Begin estate planning for parents before you have to
Dec 19, 2023Marketwise column for the Bay Area News Group and its flagships The Mercury News and East Bay Times
Published: November 25, 2023
By Pat Kapowich
Question: Our parents’ Bay Area home will be sold someday. I have three siblings. We grew up in the home. My parents are alive and well. However, they never created a trust for their estate. These are sensitive subjects. Money and death. Topics that my family avoids discussing.
What ramifications will adult children face in our situation?
Answer: During my career, on countless occasions, I heard that someone’s deceased parent(s) “Refused to pay for estate planning.” They were half right. They will pay while alive or deceased. It is an informed or uninformed decision. As attorneys often joke for those lacking a trust, “The state has an estate plan for you. It is called the probate process.”
You or your siblings collectively should offer to pay for an elder law attorney to create a trust. Pay now or pay later. If not, one or all of you might hire a probate attorney. Assets are accessible to a successor trustee. Assets are frozen during probate. The family home’s equity can enhance the quality of your parents’ later years. What remains can be inherited.
Estate planning and elder law attorneys create an estate plan consisting of trusts, wills, health care directives, power of attorneys and guardian nominations or incapacity issues. Probate attorneys specialize in the probate process.
Your parents might be house-rich and cash-poor. A trust is $3,000 to $7,000. That depends on the size and the complexities. It is not a cost. It is an investment. Conversely, the probate process can cost tens of thousands of dollars. The management of a trust is private and settled in months. The probate process is public and can elongate to a year or more.
Your parents might refuse a consultation with an elder law attorney. That is a mistake. If so, you should pay for a one-hour consultation. Get educated. Obtain valuable insight. The specialty of an elder law attorney is in older adult issues. The training is extensive. Their experience is immense. The consultation will yield over 100 vital questions that warrant further discussion.
Those of us that work with older adults have a saying: “People aging in place can often wait too long to move out.” That is understandable. The family home is just that — home. The same can be said for cognitive abilities. Planning how one’s home is sold, possessions distributed to loved ones and care for incapacity can be postponed until there is a decline in cognitive health. Prior preparations bolster family harmony. Unpreparedness can enable family disharmony because hard choices must be rushed during a crisis.
Empower yourself. Learn all you can from an elder law attorney, tax professional and probate attorney. Your parents need your help. Share your due diligence results. The information is critical. The family home’s equity can enhance the quality of your parents’ retirement. What remains will be inherited.
If you are in Silicon Valley, reach out. I can give you referrals to local attorneys.
Remember, finances can be today’s problem. Should incapacity strike one or both aging parents, a home sale can be tomorrow’s solution.
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