer and closer to answering them the questions that you need, but you're going to spread them out, because it's just a little bit to try to do it all at once. But find the right time, and the right way to talk about estate planning. Tip number three, find the time right now.

Acquania Escarne 26:49

You just can't delay because sometimes our parents and their health will deteriorate faster than we expect. Or unexpectedly. My grandfather had dementia, for example. And in the beginning, it started out subtle, like he would forget certain things, or he'd asked you about the weather a little more than once. But when you're older, people assume that you're just old. And you're just doing what older people may do, which is talk about the weather a lot and forget things. It wasn't later until we realize that this was actually a health issue. And once you reach a point where someone doesn't have the mental capacity to have these conversations, it's harder to actually even go through the process, because they're not really supposed to make these decisions when they've reached that point in their mental capacity. So that's why I say h ave the conversation now. And then see where it goes. Tip number four, make sure you're clear on what estate planning is and what they've already done. So you don't necessarily have to go down the path of the work they've already done. And then you take on a role as updating the plan as things change. So for example, your parents may already have Life Insurance, they may have already met with an Attorney in the past and gotten a Will. So maybe your conversation when you join is to see if any of that needs to be updated, right? Because Wills do need to change if you have more beneficiaries, more children, maybe you found a long lost sibling, you know, and you want them to be included or your parents wanting to be included. These are all things you need to think about. And then your process is going to be more updating what's in place, making sure it's accurate and still relevant.

Acquania Escarne 28:41

Tip number five, is make sure you cover the key topics we talked about. What is it that you have? Who do you want to leave it to? What is your net worth? What is it that we're working with financially? Do you have any family businesses?Do we have the Power of Attorney, the Healthcare Directive and our Digital Assets that's a really big one. I had someone on the show who talked about. how you need to have like a safe place where you have access to not only the email address has to log on to online accounts, but the passwords too, so that when you pass away, you can eliminate the Facebook pages and Twitter and Instagram pages or protect them from being hacked. In the event that now that the person is deceased, they're not checking those accounts often. You want to make sure you take them down. Because it's very hard to contact Facebook directly and try to get them to take down pages if you don't have a lot of proof that the person is deceased or that you have the ability to make these decisions for them. They make it almost impossible. So it's better to have the information. Have access to the digital assets when you need them, need the access and then you can take the action to take down the the pay wages are to make sure that they're secure. And the last tip I want to give you is making this a family affair and setting long term goals together. Sit with your parents and prepare for their future. And let's try to plan so we don't get surprises. That's the best thing you can do when you know that you want their best interests and their wishes to be honored. And you just want to be informed of what to do so that it can be executed according to plan. So, I hope this encourages you to have a conversation with your parents about estate planning. I've given you quite a few tips to help you navigate the conversation. And I've even given you some ways to empower your parents, so they feel motivated to iron these details out with you. And so next time, I want you to keep building generational wealth, and thanks for tuning in to The Purpose of Money Podcast.

Acquania Escarne 31:05

Thank you for listening to The Purpose of Money Podcast. For more resources and information, check out my website, thepurposeofmoney.com and while you're there, please sign up for our newsletter so you have the latest information on new episodes and blog posts. Until next time, keep creating freedom in your life today.

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