Watching your parents get older is not easy. It brings up a lot of feelings and also a lot of questions. One of the most important things a family can do is talk about finances and assets before a crisis happens. These five questions can help your family know where to start.
What assets do your parents currently own?
Getting a complete picture of what your parents own is the essential first step. This includes real estate, bank accounts, retirement funds, vehicles and personal belongings. Debts and liabilities also factor into the overall planning process. A thorough and accurate asset list serves as the foundation of any solid estate plan.
Do they have a will or a trust?
A will instructs the court on how your parents want to distribute their assets after they pass. A trust, on the other hand, allows assets to transfer directly to named recipients without probate court involvement. Without either document, the state’s intestacy laws determine how probate assets are divided. Non-probate assets with named beneficiaries or joint owners will still pass directly to those individuals.
Who has legal authority to act on their behalf?
If your parents can no longer make their own decisions, a designated person needs legal authority to step in. A durable power of attorney grants a trusted individual the ability to manage financial matters. An advance directive addresses medical decisions in a similar capacity. Without these documents in place, your family may need to pursue a court-ordered guardianship process, which is often time-consuming and costly.
Are their beneficiary designations still current?
Beneficiary designations determine who receives funds from a life insurance policy or retirement account. These designations override whatever a will states. Many people forget to update them after significant life changes, such as a divorce or remarriage. Outdated designations can unintentionally redirect assets to the wrong person.
Does their property have a transfer plan?
Certain legal tools allow property to pass directly to a named person without going through probate. Nevada law permits Transfer on Death deeds for real estate, providing a straightforward path to transfer property outside of court. Joint tenancy also enables automatic transfer to a surviving owner. Without a formal transfer plan, your parents’ estate could face a lengthy and costly court process.
Protecting your parents’ legacy
These five questions are just the beginning of a larger conversation. Your parents worked hard to build what they have. A solid estate plan ensures that their assets go where they intended.