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My wife and I have been thinking a lot lately about what would happen to our kids and assets if we were to die in the next decade. We want to make sure our kids are taken care of (especially as minors), if my wife and I both were to pass away unexpectedly.
Developing a plan of how our assets (home and investments) would be distributed and who would get guardianship of our children has been a top priority for my wife and I over the past year.
This is a big reason why we have been putting together our estate planning checklist. We recently sat down for a planning meeting with our lawyer to come up with a plan.
This meeting gave us piece of mind because we had a Will drawn up … which states who should get custody of our children if we were both to die.
In addition, we had a trust established that would direct how our assets should be split up … and when. We also designated our power of attorney (for both of us) for financial matters and medical decisions. Both of these would be invoked if both of us are incapacitated and can’t make sound decisions.
Hopefully we will never need any of these things … but we can actually sleep at night knowing our affairs are in order.
The Importance of Having and Estate Plan
We’ve always known estate planning was important … but never took action until recently. Why did we wait so long? Honestly, we should have done our planning over 15 years ago after our first child was born.
For over a decade we have been avoiding the estate planning process … because it was an uncomfortable topic to talk about. But after some recent events in our life, we’ve realized how important it is to have a plan.
These recent events are not about our finances or kids, but instead we are dealing with estate planning issues with our aging parents. And we don’t want to put our kids in the same circumstances that my wife and I find ourselves in now.
Do Your Aging Parents Have Estate Plans?
My wife and I are at the age where we want to have an estate plan setup for our children who are all minors. But we are also dealing with estate planning on the other end with our aging parents.
Both sets of our parents have done some estate planning of their assets in recent years. One big difference is they don’t need to worry about young children and who will get custody and things like that.
Instead they are planning more for a larger chunk of assets (compared to my wife and I) to be split when they pass away. And probably even more important … they are trying to pick who should be their power of attorney for financial and medical decisions when they cannot make them.
Recently we’ve discovered that even though one set of our parents had a sound plan in place (at least we thought), there still can be a mess.
Getting the Bills Paid After the Death of a Spouse
The set of parents we are having issues with now had their estate planning done almost a decade ago. Everything seemed to be in order … until it wasn’t.
A few years back, one of our parents was diagnosed with terminal cancer. This was a huge shock to the family and within two months of the diagnosis … our family member passed away.
That left the spouse who previously handled very little of the finances in charge of their money.
For the past two years, things have been very shaky with the widowed parent … who has had a difficult time of keeping the bills paid.
It’s not an issue of having enough assets … this set of parents had plenty of savings and pension checks coming in … along with social security.
There is more than enough money coming in each month to keep the bills paid. But they are not getting paid and our family member doesn’t seem to care.
Month after month we are seeing late payment fee’s, insufficient fund fee’s, and a lot of minimum payments being made on high interest credit cards.
Our parent has a paid off home and no car payments … so what is the problem? Turns out that a jealous and financially incompetent sibling has caused a fuss.
Keeping Your Estate Planning Documents Current
After the family member who had cancer passed away, all of the estate planning documents for our surviving parent should have been updated … but they weren’t.
The parent who passed away was listed as the primary beneficiary for all of the assets held in their trust. And that is the way it should have been.
In addition, this parent was listed as the primary agent for the financial and medical power of attorney.
Unfortunately, none of the documents were updated after the family member passed away.
This normally wouldn’t be a huge concern because the responsibilities would be passed down to the next person listed. But as we’ve found out, most financial institutions require a death certificate for the primary agent listed who has passed away … which we are having issues finding.
Since we are listed as the next agent for power of attorney matters, we are now tasked with finding the death certificate. Not the biggest hurdle in the world … but still a pain.
Our widowed parent is very unorganized … and is beginning to have failing health as well.
So things have come to the point where our family member needs assistance (a lot of it) in order to keeping the bills paid.
The only issue is that the jealous sibling is getting in the way.
Picking the Right Power of Attorney
The good news is that we are listed as the next agent on all of their documents … after our deceased parent. We are also listed as the executor of the Will.
The bad news is the jealous sibling has decided to take over on their own and bypass us. This wouldn’t be so bad if the sibling could be trusted or had any financial sense.
But as we’ve recently found out … they are deeply in debt and can’t manage their own finances. Now they are trying to take over our parents finances … and have made things much worse.
Just in the past few weeks, we have come across the following –
- the parent has taken out a HELOC to let the sibling use to pay off their own debt
- we’ve found receipt after receipt totaling at least 75% of the siblings monthly payments being paid by the parent
- multiple wire transfers of $1,000+ have been made to the sibling from the parent
I could list a lot more … but those were the biggest highlights. So as we look at helping our widowed parent keep their bills paid, we’ve realized they don’t have the money … because they are paying for the sibling to get out of debt!
Fortunately for the parent, my wife and I will try and make things right and get them back to keeping their bills paid. Since we are listed as the next agent on the financial power of attorney, we have a few things that can work for us to make this happen.
But as we are finding out … the sibling can still make things difficult. And with an aging parent who isn’t always thinking clearly, it has been frustrating at times.
Think About Who You Want to Manage Your Money
I’m sure many of you could share stories just like the one we are living right now. A jealous sibling who is focused more on their own financial interests instead of the parents best interest.
The money and assets our parent still has left should be used to pay for long term care. Eventually this parent will need nursing home care … probably within the year.
So their assets should be used first to pay for this care. But each week and month that goes by with the sibling getting a free ride, the more difficult it will make things.
Going through this exercise has really made my wife and I think more clearly about our own situation. Who is the best person to take guardianship of our kids? Who do we want to manage our finances … so that our assets eventually are passed down to our children in the manner that we want. Not from someone else’s agenda.
I urge you to consider this as you work on your estate plan. And be sure to update your estate plan when a spouse passes away or you have a big live event change.
Do you have an estate plan? Have you considered the pros and cons of who will manage your finances? Make medical decisions for you? Execute your Will?