Parent Finances, a Family Discussion

It’s better for parents and their children to discuss how to financially plan for later years than to wait until financial and health issues arise.  These discussions can be emotionally difficult but it is important that children and parents agree how critical matters such as housing, caregiving, estate planning, and inheritances are to be decided.

Family discussions between parents and children can often be eye opening and serve as a reality check to both the parent and children.

Should the discussions take place now or later?  Ideally, it’s best to have the conversations before any issues arise.  Try not to delay and to have these conversations sooner than later.

Areas of discussion should include…

Long-term care and housing alternatives.  Surveys indicate a small percentage of parents and children have had this conversation.  In addition, there is much misconception between parents and children of what the alternatives are and what makes the most sense.

Wills and estate planning.  A proper will and estate plan will often help to avoid the unexpected.

Income and expenses at retirement.  Parents and children often do not correctly understand what their income and expenses will be at retirement.

Guide to important documents, assets, and debts.  It’s important for loved ones to know where wills, trusts, and health directives can be found: and, a complete listing of all assets owned and debts owed should be maintained.

Benefits of Having a Trust

Benefits of Having a Trust

If you’re wealthy an estate plan is important to minimize both federal and state estate taxes.  And, if your not, it is still important to make certain your assets are distributed to family members according to your wishes.

Here are seven reasons why a trust is needed.

  1. Your children are too young or inexperienced to manage inherited assets.
  2. Upon your death, your spouse remarries. To protect from unintended individuals being included in your estate.
  3. If you have a second spouse to make certain that on your death your spouse receives income and assets to maintain their lifestyle and upon the spouse dies, the assets go to your children, not to the second spouse children.
  4. If you become too ill to manage your assets, you avoid the need for your children to go to court.
  5. Protection from creditors should the risk exists.
  6. In the unfortunate situation of a child’s divorce that the assets will remain with your child and not the spouse.
  7. You want a significant portion of your assets to go to charity, and at the same time, you want to provide for your spouse and children.


New Changes to Estate Planning

The federal estate tax is no longer a concern for many individuals and families including the most affluent who are seeking to avoid paying taxes.  The 2015 estate tax exclusion amount is $5,430,000 and any unused estate tax exclusion amounts of a deceased spouse can be carried over to the surviving spouse.  The combined exclusion amount for married couples is now a whopping $10,860,000.

Sadly for Rhode Islanders, it’s a different story:

Do not die in Rhode Island.  The Rhode Island 2015 exclusion amount is $1,500,000 and the top rate is 16%.  Also, any unused estate tax exclusion amounts of a deceased spouse cannot be carried over to the surviving spouse.