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One thing each of us, young and old , can do to plan for the future
is to get our financial and personal records in order. These records can
be useful for budgeting income, for making investments, or for retirement
and estate planning. Older people sometimes need help from relatives and
friends with the management of their legal and financial affairs either
temporarily while they are ill or assumed gradually over time. Because
the person who provides care often has little knowledge of vital information
and records, the caregiver's task is much easier if these papers are in
order.
Every family
situation will be different, but the following suggestions may help you
begin organizing your personal and financial records and then to take on
the task of helping your elderly relatives and friends organize their records.
Personal Records. A personal records file should include the following information: |
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Full legal name
Social Security number
State and county of legal residence
Date and place of birth
Names and addresses of spouse and children (or location of death certificates if deceased
Location of will or trust
Location of birth certificate, marriage license, divorce papers, citizenship records
List of employers and employment dates
Education and military records
Religious affiliation and name of church or synagogue, names of clergy
Memberships in organizations and awards received
Names and addresses of close friends, relatives, doctors, lawyers, financial advisors
Requests, preferences or prearrangements regarding funeral and burial |
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A family member or friend should know the location of these personal records and of all other important papers and documents. Note: It is not necessary to reveal the contents of wills and trusts to anyone unless you wish to. Financial Records. Your financial records file is a place to list information about investments, bank accounts, CD's, deeds, life and health insurance policies, annuities, retirement arrangements and accounts, financial arrangements for long-term care, valuable collections and any other property which has value. The following is a list of suggested financial records and information to be gathered and kept up to date in your financial records file: |
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Sources of income (assets, pension funds, interest income)
Social Security and Medicare information
Investment income by source (stocks,
bonds, property)
Insurance information policy
numbers and name of issuing company for each life, health , property, or
long-term care policy
Bank accounts account
numbers, statements, etc. for each checking, savings and credit union account
Location of all safe deposit boxes
Copy of most three recent income tax returns and any gift tax returns if filed
List of debts and other liabilities what
is owed to whom and when payments are due |
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It is estimated that between 40 and 50% of adult Americans will be forced to care for elderly parents, grandparents, or inlaws. According to the Census Bureau*, in over 85% of cases, women are the primary care givers for their elderly family members. It is therefore important, particularly for women, to become familiar with their parents' finances now, before an unexpected problem or crisis occurs. By learning about and discussing these issues with your parents, grandparents, or in-laws now, your job as a caregiver will be a lot easier. As you create the personal and financial records files outlined above, you might ask your parents the following questions: |
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Do they need assistance with daily finances?
Do they have a will?
Have they thought about future living arrangements?
Are they financially prepared for possible future medical and long-term healthcare needs?
Have they considered how they want their estate distributed to to family, friends and charities?
Have they made arrangements for durable financial and medical powers of attorney?
Have they consulted a competent estate planning attorney to develop a wealth transfer plan for their estate to minimize federal estate taxes? Is their plan current (i.e. less than 2 years old)? Also ask if have they implemented their wealth transfer plan? |
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According to the Second Annual Estate Planning Survey recently published
by Merrill Lynch, (m)ost Americans have incomplete knowledge of estate
planning issues, and many have not taken steps to arrange their affairs.
The study also revealed that the older we get, the more we tend to avoid
estate planning.
Failure
to plan for the inevitable is flirting with disaster. Federal estate transfer
tax rates on estates of greater than $600,000 start at 37% and quickly
scale up to 55% on estates of more than $3,000,000. With proper estate
planning, this tax can be minimized or altogether avoided. Without proper
estate planning, a family can be forced to pay many hundreds of thousands
of dollars in excess (unnecessary) estate taxes to the IRS.
Although
many people recognize the need to plan their estates, most fail to take
the first step! For this reason if no other, it is vitally important for
parents and their children to discuss such matters as a family. The protection
and preservation of the family's wealth is at stake.
A word
of caution. If your parents or grandparents are elderly, exercise caution
and diplomacy in discussing such matters with them. One of the first signs
of senility is paranoia. Your sense of urgency in bringing these matters
to the attention of your aging relative could easily be misconstrued. Sometimes
the gentlest way to talk about such topics is to show them a video tape
or let them read a book on the subject. Encourage them to seek the counsel
of a competent estate planning attorney, most of whom offer free get-acquainted
consultations.
Be sure
you have the full trust and confidence of your elderly relative before
you seek to move them to take action. Don't jeopardize your relationship
with them, but don't enable their procrastination. Seek help from friends
and relatives they respect. Often there is comfort to be derived from the
experiences of others.
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