The goal when the family patriarch or matriarch dies is to have property move to the next generation with the best tax result, without probate or legal interaction, and without triggering a family fight.
Mom and Dad may be the “next generation up,” or you may be the “next generation up,” meaning you are potentially next to die in the family. Estate planning seems to come up when a generation reaches a certain age. Bringing it up to your parents or even bringing it up with your kids may be a thorny discussion. But the more you talk about it, the easier the transition will be from one generation to the next.
If you have a business, or rental real estate, or trading accounts, or something that takes ongoing work or actions, you need to train somebody to take over those tasks. I am a small real estate investor, and I work at it.
Talk About It
Discuss what will happen to the real estate after you’re gone. Should it be sold after you die, or will the kids keep it going? My kids have agreed to keep it going. It will give each kid a few thousand dollars extra each month. But it’s a business. How will it work when I’m not here?
One of my daughters-in-law has started to manage the properties. She is learning the ropes, and it gives me some retirement room. She has a good business head and gets paid a little for doing the work, but she is figuring out how to make it go rather than just being thrown into it when I die. She is also doing it because she wants the extra money each month when I do die.
The GREED of a child rises to its highest point in life when the parent dies. If everything isn’t worked out and agreed to beforehand, half the kids will be screaming that they want their chunk of money NOW. There will be a family fight over what to do. My kids have all agreed to keep the properties and get the rental income. Hopefully, this will avoid a fight on this matter.
This is an important issue to bring up with your family when you are all together. The more you talk about it, the smoother things will go. You can see where the problems will be as you talk, and maybe you can figure out a way to work around those problems to keep peace in the family and have things go smoothly after your death or the death of your parent(s).
Power of Attorney
Make sure Mom and Dad have a durable power of attorney, and you and everyone else have one, as well. This will solve huge problems before Mom and/or Dad actually die. It solves huge problems if Dad gets Alzheimer’s or can’t operate on his own. In fact, it will give the agent under the durable power of attorney a shot at cleaning things up before Dad actually dies. That’s easier than after he dies, because the agent under the durable power of attorney isn’t acting with the attorney’s and court’s foot on their neck like the personal representative will be after Dad dies.
The discussions you have on these issues may not seem important, and people may be uncomfortable, but they can make a huge difference for the future wealth and health of your family.
Lee is an unique attorney. He has a BS in geophysics, an MS in analytical nuclear chemistry, and a JD in Law from Brigham Young University. He has distinguished himself as a United States Supreme Court Counselor, Estate Planning and Business Formation Specialist and Tax Lawyer, who has practiced law for over 40 years. He is a popular continuing education teacher for attorneys, accountants, insurance, and finance professionals. Learn more at: LegaLees.com, or contact Lee at: [email protected].