Is there an ideal time to have this discussion that families instinctively want to avoid? (Read our companion article, Why You Need to Discuss the Unthinkable ) After all, who wants to plan ahead for a parent’s death? Certainly neither parents nor children.
But there is a best time to tackle this difficult issue and that is when the children are out of college but the parents are not ready to retire. For most families, that means the children are in their mid-20s and beginning their adult lives and the parents are approaching or in their 50s. That is a time when both parents and children are redefining their relationships with each other. Moreover, the younger generation has likely not yet embarked on raising their own children just yet. So the influences of in-laws and the responsibilities of raising their own children are not yet requiring their time and focus.
If, for some reason, the relationship between parents and child or children is not good, the relationship needs to be healed before the family discusses and makes decisions about legal and financial affairs and medical directives. Those decisions, and whatever plan evolves, are not irrevocable so they are a good starting point.
Estate Planning is a Team Effort
The process is called estate planning. Decisions need to be documented but they are changeable. The plan can always be modified or replaced and ideally should be reviewed every few years. When changes occur, like a birth, death or a divorce, it should be updated.
Ideally, the discussion involves not just family members — and definitely both husband and wife — but the family attorney, tax advisor and financial advisor. The group needs to function and work together as a team on behalf of the clients, and that means team members need to communicate, at least on an annual basis, to go over the plan and make sure it still meets the needs and goals of the clients. If all team members live in the same area, a meeting can be arranged far enough in advance, but if not, in this age of instant communication, a conference call, Skype, even FaceTime will work.
The team needs to involve both husband and wife and that does not happen intuitively since men typically handle the family finances. However, if the husband dies first, the widow will be responsible for financial management, tax issues and legal matters without having been involved in any of the discussions. The learning curve is difficult for someone who is probably in her 70s and has to learn the jargon and the legal and financial intricacies of the estate plan. If the surviving spouse has been part of the conversation from the beginning and the team has been communicating effectively, there is no learning curve.
As the estate plan is being developed, the senior generation should be in charge, selecting and identifying a team that works well together and communicates. The younger generation can be included when the parents have confidence that their team is working well. A well-functioning team then becomes an asset to the next generation.
Given all the considerations, having the discussion sooner rather than later makes sense, as does developing a coordinated team with every member working in the best interests of the clients. Those clients, the parents, don’t want to be a burden to their children but also hope to leave something behind for the younger generations, and that takes planning.