As parents and their children age, a family's needs change. Parents' focuses evolve from immediate concerns, such as school dropoffs and getting kids to basketball practice on time, to long-term issues like preparing for retirement and moving into smaller quarters after the children are grown. Once these discussions begin, it's important to cover all the legal bases that will make these transitions go smoothly. Stephanie Quinlan, wills, trusts and successions attorney with the law offices of Jules J. Mumme III, works with clients of all ages to prepare them for the unexpected and the inevitable.
"It's always a good time to think about planning, certainly when someone is young and healthy and wants to have these things in place," Quinlan says. "You can tuck them away in a drawer when you're done and if they're needed, they're already there. But certainly, there are trigger events, regardless of age, especially in terms of health, that necessitate estate planning. And with the elderly, it is always a good time, especially in the case of an elderly person without a spouse. It's also important in blended families."
Quinlan advocates a team approach to lifetime and succession planning. When making these decisions, involve your lawyer, CPA, financial advisor and your kids. She recommends her clients complete three specific tasks: create a will and appoint agents for business power of attorney and a separate medical power of attorney, agents who can make decisions on a client's behalf in those contexts.
Splitting powers of attorney (POA) into business and medical allows you to choose a person most suitable for each job. One trusted person may have a background in health care and another may have financial acumen, so it makes sense to let each draw on what they know to help you make informed judgments. In case a POA becomes unable or unwilling to serve, name successor agents. Consider the age and health of each one, and make sure it's documented in the legal paperwork.
As parents transition into later stages of life, parents and children may consider adding the adult kids' names to parents' bank accounts for greater financial flexibility. However, depending on the way accounts are structured, this may not have the intended result. Signatory authority (the ability to sign checks or initiate money transfers) on an account does not equate to co-ownership of that account, and Quinlan has seen cases in which children spend money from co-titled accounts only to find that they have to replace those funds when the account enters succession after the parent's death. Signatory authority is extremely limited; if parents want co-signers to be able to perform any other business in their names, a POA is necessary.
Quinlan says a will is a must for everyone. Anyone that has any assets at all should write a will and appoint an executor.
"It avoids a tremendous amount of confusion and it's more often than not less expensive to do a little bit of pre-planning," Quinlan says. "Court costs and attorneys' fees — those things can be minimized just by creating a will, and it makes things easier on the kids."
People also should consider establishing an advance health care directive, or living will, that dictates what medical procedures and treatments are allowed and prohibited in case a traumatic injury or illness leaves them incapable of making a decision about their care.
Quinlan says online legal service sites offer temptingly cheap legal documents for things such as wills and POAs, but she urges caution.
"Louisiana law is different — we have civilian jurisdiction here [while the rest of the U.S. follows mostly common law]," she says. "Don't act on legal advice from LegalZoom or the AARP website. It is always worth consulting a local professional."
Nightmare scenarios include creating a will or POA through one of these sites, only to find out the documents aren't binding or the language doesn't achieve what you want — situations Quinlan has witnessed and had to litigate. The cost of a consultation with an estate planning attorney and notary fees for these documents begin around a couple hundred dollars; the costs that rack up to annul one document or agent and instate another easily will eclipse what you'd spend on a lawyer in the first place. Quinlan recalls court battles over invalid wills that have cost families tens of thousands of dollars.
She also recommends updating a will at least annually, and especially in the event of major life changes.
"Wills are living documents," she says. "Important life events like having a child, receiving a medical diagnosis, inheriting money, kids graduating from high school or getting married — report all these things to your financial team. It may change the scope of some of the provisions you've set down."
Speaking from the heart
With all the legal necessities of planning for life and end-of-life, parents and kids shouldn't overlook the emotional snarls that can occur. Parents may begin to feel like they're ceding authority to their kids as they begin appointing POAs. They may feel anxiety, depression or even fear as they come to terms with their own mortality when drafting a will — a document that only takes effect after the holder's passing.
"What's important for clients to understand when they sign a power of attorney is that they're not surrendering their ability to make their decisions," Quinlan says. "They're merely extending some of it to another party. It can be difficult emotionally to surrender control, especially in the case of an elderly person facing end-of-life issues."
Children also are dealing with the eventuality of their parents' passing while trying to balance their parents' autonomy with making sure they're stable and healthy and protecting their legacy. Quinlan has advice for these kids.
"Keep a gentle but close eye on your parents so you're aware of any kind of change in their physical or mental status," she says. "It's a tightrope that you walk, between not infringing on your parents' autonomy ... and being so hands-off that things happen that are unfixable. The direct approach is best — good, open discussion, and an agreement that no big decisions will be made without first talking to family members, especially the POA (agent)."
Quinlan has observed clients that resent kids' involvement in their business affairs, finances and health as they age, especially if the interest arose late in their relationship. They ultimately see it as "looking over their shoulders" or interfering, but she says that's the time to enlist the help of a trusted friend or relative to help convince parents to accept kids' support. The only way to avoid this scenario is by showing earnest, consistent attention to parents' affairs. If mom has a doctor's appointment, offer to go with her and make a day of it, Quinlan says. Take her for a late lunch or early dinner afterward; she gets your undivided attention and you are up on any potential health issues.
"Maintaining good relationships with your loved ones is super important," she says. "That way it never looks like you're swooping in from out of the blue."