Parental Planning

Wasn’t it just yesterday that you were turning to your parents for advice regarding school, steadies, matrimony and mortgages? Now they are or will be facing some tough decisions about their Life & Estate Planning…and they could use your help. Use this article to help you help them.
According to Benjamin Franklin, there are only two certainties in life: “death and taxes.” Fact #1: Everyone who is born will eventually die and some of us will even become disabled along the way, spending our life’s savings on nursing home expenses. Fact #2: Death taxes, with marginal rates ranging between 37% and 55%, can confiscate a significant portion of ones hard-earned assets. While proper Life & Estate Planning cannot alter these facts, it can help your parents control the impact these facts may have on themselves, their loved ones and their hard-earned assets.

Disability & Death
     If an accident or an illness leaves your parents legally disabled, then their personal, health care and financial decisions will need to be made for them. In the absence of proper Life & Estate Planning, your parents (and you) may be subject to the jurisdiction of the Probate Court. Typically, the Probate Court process employs three or more lawyers, may cost several thousand dollars and may expose the personal and financial condition of your parents to the public, placing them under the supervision of a Judge who likely is a stranger to your family. Alternatively, proper Life & Estate Planning may avoid all this, empowering your parents to legally appoint the decision-makers they know and trust to make their decisions during any period of disability.
    If your parents cannot perform recognized Activities of Daily Living (e.g. bathing, continence, dressing, eating, toileting and transferring), how will they pay for professional assistance? The failure to make proper plans now for Long-Term Care needs later can be hazardous to their wealth.
     The death of a parent can leave heirs better or bitter. Better in that they may celebrate a life well-lived. Bitter in that they may fight over the worldly possessions left behind, potentially wounding family relationships for generations. In the absence of proper Life & Estate Planning, the seeds of bitterness may find fertile soil to be sown and grown. Consider the findings of a recent study of Americans age 50 and over regarding Family Fall-Outs due to an inheritance (or lack thereof).* Over 20% of the respondents reported problems among their surviving family members due to an inheritance. Of those respondents reporting no conflicts, the majority said they had known what to expect ahead of time andthe vast majority of them believed their inheritance was fair. The value of proper planning and prior communication cannot be overemphasized in preserving family harmony.

Death Taxes
As responsible citizens, your parents probably believe that everyone should pay their fair share in taxes to support the legitimate operations of the federal government. Although most responsible citizens feel the same way, few believe any citizen should pay more than they legally owe in taxes. Ironically, many of these same responsible taxpayers are facing unnecessary Death Taxes on the value of their life’s work at marginal rates ranging from 37% to 55%.
If your parents want a significant portion of their wealth taken by the IRS and redistributed to strangers by politicians in Washington, D.C., then the subject of Death Taxes may be of little interest to them. On the other hand, if your parents would rather minimize the impact of Death Taxes on their wealth and use it to benefit the loved ones/charities of their own selection, then proper Life & Estate Planning is critical. For example, a married couple with a $1.35 million estate may shelter their entire estate from Death Taxes by an appropriately designed, implemented and maintained Life & Estate Plan. In the absence of such planning, the same couple may lose in excess of $200,000 to unnecessary Death Taxes.

Summary
This has been a brief, general overview of an extremely complex topic. As always, qualified legal counsel should be sought to evaluate the planning options appropriate for your parents.

*Survey by AARP/Scudder Investment Program

Copyright © 2005 Integrity Marketing Solutions. All rights reserved. Some artwork provided under license agreement. This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material.