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Who knew Mom is a millionaire? Helping her plan her estate

One day you get a call from your recently widowed mother. “Can you come over here and look at something for me? I just got a thing in the mail that looks like a financial report of some kind. It says Dad had over $1 million in investments!”

Even though this sounds like something out of a bad movie script, it does sometimes happen. Go look at it. You and your mom may be astounded to discover that it is real and she truly is a millionaire. Who knew?

Dealing with unexpected wealth

In all likelihood, the responsibility for handling this new-found wealth will fall on your shoulders, not because your mother is incompetent, but because she feels overwhelmed. She knows nothing about complex financial matters and is not all that anxious to find out about them or how to go about passing on her wealth to her children and grandchildren during her remaining life and after her death. You probably will need to take the lead in her estate planning.

First you need to determine what she has. Since your dad was not a talker, make a thorough search for additional assets. Start with the following:

  • Call his bank and ask if he had a safety deposit box; if so, find out what you need to do to access it.
  • Check his bank statements, check registers and/or online banking accounts to determine if he was making payments to investment funds, insurance companies, etc.
  • Review their latest tax returns to see if he claimed interest or investment income, and if so, from whom.
  • Search his desk and bureau drawers, tool boxes, etc. to see if there are any passbooks or other important records.

Starting the estate planning process

Once you and your mom know what she has, suggest that you contact a knowledgeable estate planning attorney on her behalf. Some or all of your dad’s investment accounts may come with a financial planner as a built-in bonus, but if not, you may wish to consider contacting an experienced Certified Financial Planner. The attorney will be the quarterback of the team you assemble since he or she will be the person who drafts whatever legal documents your mom ultimately decides she wants.

Accomplishing what she wants

In a high-asset situation such as your mom now finds herself, things can become very complicated very quickly. Depending on what it is that she wants to accomplish now and in the future, she has a variety of options including the following:

  • A will
  • One or more trusts
  • A durable power of attorney giving you or someone else the authority to make financial decisions on her behalf
  • A living will, often called an advance directive or health care proxy, stating her wishes regarding her end-of-life care and appointing you or someone else as the person who will make those decisions for her if and when she cannot do so
  • Gifts to her family, friends and/or favorite charities during her lifetime
  • The purchase of long-term care insurance to help pay for what could be enormous expenses later in her life

Each of these options carries tax and other consequences, and ultimately she may wish to execute a combination of estate planning documents. That is why it is so important for her and you have the advice and counsel of knowledgeable, experienced legal and financial advisors who also will take the time to answer the myriad of questions and concerns that are sure to arise.

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