Guide to Estate Planning for Your Elderly Parents

Assisting your elderly parents with their estate planning in their twilight years can help them handle their assets and personal affairs before anything happens. The process will likely involve making decisions about how their property, finances and health care decisions will be addressed. Taking care of these issues early can provide peace of mind for both parents and their children.

If you’d like someone to walk you through the process of estate planning for elderly parents, a financial advisor may be able to help.

Initiating the Conversation

Discussing estate planning with aging parents can be a challenging and emotional topic. It’s important to approach the conversation with patience and transparency, recognizing that it might take time for everyone involved to feel comfortable. Starting with an open dialogue can help parents understand the importance of planning for their future and the peace of mind it can bring to all involved.

It can also be important to engage others:

Family members: Involving other family members in the conversation can help provide a support system, and address concerns and wishes. This collaborative approach can prevent misunderstandings and conflicts down the road. It might be helpful to schedule a family meeting where everyone can share their thoughts and ask questions.
An estate planning attorney: An estate planning attorney can offer impartial advice and professional guidance, making the process smoother for everyone involved. They can assist with the necessary legal documentation and cover different aspects of the estate plan. Having a professional involved can also help reassure parents that their interests are being protected.

How to Create an Estate Plan

A family sits down to discuss estate planning for elderly parents.

Creating an estate plan for elderly parents involves a careful, step-by-step approach. This process can help respect their wishes and manage their assets according to their preferences:

Set estate planning goals: Begin by identifying your parents’ estate planning goals. Understand their priorities, whether it’s preserving wealth, minimizing taxes for themselves or their heirs, or providing for specific family members. Clear goals will guide every decision made throughout the estate planning process.
Record assets and debts: Compile a thorough list of your parents’ assets and debts. This inventory should include properties, bank accounts, investments, personal belongings, and any outstanding liabilities. Having a clear picture of their financial situation and assets can help ensure that everything will be accounted for in the estate plan.
Select beneficiaries, trustees and agents: Choosing the right beneficiaries, trustees, and agents is a critical step. Beneficiaries are those who will inherit assets, while trustees manage the trust, and agents handle affairs if your parents become incapacitated. It’s important that your parents select individuals who are trustworthy and capable of fulfilling these roles.
Discuss long-term care planning options and power of attorney: Address long-term care options, including preferences for home care, assisted living, or nursing homes. By establishing power of attorney, your parents can designate someone to make medical and financial decisions on their behalf if they are unable to do so.
Determine burial wishes: Understanding and documenting burial wishes is an essential part of estate planning. Whether they prefer burial, cremation, or another option, recording these preferences can relieve the family of difficult decisions during an emotional time.
Gather important documents: Collect all vital documents such as wills, trusts, deeds, insurance policies and financial statements. Having these documents organized and accessible will make them readily available when required.
Create all necessary estate planning-related documents: Work with an estate planning attorney to draft and finalize all necessary documents. This includes wills, trusts, power of attorney, and advance healthcare directives. Properly executed documents will legally formalize your parents’ estate plan and protect their interests.

Frequently Asked Questions About Estate Planning

What Is the Difference Between a Will and Estate Planning?

A will is a legal document that outlines how a person’s assets and affairs will be handled after their death. It specifies who will inherit property and who will be responsible for managing the estate. Estate planning, on the other hand, is a broader process that includes not just the creation of a will, but also the development of strategies used to manage an individual’s assets during their lifetime and beyond. This can involve trusts, powers of attorney, healthcare directives and other legal tools.

What Is Legacy Planning vs. Estate Planning?

Legacy planning is a subset of estate planning focused on preserving and passing down values, beliefs, and non-financial assets, such as family heirlooms, personal stories, and philanthropic goals. It aims to leave a meaningful impact on future generations beyond just financial wealth. Estate planning, while encompassing legacy planning, primarily focuses on the distribution of financial assets, tax minimization, and the legal aspects of managing an individual’s estate. Both are important for a comprehensive plan that reflects both financial and personal legacies.

Can You Start Estate Planning Without Being Wealthy?

Yes, estate planning is not just for the wealthy. Regardless of the size of your estate, having a plan in place can help you manage assets and distribute them according to your wishes, as well as reduce potential legal complications and protect your beneficiaries from unnecessary financial burdens. Estate planning can include creating a will, designating beneficiaries, setting up powers of attorney and making healthcare directives.

Bottom Line

Estate planning for elderly parents is a thoughtful and necessary process that helps honor their wishes and preserve their legacy. By setting clear goals, recording assets and debts, selecting reliable trustees and agents, discussing long-term care options, determining burial preferences, gathering important documents and creating all necessary legal documents, you can help create a comprehensive plan that respects your parents’ desires.

Estate Planning Tips

If you’re creating a financial plan, a financial advisor can help. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
While it’s a good idea for everyone, estate planning is even more important for people who have large, valuable estates. Without adequate estate planning, high-net-worth individuals may be exposed to inheritance taxes. They may have the ability and inclination to make impactful contributions to charity through their estate plans. Gifting to family members and other beneficiaries also assumes greater importance.