It is understandable to want to maintain the privacy of your estate plan and finances. Yet, failing to disclose this crucial information to your loved ones before you become ill, incapacitated, or pass away can lead to a myriad of problems that could have been prevented.
For example, when a parent neglects to divulge their finances to their children before suffering a debilitating illness, the children will be unable to determine whether income and assets are available to pay for the parent’s healthcare expenses—is there a whole life insurance policy that could be borrowed against, retirement accounts that could be liquidated, or savings accounts that could be utilized to pay for the cost of a home care aide, rent at an assisted living facility, or room and board at a skilled nursing facility? Furthermore, the children will not be able to establish whether their parent is or could become financially eligible for Medicaid.
Ideally, in addition to disclosing the requisite financial documentation and information to trusted loved ones before disaster strikes, the parent will also have executed a General Durable Power of Attorney (POA) with broad gifting authority, thus, allowing the agent under the POA to engage in elder law / asset protection planning on the parent’s behalf and protect the parent’s assets from the cost of long-term care.
Alternatively, if the parent has a sizable estate, the agent under the POA, together with an estate planning attorney, can determine if the estate may be subject to New York or Federal estate tax upon the parent’s passing and, if so, potential strategies to reduce or eliminate this possibility. However, if the POA is not drafted broadly enough to confer the appropriate authorities upon the agent, and/or the agent under the POA is unable to gain a full understanding of the ill relative’s financial portfolio, the family will have great difficulty determining what steps they should be taking and how to manage the ill relative’s finances in a way that they would have done themselves.
While disclosing the details of your finances and/or estate plan to your family can be uncomfortable, in the long run, the benefit of doing so is immeasurable. It may be awkward to have these discussions, however, engaging in these conversations at a time when you are of sound mind will ensure that your loved ones are equipped with the knowledge and information needed to care for you in the future and tackle any issue that arises.
