November 2012, Volume 1, Issue 9
Helpful Hints For Discussions About Estate Planning
HolidayHOLIDAY TIME IS FAMILY TIME: How to discuss estate planning across the generations


As the holidays approach, many families look forward to the opportunity for multiple generations to come together to share a meal and celebrate the season.  This is a time to take a break from the everyday routines of school and work, to share old memories and create new ones.  


Having multiple generations together can, let's face it, also be the cause of some stress.  Many people make plans to discuss family estate planning and other financial arrangements during this time of togetherness.  These conversations have the potential to be awkward for a variety of reasons.  It forces people to consider their mortality, it brings up family dynamics that may be uncomfortable, and discussions of personal finances can feel intrusive. In fact, surveys show that the majority of Americans rarely discuss estate planning with their families.


However, if you can communicate now with your parents about their intentions, or with your adult children about your own, you may be able to avoid future confusion and bad will among family members.  Below are some tips for discussing estate planning within the generations of your family.


Discussions with Elderly Parents


If you are confident that your parents have saved, invested, and planned wisely, you may not have much of a role, other than to help them keep open lines of communication with you and other family members about their intentions.  Keep in mind that any conversation with elderly parents needs to be focused on them and  their intentions, not your own needs or desires.  An inheritance is a gift, not a right, and estate planning is about enabling your parents to have control rather than abdicating their wishes to the government or another third party.  If you have concerns that they haven't protected their assets, you may need to begin a conversation with them.


  • A good way to begin a conversation is by asking your parents to help you understand what they want.  For example, you may say something like, "Dad, I really want to carry out your wishes, but I need to understand them." 
  • Stay focused on your parents' concerns.  You may find that they worry about outliving their resources or that family members will fight over the estate.  Help them to address these concerns rather than avoiding them.
  • Understand and acknowledge that they may not be comfortable discussing these issues with you. Offer to help them find and set up an appointment with a qualified financial planner and estate planning attorney.
  • Share your own experiences with setting up an estate plan as a way to open a conversation about your parents' wishes.  For example, you may say something like, "Mom, I just learned that if I set up a trust, I can..." or "I wanted you to know that in case anything happens to me, I assigned Bob as my durable health care power of attorney."


Discussions with Adult Children


When it comes to discussing your own plans with your children, you may be reluctant to share the details of your finances or risk conflict or hurt feelings among them. However, the majority of conflicts happen as a result of failure to communicate. 

  • You need to be clear in your own mind what capabilities and confidence you want your children to have with regards to money.  You probably want your children to be able to support themselves. Do you want them to see any potential inheritance as a safety net, as a way to fund their own children's education, or to serve some other purpose?
  • Be mindful of your tone. There is a risk that parents can come across as too controlling.  Don't forget that an estate can be seen as more than a sum of its parts. It can be seen as an expression of love, control, or power, and it can bring up powerful emotions among family members.
  • Create a family mission statement.  You may come up with a list of values that you and your children share.  For example, you may agree that philanthropy is important to all of you, which may lead to inclusion of a favorite cause in your will or the creation of a family foundation.
  • Tell your children what your plans are with regard to advance directives for health care. Even if you have it documented legally, it will be easier for them to make potentially difficult decisions in the event you become incapacitated if you have personally communicated your wishes to them.

An important issue, whether discussing plans with elderly parents or adult children, is to make sure all important documents are in one place, and that everyone knows where they are.  Many estates take much longer to settle than necessary because documents are misplaced or their whereabouts are unknown.


Call or email our office. We are here to answer your questions.

FiscalTHE FISCAL CLIFF: Should you worry?

Even those who choose not to pay attention to current events have probably heard the term "fiscal cliff".  It is a term, some say a misnomer, which refers to a series of economic events which could occur if Congress and the White House fail to come to terms on a deal prior to the expiration of the Bush tax cuts, the expiration of the Obama payroll tax cuts, and the reduction in government spending that hits January 1, 2013 which affects all areas of the federal budget.  The last portion is the "sequester" which Congress passed without really intending it to go into effect.  The idea was to create legislation that would cut spending to such a ridiculous level that it would force the parties to cooperate and negotiate a reasonable solution to the debt ceiling crisis.


From an estate planning perspective, the focus on the "cliff" is related to what will happen to the federal estate tax.  As we have written before, if Congress doesn't act the current $5.12 million per-person exclusion from federal estate and gift tax will automatically dip to $1 million and the tax on transfers above that amount will rise from 35% to 55%.  Most experts do not believe this will happen.  The estate tax exemption has never gone down.  If it were to this year, most believe it would only fall to the level President Obama included in his proposed budget for 2013 which is $3.5 million per person at a 45% tax rate.  Even if a decline on January 1, 2013 were to temporarily go to $1 million, many believe it would be "fixed" retroactively.  There is a consensus that the portability law, which allows widows and widowers the chance to use their deceased spouses' unused exclusion amount, will be extended.  In order to claim that unused exemption amount, the surviving spouse must make an election on a timely filed estate tax return.


The biggest change likely will come related to lifetime gifts.  The last two years allowed people to remove as much as $5 million from their estates through gifting.  Of course, these gifts were counted against the estate exemption amount at death.  However, for the very wealthy there is a benefit of taking advantage of passing assets during one's life as there is no tax on the appreciation of the assets as they increase in value after they have been passed.  However, unless you don't need the money for yourself, there is no rush to give away everything to your kids.


More typical gift planning involves the annual exclusion amount, which allows gifts in 2012 of $13,000 ($26,000 for couples) without incurring gift tax or eating into the lifetime exemption.  This technique is not subject to the "cliff" and is scheduled to go up to $14,000 ($28,000 for couples) in 2013.


Contact our office to make an appointment. We can help you determine the best way to maximize your estate planning tax benefits.
SantaSTORYTIME WITH SANTA: Lake Forest Open Lands
Horse and wagon Pierson & Strachan is proud to be a sponsor of this charming event for families, scheduled for Sunday, December 1 at 1 PM at the Mellody Farm Nature Preserve. A great way to kick off the holiday season!
AboutAbout Pierson & Strachan

Pierson & Strachan P.C. is a law firm serving clients throughout Lake and Cook Counties specializing in estate planning and probate, real estate and land use, business law, and other contract matters. From issues that affect your family to those that impact your business, our attorneys combine cutting-edge technology with personal service to vigorously represent your interests and get you the results you need. Read more>>


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This information may address some questions, but is not intended to be a comprehensive analysis of the topic or legal advice.  Independent tax and legal advice is recommended.