How To Have “The Estate Settlement Planning Talk” With Your Family

When a loved one dies, survivors go through a six-step grieving process involving denial, anger, bargaining, depression, acceptance and finding meaning in great work.

Some progress through the grief process faster than others. The estate settlement process can be similar.

From a financial perspective, it’s the start for the executor, who commonly is the widow/widower or a surviving child, to start playing the “what’s in the bucket” and “what’s going to happen to the bucket” games.

The estate settlement game can be long or short based on how you set up the game board.

The Long Version

The long version requires the most significant number of moves and a corresponding longer timeframe. 

This version involves financial institutions that do not offer “preferred” beneficiaries, or no beneficiary designation at all, may involve potential probate, lawyer, and accounting fees — and may take years for beneficiaries to receive funds, even on small estates.

One case took over two years for the family to receive funds from their mother’s substantial estate because the mother unknowingly chose the extended play version.

In another, it took over a year to transfer her deceased’s husbands’ investments to her.

And just this month, another shared a similar story that lasted two years.

The Short Version

The short version takes the fewest number of moves.  It commonly only takes a few weeks to distribute wealth to beneficiaries because they wisely invested with an institution that offers a “preferred” beneficiary — and because they did, their wealth was transferred to beneficiaries within a few weeks, with no probate, lawyer and accounting fees.

Now that you know this, as a parent, which version do you prefer is used when you die? As an executor, which version do you prefer? 

It’s time for the talk.

Do you remember when you had the earlier talk?  It likely included some anxious moments and uncomfortable feelings. Well, it’s time for another talk – a conversation that you may have been avoiding — final wishes and legacy. 

Having the talk now takes advantage of the time you have, instead of reacting in the moment, when it’s too late. It doesn’t matter who initiates the talk, parent or child(ren), it’s time.

The talk is a three-hat process.

Hat one – life planning

Hat One is where the parents decide what they want their legacy to be and what they still want to do while they are still able to do it. Perhaps it’s community involvement or similar pursuits. This is where the executor learns what they don’t want to do, such as end of life decisions, home care over institution care, do not resuscitate decisions, and causes they care about.

Hat two – financial planning

Hat Two is where to determine what is in the parent’s bucket and see if it’s enough, not enough or more than enough to do what they want to do when running financial fire drills that include long-term care scenarios.

It involves reviewing their sources and amounts of income, any mortgage and credit outstanding, personal obligations, ongoing expenditures, and types of insurance they have. Banking and password information should be written down and stored somewhere safe along with their medical info.  

It includes asking what their wishes are when they cannot tell you, whether they have a will, living will, power of attorney documents, and where they are. 

Hat three – financial advisor

Hat Three is to consider “what’s going to happen to my bucket?”. It’s in this step where the beneficiary discussion takes place with a beneficiary expert. 

You select any two of three beneficiaries to pass your wealth to — family, charity or CRA. 

You can also buy dollars for pennies using life insurance and have CRA pay for it.

It’s also an opportunity to discuss life insurance settlement options and inheritance planning.

This talk is best completed with a professional’s assistance with years of experience with each of the three hats – a whole picture lifestyle three-hat financial planner — like us.    

To connect with us and to obtain your free estate planning guide, click here.