“THE LEGAL CORNER”
By Sam A. Moak
The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstance.
Talking to parents can be very difficult. In fact, it can be more difficult to have a deep conversation if you’re really close to your parents, because frequent communication and closeness means that important subjects often get placed on the back burner. Personal experience has taught me that none of us knows what will happen tomorrow. Before something happens to you or your parents, make it a point to discuss their estate plans.
A few months ago the New York Times ran an article about an attorney in Seattle who had never even thought about forming an estate plan until the issue was forced upon him by life circumstances. At that point, the decision to formulate a plan involved a great deal of input from the attorney’s daughter—a woman who would certainly be influenced by the plan. The moral of the story is that it’s incredibly easy to fail to plan . . . even for attorneys who are trained and understand the importance of establishing a comprehensive plan.
How can insurance companies get away without paying the proceeds of life insurance policies? The answer is simply that many beneficiaries don’t know they are named as beneficiaries and, therefore, don’t demand payment from the insurance companies. Many, many times I have been asked to help clients locate insurance companies listed in old policies they have found in their parents’ home. This is one reason why you need to know (i) if your parents have an estate plan, and (ii) what that plan looks like. Your parents worked hard to pay premiums and create real wealth. It would be a shame for that wealth to go somewhere other than where your parents intend it.
A sad but true fact is that more than $32 billion of unclaimed property is currently held by state treasurers. The property consists largely of cash held in bank accounts, and sooner or later, it’s likely that the cash will end up belonging to the state. You don’t want that to happen to your property, nor do your parents.
Estate planning attorneys often talk about the importance of Wills and trusts. While those documents are critical, what is often overlooked, however, is a discussion of how your parents would want to be cared for in the event of a major debilitating illness. Without the properly drawn legal documents, you may not be able to assist your parents in this time of need.
There can be serious pitfalls and tax implications to adding a child’s name to a bank account or deeding them property while you are still living. A well written power of attorney can avoid these pitfalls. Additionally, all documents are not created equal and finding out the document you are relying on is difficult to use or out dated at a time when your parents need you most just adds to the stressful situation.
Your parents worked hard to acquire their assets, and they should be made aware of the consequences of failing to plan adequately. It’s not a matter of selfishness on your part to mention estate planning to them. However, you should understand it is their choice. I often tell clients, “It’s your property, if you want to take it all out back and burn it, that is your choice.” The point is it is your parents’ decision. You can not make their plans for them.
Making estate planning decisions is not something that should be done from a sick bed. You can encourage your parents to plan sooner rather than later and to let you know your role in that plan.
Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.