There comes a time when even the most independent of parents will need to start relying on their children, especially when it comes to money. but control is a big deal — no one likes to give it up, especially those who have been taking care of themselves for decades.
Sometimes the best route to take is involving a third party. Parents can have a difficult time opening up to their children about sensitive matters. using a financial planner, tax advisor, or elder law attorney can remove their feelings of damaged pride or worries that you might think less of them.
When the time comes to get everything in order for them, you will need a lot of paperwork. This includes:
- Sources of retirement income: If they don’t have the records readily available, you may need to check the mail or their online bank accounts to determine what they have coming in through investments, retirement plans, social security, etc.
- Residential preference: Your parents may want to live in the family house forever, but it is likely that they will not be able to remain independent indefinitely. This means you will need to know what they can afford and where they would prefer to stay.
- Last will and testament: Make sure your parents have an updated will so their surviving loved ones do not end up in a legal battle upon their passing. The best way to make sure their wishes are followed is to record them in their will.
- Durable power of attorney: The legal authorization to take over your parents’ finances and make decisions on their behalf is an important matter to have settled. you will also need to determine who will have durable power of attorney for healthcare to make healthcare-related decisions.
- Living will: This is similar to a durable power of attorney for healthcare, but is also a reflection of the direct wishes of the incapacitated person, such as if they would prefer to not be resuscitated or what life-saving measures they want.
- Funeral arrangements: Your parents may have already sorted out some of these issues, but seniors often forget to tell their children about this.
- Update beneficiary forms: Your parents will need up-to-date beneficiaries for everything from insurance policies to insurance payouts.
Sharing an Inheritance
Married individuals who receive a large inheritance face a tough decision — should you share the assets with your spouse or hold them separately? Legally, you aren’t required to share the inheritance, even in community property states where almost all other income must be split equally. Even if all other marital assets are owned jointly, you might want to keep an inheritance separate for a couple of reasons:
- Should you get divorced, you probably wouldn’t have to split a separately held inheritance with your spouse.
- When you die, you control who receives the inheritance. If the inheritance is owned jointly, it goes to your spouse. If your spouse remarries, there is a chance the inheritance will ultimately go to a second spouse or children from a second marriage.
However, those reasons may be difficult to explain to a spouse. Rather than remaining evasive, discuss the inheritance and your concerns openly. Even if you decide to keep the inheritance separate, that doesn’t mean you can’t share some of the assets for common goals.