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What Do I Need to Know?

The following was a post to Reddit on the r/estateplanning thread along with my response. The person posting was looking for information on what to expect in the estate planning meeting with their parents and attorney… but most of the traditional attorneys jumped into providing advice to the parents on what they should do. I responded more directly to the question with different potential areas the parents and attorney may want to discuss with him while providing resources rather than trying to tell the poster’s parents what they should do.

When parents are doing estate planning and want you involved, it is critical to not try to tell them what to do. They are often asking you to be there to see if you are OK fulfilling one or more roles in the plan, not to make decisions for them.

My (26M) parents want me involved in the process of planning their estate. What do I need to know?

(Text quoted from the Reddit thread:) “I’m 26. My parents are in their 70’s and recently asked that I sit down with them and their attorney to plan their estate and set up a trust. I really appreciate them wanting me to be involved in the process. I guess I’m looking for some general advice. Obviously, it’s all their decision to make, but they want to do what’s best for the family and I know they will really value my opinions and suggestions.

A few things about my situation:

I don’t know exactly their net worth. I do know it’s over 2M, likely significantly more.

In terms of beneficiaries, it’s mainly just me and my sister. My sister and I are in two very different places in life. She doesn’t work, didn’t go to college, and regularly makes bad decisions. She has no concept of money and for that reason, I think it’s really important that they set up a trust with strict rules so she can’t blow all her inheritance, etc. She has a daughter, too, who my mom is basically the nanny for and I know they will want the daughter to benefit from their inheritance, in such a way that my sister couldn’t interfere. I on the other hand am engaged, have a good job, own my home, and am financially responsible. I think a trust makes sense for me too but potentially with different rules.

I want them to spread the wealth to others besides me and my sister, and also make charitable donations.

They own their home.

They own a 16-unit apartment building out of state. They inherited it, it’s paid off and brings in a lot of money. I don’t want it to be sold at the time of their death, I want to take it over and continue the business. I believe they are on the same page.

I own, with my mom, a local two-family house. I do all the work, pay the mortgage, claim the income, and manage the rentals, etc. It’s basically mine – my mom gifted the down payment on the deed. When the time comes, I want that to go to me, as do they.

A friend of mine recently took an “early inheritance” before his parents passed. I really like the idea of this, because I’d love for my parents to see the impact their gift has on me, and have it be able to change my life while they are still alive if that makes sense. It could mean that I could spend more time with them, and enjoy the time we have left together.

Appreciate any thoughts, suggestions or advice”

Attorney Marsocci’s Response

Quite a few things going on here. I’m not going to make suggestions about what your parents should do in their estate planning, because that is entirely up to them. However, there are a few topics you should probably look into that may come up in this discussion with your parents and their attorney you can look into ahead of time:

  • Sounds like your sister can’t handle an outright inheritance. Your parents may be looking to you to potentially be a trustee to oversee her share, which may be for her lifetime, with provisions for her daughter to receive anything left over when your sister passes on. This could be a big commitment lasting a lifetime, so think about whether or not you are up for this. One potential suggestion is to have a corporate trustee as last on whatever list of trustees your parents chose.

  • You are already in business, and your parents have a business that may want to pass along for you to manage. Discussions on Family Limited Partnerships or Family LLCs may come up. Here’s a starter video to check out: https://youtu.be/uTCnGaGpVxM. There’s a lot more to look into and discuss with your parents’ attorney if you are going to end up taking control of a corporate structure before or after they pass on.

  • Very likely a revocable living trust will be discussed, and here’s a more “fun” webinar I did on avoiding probate at www.estatecrashcoursewebinar.com. This will probably give you some ideas and questions to ask. There’s also no shortage of other resources out there on Revocable Living Trusts, and they could give you a good background before meeting with the attorney.

  • There is also potential to set up a trust for you that can protect you during your lifetime from lawsuits, divorcing spouses, etc. that we call a Beneficiary Trust in my practice. It allows you to have some control as a trustee, but there is a Special Co-Trustee who can take sole control of the trust if there is an issue. I have a video coming out that explains this type of trust, but not for another week or so. If you really want to see this one, message me and I can provide advance access to you.

Hope that helps!

When parents are doing estate planning and want you involved, it is critical to not try to tell them what to do. They are often asking you to be there to see if you are OK fulfilling one or more roles in the plan, not to make decisions for them.

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