If you have elderly parents and you are concerned about their estate plan, or lack thereof, you might be wondering what you can do to protect their assets when the time comes for them to move into a nursing facility or when they pass away. Like most people, you probably want to help them keep their assets and heirlooms within the family. The last thing you will want is to watch everything your parents have worked for get liquidated to pay off taxes, creditors and other expenses.
Fortunately, with a little estate planning, you and your parents can protect the family assets. Here are four estate planning strategies that can help your family.
Write a will
One of the easiest, most common and basic strategies to start with is a will. If your parents do not have one or have not updated an existing will in a long time, this is a good place to start. Like with all estate planning, they should do this while they still have their full mental capacities.
If your parents had prior marriages, have them check their beneficiaries, both those named in the will and those listed on life insurance policies and retirement accounts. It would probably be rather unpleasant if, when your parents pass away, a former spouse swoops in and takes what should have gone to you and your siblings.
Create a trust
If your parents have a large estate and extensive property in the San Jose area, it might be a good idea to help them set up a trust. Not only will this help alleviate high estate taxes but will also provide your parents with a way to distribute their assets to their beneficiaries over time instead of one lump sum when the probate court settles the estate.
Another strategy that will help keep the family assets actually in the family is for your parents to make gifts of property or cash to their beneficiaries. Over the course of many years, they can divest themselves of their property in the form of gifts. However, there are limitations on the value of gifts in order for them to remain tax free and your parents should consult a tax professional before making such gifts.
If you have elderly parents and you are worried about the condition of their estate plan, the above strategies might be helpful in adding some safety measures. No matter what strategies your parents choose to employ, it is important to start the estate planning process sooner rather than later.