Your Parents’ Estate Plan and How it Impacts You

Impact on Workload

There are several ways in which your parents, or indeed, any family member’s estate plan impacts you. First, you may be asked to play an active role in the processing of the estate, and that may or may not have been directly communicated to you. You could be the executor of the estate or hold your parents’ power of attorney and would need to know their intentions. Things you should be able to address are:

  • How to handle specific property when someone dies, including whether to put it on the market or preserve it for someone in the family.
  • For personal property, is there a specific friend or member of the family who was intended to inherit it?
  • If there was a relevant dissolution of marriage, will you need access to family law?

If you are tasked with roles in your parents’ estate, you may need to become familiar with relevant processes and need to know where important documents are. Estate planning documents could include a power of attorney, advanced medical directives, wills, trusts, and letters of instruction. On top of that, you will likely need to access real estate, personal property and vehicle title documents, business, tax, and medical records, bank accounts, military discharge papers, and the like. Increasingly, records that are digital and have password organization are an added necessity. Keeping those records out of destructive pathways such as flood and fire zones requires a tidy organizational effort. On the plus side, it could help you organize your own system for heirs and beneficiaries. In complicated estates, one may need to know about agricultural and land-use practices, or take charge of business and civil litigation matters, including wrongful death and personal injury lawsuits.

We would be remiss in not mentioning that the role of power of attorney generally covers financial decision-making and often medical decisions. The authority over financial matters may be complicated by digital assets, including cryptocurrencies (think Bitcoin), non-fungible tokens (NFTs), and other speculative assets. You would be surprised at the number of retirees whose financial planners have them invested in this class of assets! At least one 401(k) provider allows their account holders to invest in Cryptocurrency.

Impact on Finances

Second, as you are reading this post, you are likely planning your own retirement and estate plans, and therefore need to know if you will be called upon to financially assist your parents. A large contribution will require you to have more assets or income on the way. On the other side of the coin, they may be in a position to pass along assets to you or your children and that prospect might figure into your financial planning. If the former situation is likely, careful and conservative planning is important, especially if there is a chance that mental capacity will be an issue. If the latter is true, taxation is something that must be taken into account.

For many of us, the economy is turning in the right direction. Inflation is of concern, of course, but employment numbers, gross domestic product, and other measures of well-being are trending positive. This increased prosperity may help many estates, but we most always plan prudently, for financial downturns, as well as an unexpected loss of a family member.

Pushback on Procrastination

The final impact that this post will touch upon, though far from the last, is that the documents could have been drawn up when you, or others, were minor children and they could use a refresh to reflect that important change in status. Parents may have created an irrevocable gifting trust for a minor child and need to appropriately update the document to reflect the minor being an adult. Or similarly, if there are still minors who are covered, a new primary or successor trustee may need naming.

If the estate planning documents are truly rusty, you could play a role in getting them updated. Just one example, certain gift tax exemptions were adjusted by Congress in the Tax Cuts and Jobs Act of 2017. Basic exclusion amounts were adjusted, and it is possible that an estate could take advantage of that legislation. Now is the time to act, because the legislation was slated to expire on January 1, 2026. For more information on this, see our blog post on Changes to Basic Exclusion Amounts.

The contribution that you can make to help cure a crucial procrastinated update is infinite. Your energy or administrative resources may help to make up for any shortfalls that your parents may be experiencing. Even mundane assistance like driving a parent to their lawyer’s office for an appointment could be very helpful, especially with tea, coffee, or a comfortable meal as part of the experience.

Communicating Preferences

To deal with the above-named situation, it is important to have open communication channels with your parents. For many families in today’s world, confronting our mortality and the prospect of death is not easy.  If you haven’t, look to establish open and free communication with your parents. For some tips on how to discuss this subject, please take a look at our previous post, 6 Tips For Estate Planning Over The Holidays.

At the end of the day, it is up to you to plan your estate and provide input to others on actions that they may take that will impact your financial situation, your quality of life, and the people in your household. Like all things estate-related, the sooner you act, as uncomfortable as it may be, the better off you are. Many people hesitate at the start, but after they jump in, they realize that their fears were unjustified, and it was well worth the action.

If you have more questions about estate planning pertaining to you or a family member, contact a lawyer for legal assistance. Call the trusted estate planning attorneys at Lowthorp, Richards, McMillan, Miller & Templeman at (805) 981-8555 or fill out our online contact form. We operate primarily in the Tri-Counties area – Ventura, Santa Barbara, San Luis Obispo.

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Cristian R. Arrieta, Lowthorp Richards McMillan Miller & Templeman, A Professional Corporation, 300 E. Esplanade Drive Suite 850, Oxnard, CA 93036