Growing up, you might have thought that your parents had all of the answers to life. Now that your parents are in or near retirement, you might have realized that they overlooked a key part of being responsible adults — creating an estate plan. They are far from alone in forgetting about estate planning.
Many people in Colorado view estate planning as an unwelcome or even unnecessary chore. Some even try to claim that they will not care what happens to their things after they die. While it might be true that your parents are not worried about their physical possessions, they most likely care about accidentally leaving behind a confusing estate for you and your family to deal with.
Start with a will
Fewer than 50% of people in America have a will. This means that the majority of estates end up settled in probate court. In the absence of a will, probate is a process that can take months or even years to complete. To make matters worse, probate is expensive.
While every family is different, many parents express that they do not want to be a burden on their children and loved ones. If your parents have expressed a similar sentiment, consider showing them how time-consuming and expensive probate is. If they choose to put the time and effort into a will now, they can save you time and money in the future.
Review beneficiary designations
While a will is an excellent place to start, it is not always enough. Beneficiary designations usually supersede what the will says, so when creating a will, you should encourage your parents to review who they designated as beneficiaries for things like:
- Life insurance policies
- Retirement accounts
- Pensions
Consider a trust
Trusts do not have the greatest reputations. They are often associated with the very wealthy or elite, and your parents might believe they have no use for a trust. However, trusts can be very useful for controlling how and when a beneficiary uses his or her inheritance. If your parents have a child or grandchild who is not so great with money, they can use a trust to ensure he or she does not blow through it quickly.
Discussing end-of-life matters like estate planning is not always easy, especially when having that conversation with parents. Approaching the topic of creating an estate plan with care and compassion can go a long way, though. Being prepared with additional knowledge about estate planning in Colorado can also be a useful tool for guiding your parents though this process.