Earlier this year, my dad had a routine operation to remove a hernia. We all knew he would be fine, but he was convinced the worst would happen. I’m glad he wasn’t right, but one good thing about his pessimism is that it got him to write his will and have the ‘talk’ with his family.
In the past, I’ve spoken to colleagues and friends who have faced legal complications in their families after the death of a relative. One of their sibilings contests the will. A step parent takes over full control of assets against the wishes of their deceased spouse. One sibling is discovered to have taken a portion of their inheritance early through coercion of their aging parents prior to death and are fighting for the same share of the estate. Like divorce, you dealing with the finances can be as draining as dealing with emotions.
This article doesn’t constitute legal advice, so it’s advisable to use the resources listed at the throughout the article to get more information. This article aims to encourage you to discuss financial matters with your parents whilst they are still in good mental health and able to communicate their last wishes to you.
If it was as easy as bringing up dinner plans, then everyone would do it. Most people avoid this conversation for fear of offending their parents. There’s never going to be an ideal time to do it but there will be a less than ideal time if your parents develop a degenerative disease that impedes their ability to think. The main challenges of bringing up wills are:
- You or your parents are uncomfortable thinking about death
- Your parents don’t want to feel a loss of control
- Your parents want to keep money private (to hide wealth or lack of wealth)
- Your parents are worried about the cost of writing a will
- Your parents believe it’s bad luck to write a will
The benefits of having this conversation should be obvious, but in case they aren’t, discussing wills with your parents can:
Increase your parents’ control. You can ask your parents what they’d like you to do with any money they leave in the will. You can ask them where they want to retire and help plan for this. Your parents can decide whether they wish to be an organ donor or whether they wish not to be resuscitated.
Reduce stress for you. Having no idea where your parents money is held is a recipe for a drawn out and stressful period after their deaths. You can find out how they manage their money now and whether gaining access to it is complicated e.g. are assets held abroad. You can also be reassured that you can honour their wishes.
Uncover help. Your parents may not realize that they’re eligible for support from the government to help pay for their bills.
Mitigate inheritance tax. In the UK, you pay 40% in inheritance tax of any assets over £325,000 (£650,000 for a married couple - as long as the first person to die leaves their entire estate to their partner) left to you. In the US, this is more complicated with 12 different estate tax “brackets” ranging from 18% - 40% and these rates apply from $0 to $1 million. Inheritance tax can often be mitigated with advance planning with your accountant. In the UK, you can give £3,000 each year without being taxed. You can gift larger sums of money but these will stay within your estate valuation for seven years.
By encouraging your parents to discuss estate plannning, you can help avoid a financial nightmare after their death that can leave your parents’ assets in limbo for years.
What to Discuss
All of what you discuss should cover the areas that require formal paperwork as a minimum. It may be worth telling your parents in advance that you wish to have this discussion and plan to work through these questions over a few days:
Have you written a will?
Did you write the will or was it written by a legal professional (e.g. solicitor in the UK)?
a. Can you confirm that it’s legally binding? (if written without a solicitor involved)
Do you have a Lasting Power of Attorney?
a. Who will take care of your financial and health matters if you become mentally incapacitated (i.e. who is your legal power of attorney)
Who is the executor of your will?
a. Is the executor aware of their responsibilities after your death?
What is outlined in your will (who receives what)?
What do you want your funeral to be like?
Do you have a financial factsheet? (i.e. are you the only person who knows the details of your bank accounts, pension, gas and electricity provider?)
Do you have a household factsheet? (i.e. when does car insurance run out, where is the stopcock) Charity Age UK offers a template called LifeBook where you can note essential house information in the event of your death.
Additional optional questions:
How would you like your money to be used?
Your parents may already have an idea of how their money should be used. For example education for the grandchildren. Perhaps they want the money to be invested and for the dividends to be donated to charity every year. Get clear on how you can fulfill their wishes.
If you have siblings under the age of 18, who will look after your dependents?
If your parents have someone in mind to look after any dependents in the event of their death, then it’s important to confirm that they have discussed it with that person, so that they can be named as legal guardians in their will.
If you become ill, do you wish to be resuscitated?
If your parents do not wish to be treated when near death, they will need to create a living will or an advance statement (US, advance directive). An advance statement lets your parents state anything they think others should know to best care for them should they be unable to communicate due to incapacitation. It’s as simple as your parents writing down their wishes, signing it and keeping it safe whilst letting their loved ones know where to find it. In the UK, your parents can ask their NHS doctor to keep a copy of it in their medical notes. The key difference between an advance statement and lasting power of attorney is that the individual outlines how they wish to be treated vs. appointing a lasting power of attorney to make all of the decisions.
What to Do If Your Parents Don’t Have a Will
If your parents don’t have a will, you can expect that settling their financial matters after their death will be more complicated and could drag out for years. By nature, your parents want the best for you and just may not realize the impact that being will-less at death has on your life. You could show them this article and start the legwork for them by consulting with a solicitor about drafting a will.
If your parents are worried about cost, there are a few times during the year when they can get a free solicitor-drafted will written by charities. The expectation is that, if you use the service provided by charities (which could cost the charity hundreds of pounds), your parents leave a small sum of between £95 (for one person) and £150 (for a couple) to the charity.
In the UK:
In the US, a lawyer may charge $100 - $1,000 to create a will depending on where you live and your personal circumstances. You can create your own for as little as $5 to $20 by using templates available from OfficeMax, Office Depot or Staples as well as online services below:
No matter how old your parents are, it’s never too early to start the conversation. It may be an awkward conversation but it’s more awkward trying to figure everything out after your parents have passed away.
Image credits: Six Feet Under, HBO and Canva.com