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Estate Planning Techniques to Preserve Inheritance

Estate planning avoids gambling with inheritances in California

Step Away from the Table, Baby Boomers

Come on, red. Come on, red… Turn the rally cap around, uncross your fingers, and stop bugging the waitress to blow on your dice for luck. The odds of hitting it big on a windfall inheritance from Mom and Dad are no longer in your favor. This is true even if your parents created estate planning documentation and attempted to financially prepare for retirement, including covering their healthcare needs in the golden years. Thousands of Californian “boomers” are facing the grim reality of not receiving an inheritance when their parents pass on. Facts don’t lie. The market crash in 2008 alone reduced projected inheritances by 13% for the baby-boom generation. The financial saga doesn’t end there. The postwar generation is also living longer. Fortunately, Mom and Dad will be around as grandparents to your children. Unfortunately, however, many elderly are under-financed. This causes them to tap into savings that would otherwise be left to their children. The consequence. Your expected windfall may be much less than envisioned – “Aloha, pass the poy, Mahalo” may have to wait.

Brace yourself. It gets worse. Far from landing on red through a bequest in your parents estate planning, you may be tapping into your own resources to assist your cash-stapped parents. Oh, how the tables have turned. Of course, you’re not going to turn your back on your parents. But their needs have become too much for you to handle alone. You’re running out of money too. Your other siblings can’t help out – or won’t as the case may be. For many families the lack of proper estate planning doesn’t lead to champagne and caviar, but rather to dashed dreams and conflict amongst parents and siblings.

Start the Estate Planning Dialogue

Estate planning avoids sibling rivalries by letting everyone know where they stand

Families often fail to talk about estate planning issues at a time when something can be done. Talking about inheritance inevitably leads to talking about death – not necessarily a light dinner subject. Many parents are uncomfortable disclosing the details of their finances to their kids, especially when they’re worried that it might be a disappointment. Adult children also aren’t eager to ask their parents about money (well, not since college anyway) for fear of coming across as greedy or insensitive. This is even more the case  when parents are facing expensive medical or long-term healthcare needs. Failure to get it out on the table contributes to lack of proper estate planning for continued long-term elder care and heated disputes between siblings regarding their share of the estate.

There are some things you can do now to alleviate problems in the future. Families need to start the estate planning conversation now. If your parents anticipate running out of money, they should consider reevaluating their budgets, downsizing to a smaller residence, buying an annuity or longevity insurance to ensure continued lifelong income, or take out a reverse mortgage on to get cash now.

Aside from these strategies, setting up a medi-cal estate planning package will help to cover healthcare costs during the parents lifetime, while also protecting inheritances for the kids in the future. The estate planning package can also minimize sibling disputes by appointing a trustee and accounting for the relative financial contributions toward the parents’ care with appropriate reimbursements made from estate distributions.

About Dan Hanley

Specializing in estate planning, elder law and real estate law, Dan brings a wealth of experience and knowledge to help his clients with a variety of legal needs. In addition to a MBA and Juris Doctorate from Santa Clara University, Dan is also a licensed real estate broker since 1980.

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