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NOVEMBER 09, 2021

This holiday season, save a seat for estate planning

A full table, the warmth of family and friends and pie, so much pie. Those are the hallmarks of holiday gatherings. With your loved ones together in one place for Thanksgiving and the winter holidays, it’s also a good time to talk about estate planning.

Estate planning can be a touchy subject for many families, bringing up uncomfortable conversations around death and money. In some families, talking inheritance—including the size of an estate and who gets what—may be too difficult and fraught with tension. Parents may worry that by divulging the details of their estates it will create expectations for children and grandchildren. And adult children may fear that their concern will be misinterpreted as prying.

 Instead of focusing on the financial aspects of estate planning, families can instead aim to have meaningful conversations about their financial and healthcare wishes and how those can be carried out.

No matter where your family is in its estate planning journey, consider these ways to open the doors this holiday season.

For parents

Express your values

 At its most basic, estate planning is about passing your assets to your family and loved ones (and perhaps charities as well) in the most tax[1]effective way possible. But it’s also an expression of your values.

Use your time together as an opportunity to talk about your values and what you hope to pass down to future generations. For example, if higher education is something that you hold dear, consider leaving behind money for your grandchildren’s college educations. Or if you’ve worked with organizations to end hunger, explain how a legacy gift to a charity doing this work aligns with your beliefs.

Get your documents together

You can give your family peace of mind by assuring them that you have taken the basic steps to start the estate planning process. This includes having the following basic documents:

Will. This lays out how assets will be divided upon death. Without a will, the probate court will decide how to distribute your assets by following state law, which may or may not be according to your wishes. That process could take months, or even years. As an alternative, consider creating a revocable trust (also known as a “living trust”) to deal with your assets at the time of death or incapacity.

Power of attorney. If you become incapacitated or cognitively impaired and unable to act on your own behalf, a family member or friend will be able to handle financial matters for you if you grant them power of attorney. Don’t wait until there’s a medical emergency to get this important document in place. Advance healthcare directive. An advance healthcare directive, sometimes also called a medical power of attorney, gives someone else the authority to make medical decisions on your behalf if you are unable.

 Living will. You can spell out what kind of end-of-life care you wish to have with this document if you are unable to communicate your wishes.

Inventory of assets. You may not be ready to share the specifics of your estate, including its size and what all your investments are. However, your heirs should be assured that they’ll have all the information they need to deal with your estate after your death. Let them know where they can find the following documents:

  •  Copies of bank and brokerage accounts
  •  Life insurance policies
  •  Retirement plans, including individual retirement accounts and 401(k)s
  •  The names and phone numbers of your financial professionals such as wealth managers, accountants, trust officers and lawyers
  • Passwords for online accounts
  •  Funeral or burial instructions

Assign the right tasks to the right people

 As you begin your estate planning, think about who can perform the various tasks, such as an executor of your will and a power of attorney. For example, if one of your children is a number cruncher, they might be a good one to assign as executor of your will. On the other hand, a child who works in the medical profession would be ideal as a medical power of attorney.

 No matter who you choose for which role, make sure you clear it with them in advance. The person you select may not have the time or the interest in handling the job. Have a backup plan in case they decline their responsibility. Or consider whether a trust company or bank (such as BMO Harris) is a good fit for carrying out the role of executor or trustee, especially if no friends or family members are willing or able to.

For adult children

Lay the groundwork early

 In an ideal world, parents would bring up these conversations. After all, it’s their estate and their wishes that are the subject of the estate planning. Of course, reality doesn’t always work that way, and it might be up to you to get the ball rolling.

Don’t spring this conversation on your parents as they’re digging into their holiday meal. Tell them about your desire to have a thoughtful conversation about estate planning well in advance, so they can prepare. Set aside some time before or after your festivities for this important conversation.

Frame these conversations around your desire to be helpful, not nosy. If your parents aren’t eager to discuss the specifics of their estate, ease into it by telling them about your own estate planning steps or sharing the story of a family friend who recently finalized their estate plan. This might also be a good time to recommend an estate planner or trust officer who they can talk to if they’d rather not discuss their estate with you.

Focus on the most important things first

A good estate plan will start with the key documents discussed above. Even if your parents aren’t willing to share the full details of their financial lives, they may be willing to tell you about what planning is in place, what their wishes are for their healthcare, and who they’ve asked to act on their behalf.

Be clear that they are in control of this process, and any information they share will be used to ensure that their wishes will be carried out.

Take the next step

Remember, conversations about estate planning are never a “one and done.” As circumstances change, with marriages, divorces, deaths and births, you’ll want to revisit estate planning and make changes. By starting the conversation now, you and your family can be prepared when the time comes. In the meantime, you can enjoy your holiday pie knowing you’ve taken this important first step.

joel-schoenmeyer
Joel Schoenmeyer
National Head - Estate Settlement Services
BMO Wealth Management
As the head of BMO’s Estate Settlement group, Joel leads two teams: …
As the head of BMO’s Estate Settlement group, Joel leads two teams: a post-death team that settles estates and trusts …
As the head of BMO’s Estate Settlement group, Joel leads two teams: a post-death team that settles estates and trusts for deceased clients, and a guardianship team that…
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