My friend Jim Flanagan in New Jersey always said he planned to live to be 100 and die with one shiny nickel left to his name. His four children -- and now a couple of grandkids -- understood that it wasn't that he didn't love them or want them to be financially comfortable, but rather that he intended to give them the education and skills to earn their own livlihood and then let them do precisely that. Flanagan, who taught college and high school English before he retired, ascribed to the philosophy: "Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime."
It's a great attitude and I'm all for raising self-sufficient kids, but many a spend-it-all-and-then-I-die plan runs afoul of timing. The reality is, you can't predict illness or emergencies and there are far greater odds that my friend will die with something left over -- which is why he would be wise to figure out the who-gets-what part of estate-planning. And that goes for the rest of us too.
Those familiar with estate planning, like Ann-Margaret Carrozza, elder law and estate planning attorney based in New York, say it is never too early to make those plans and to make sure they are updated every few years as circumstances change. And it all begins with a conversation with the whole family.
There are lots of things to weigh and some truths to confront, and as painful as the conversation may be for some families, not having it will only result in more pain later on, said Carrozza. Our lives are complicated. There are remarriages, step-children, adult kids who can't handle money or are married to dolts. There are children with special needs, grandchildren with college worries, surviving spouses who remarry and nobody likes the new wife. Our lives are messy, said Carrozza, but an honest conversation now can pre-empt problems later on.
Here are some tips to get the ball rolling:
Get off the dime and get a will already.
Everyone needs a will, said Carrozza, and yet only about half of us have one. A will needs to spell out not just who gets what but also how they get it. You may also need to establish at least one trust, possibly more, to ensure that the directions of the will are carried out. Determine what your goals are and think out all possible scenarios. Each scenario needs to be addressed.
For example: Many married couples want to set things up so that the surviving spouse gets everything and then when the surviving spouse dies, it all gets left to their children. But what if Dad remarries after Mom dies and then is outlived by his new wife? Should that new wife be allowed to live in the family house until her death -- thus delaying when the adult children can realize it as an asset? What if Wife 2 devoted herself to caring for Dad, keeping him out of a nursing home and protecting the family's other cash assets by doing so? Still ready to put her in the street?
While a question for individuals to work out for themselves, many wills create trusts for the property which, in this case, would allow Dad to remarry and live there with the new spouse, but upon Dad's death, the house would revert to a trust managed by his adult children. The trust would stipulate whether his new wife could continue living there for a fixed period of time or until she dies. It might stipulate that if she remarries or moves another companion in to live with her, her rights to the house end. It might stipulate that she pay rent to the adult children who now own the house.
And Dad's will may have left his second wife a chunk of money, an acknowledgment of the care she gave him and his value of their marriage. Re-marriage is an excellent time to re-do a will.
Be honest about family shortcomings.
Parents may feel that their older adult daughter is more responsible than her younger sister. The younger one may have made what the parents see as some bad life choices. They think her husband is a freeloader and fully expect the marriage to end in divorce. They live in a community property state and half of what they give their daughter will become his. Yet they want to be fair to both their children.
They can set up a trust for the younger daughter, doling out her inheritance either in increments or with the approval of her older sister. It isn't likely to foster a lot of harmony between the two siblings, but it's the parents' money and up to them to decide where -- and how -- it should go.
We live in complicated times and with blended families, things can get hard to sort out. If the children are adults when a remarriage occurs, many people simply provide for their biological children with their inheritance. In some cases, a stepson becomes close to the new parent and is included as an heir to that parent. It all depends on the relationship and what the parents feel is the right thing to do.
Delegate assets, beyond the house and money.
This is the "who gets Grandma's three-carat diamond ring?" stuff. Everyone has some family heirlooms -- some of greater value than others. It's best to dispose of these outside a trust, although they can certainly be included, said Carrozza. Typically, they are gifted to a child during life or a child helps himself to it. Generally, it just passes under the radar.
If the object has a large monetary value, one of the kids might question why it went to his brother's wife instead of his. Again, it's your money, your diamond ring, and your choice. The rest is just noise.
Get a lawyer, but don't leave this all up to the lawyer.
Estate planning has lots of ramifications, including not just making sure people get what you want them to. It also has lots of tax implications. For the best results, you need sound legal advice and the understanding that the lawyer won't know about your family dynamics, shortcomings or needs. Stay involved.
Long-term care and your estate.
The national Medicaid program covers most nursing home stays after you exhaust all your resources. While eligibility varies from state-to-state, in order for Medicaid to kick, your assets can be no more than $14,250. A principal residence occupied by a surviving spouse is exempt from consideration in most states, but in some cases, if it isn't in a property designed trust, it could come into play, with the Medicaid program requiring it be sold and the nursing home costs reimbursed, said Carrazzo.
Best bet: Talk to a lawyer who can help protect your assets. There are tax implications that can be addressed now that will protect your assets
HuffPost Parents offers a daily dose of personal stories, helpful advice and comedic takes on what it’s like to raise kids today. Learn more