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If
you are a baby boomer, someone born
between 1946 and 1963, and your parents
are still alive, you may want to talk to
them about an important subject: their
plans for leaving a legacy. Their
thoughts on the subject might vary from
yours, so, to avoid misunderstandings
that could lead to hurt feelings – and
financial problems – you will want to
make sure now that you are all reading
from the same script.
Of course, you may not be
eagerly anticipating such a
conversation. You are not alone. Your
fellow baby boomers and their parents
are not doing a good job discussing
inheritances and other issues related to
legacies. In fact, less than one in
three families has actually had a
meaningful discussion on these matters,
according to a study by Allianz Life
Insurance Company.
When you have this
conversation, you may be surprised at
how different your parents' attitudes
are from yours. Consider this: Nearly 40
percent of the elder generation says it
is very important to pass financial
assets or real estate to their children,
but only 10 percent of baby boomers feel
the same, according to the Allianz
study. It is entirely possible that your
parents own some assets that they want
you to have, and you might not even know
about them.
It is not greedy for you to
inquire about these assets. In the first
place, your parents may feel strongly
about leaving them to you. But just as
importantly, if your parents have not
done proper estate planning, their
assets may not be distributed as they
had intended. Unexpected inheritances
may also result in unexpected tax
burdens for the recipients.
Consequently, you may want
to encourage your parents to work with
an estate-planning professional to
develop appropriate legal documents,
including the following:
Will. If your parents
die intestate – without a will – their
assets might be distributed by a court.
This could lead to a great deal of
problems within your family.
Living Trust. Even if
your parents have a will, their assets
may have to pass through probate, which
can be time-consuming and expensive. But
with a properly established living
trust, their assets can pass directly to
their beneficiaries, without court
interference, legal fees, lengthy delays
and public disclosure.
Durable General Power of
Attorney. This document allows your
parents to appoint another person to
conduct their business affairs if they
become physically or mentally
incapacitated.
In addition, you will want
to look over the beneficiary
designations on your parents' life
insurance contracts and qualified plans,
such as 401(k)s and IRAs. It is
especially important to update these
designations if remarriages and
stepchildren are part of your family
picture.
It is not easy to manage the
estate-planning process. In addition to
working with an attorney, you and your
parents may well want to consult with a
tax advisor to make sure everyone's
interests are protected.
Do whatever you can to help
your parents leave the legacies they
desire. You will be doing them a great
service, and you could be taking a large
burden off their minds |
