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Your Adult Children Need to Be Prepared For Your Incapacity and Passing
A USA Today article published in the August 18, 2024 edition of the News Journal (linked at the
end of this Blog) explained the perils of probate, which we often cover in our Newsletter and Blog.
But the article also highlighted frightening statistics that come as no surprise to us in our practice, and, if you really think about it, should come as no surprise to you:
1. Baby Boomer Wealth Transfer is Huge.
“With baby boomers reaching retirement and controlling roughly half of the wealth in America,
researchers expect an unprecedented generational wealth transfer over the next 20 years. As
much as $84 trillion could change hands.”
2. Fewer Baby Boomers Have Estate Plans Than Past Generations.
“The share of ‘over-70’ households with wills or trusts has been in steady decline, according to
the Center for Retirement Research at Boston College. Between 2000 and 2020, that share
dropped from 73% to 64%.”
Dying without a Will is called intestate succession. Who gets your property without a Will may
surprise you to say the least. Laws vary by state, so what you hear about one state does not
necessarily apply in your state.
Avoiding intestate succession and its unintended consequences is essential. Preparing an
estate plan is not to be skipped relying on law you do not understand.
3. Millennials Will Receive the Baby Boomer Wealth.
“Much of the money will go to millennials, who were born between 1981 and 1996. And many of
them are unprepared. In a companion report, Trust & Will found that one-third of millennials do
not know if their parents have an estate plan. Among other findings:
● Only 58% of millennials have discussed estate planning with older relatives.
● 62% of millennials have no will or trust of their own.”
Only 58% of millennials have discussed estate planning with their parents? That means those
58% families are facing some level of chaos when a parent becomes incapacitated or dies.
4. Baby Boomers and Millennial Children Are Not Talking About Finances or Death.
“Estate-planning experts cite two big reasons why we don’t know more about the probate
process in general, and our own family’s estate plans in particular. …”
“First, many people only experience the full sweep of probate upon the death of their last
surviving parent. The death of a first parent in a married couple can be relatively simple, at least
from a probate perspective. …”
Second, many adult children find it agonizing to discuss death and inheritance with an aging
parent.”
As to the first point, relying on a surviving spouse to carry on the household finances unaided by
an informed helper exposes obvious risks, including incapacity of the surviving spouse, the
need to move to a long-term care facility, financial exploitation, and so on. Who will help your
beloved surviving spouse if you pass? Will your children be prepared for the job?
All of your adult life raising children, you always worked – at great sacrifice (both financial and
emotional) - to prepare your children for the next step in their lives. Why would you not prepare
them for this next step?
5. Are Your Children (Millennial or Not) Prepared to Help You If You Become Incapacitated?
Based on the 58% figure above, most likely no. Have you sat down and showed your children
how you pay bills each month? Or where you keep important documents? Or where you bank
and where your assets are invested? As explained above, relying solely on your spouse to do
these things and not educating your children is short-sighted and unfair to your spouse and
children: everyone deserves support and to know their jobs.
6. Are Your Children (Millennial or Not) Prepared to Carry Out Your Estate Plan When You
Pass?
I always think of the family checkbook. Think of one checkbook. You hold it tight and don’t show
it to your children while you’re alive. Then you pass. Now the children (if they can find the
checkbook) open it and start a crisis exploration – because bills still need to be paid – of what is
due when, and how to pay it, and what assets you have. Showing them that checkbook – or at
least that a checkbook exists and giving them a list of your bills and accounts (even if you
exclude balances) – is the best way to help them carry out your estate plan when you pass. It is
easy to tell your children you have a big binder of estate plan documents in the fireproof safe.
Those documents are just pieces of paper if the children don’t know their jobs under those
documents.
7. Family Meeting as an Important First Step.
We do our part to cure the above by including a Family Meeting on a separate date after all
estate plan documents are signed, where children and trustees, and if desired, professionals
such as CPAs and investment advisers, attend. We first answer any questions the parents may
have had in funding their trust and completing beneficiary designations. Then we take our time
and explain to the children: 1) this is what you do if Mom or Dad gets sick, and 2) this is what
you do if Mom or Dad passes. We direct the children and parents to discuss how to pay bills,
where to find assets, etc. Again – the children don’t need to know amounts if you don’t want. But
whichever children are going to help you as named agents/trustees need to be informed while
you have capacity about what they need to do their job. We also direct parents to instruct their
health care agents of – and discuss in adaptable terms - their wishes so the health care agents
can make informed health care decisions if a parent is unable.
Parents routinely report to me the value of the Family Meeting not only in and of itself, but its
value in prompting the parent education at home. The peace of mind they share is palpable.
Source: https://wilmingtonnewsjournalde.newsmemory.com/?publink=0b20dbff3_134d3d6
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