When getting their “financial house in order” through setting up an estate plan, is high on a person’s list of New Year’s resolutions, he or she should remember that communicating the details of the estate plan to family members is an important part of the process, according to research by The Hartford Financial Group. Maureen Mohyde, director of the Hartford’s corporate gerontology group, said that their conversations with older adults revealed that estate planning was “not about money, it’s about creating lasting bonds within families.”
The first person to involve in estate planning, and the execution of a plan, is your spouse, says Alan Howard, writing for Scripps Howard News Service. “The basic family asset inventory and income projections should be familiar to husband and wife.” Whether the estate plan is a simple “all to my wife” will, or a more complex plan involving bequests, trusts and health care related documents, such as livings wills, both spouses should actively participate in the planning process, “not just the signing process.”
The Hartford research, part of the “Family Conversations” series sponsored by the company, surveyed older parents between the ages of 70-79, and adult children between the ages of 45-65, primarily Boomers. The study found that older parents were more comfortable discussing the sensitive issue of estate planning than their Baby Boomer children. More older parents reported having estate planning documents, such as living wills and durable power of attorney, than their children knew. Almost all older parents said they had discussed their estate plans with their children, but fewer children remembered having the conversation.
Maureen Mohyde recommends that families focus on what they agree on. Parents should reach out first, and children should remember that their parents are comfortable talking about estate planning. Children should also ask how they can help their parents maintain their independence, she said.
When people give in to procrastination, and there is no plan in place to prepare for estate taxes, a “qualified disclaimer” is a good option, bizwomen.com says. The disclaimer is made when an individual who inherits a particular sum of money from a parent refuses to accept the money. Under the terms of the parent’s will, the money then goes to a grandchild, which allows a transfer of money from parent to child that the IRS does not consider a gift. The disclaimer option must meet four requirements, according to bizwomen.com:
- A qualified disclaimer must be made within 9 months of the initial transfer
- The disclaimer must be made in writing, with notification to all interested parties
- The initial recipient of the interest must not use any of it
- The person disclaiming the interest does not name the person who will next receive it.