When we set financial planning goals, retirement savings and estate planning are two big priorities for many people. When it comes to retirement, travel, enjoying your home and treating your grandchildren might be part of how you envision this stage of life. At the same time, preserving assets for future generations might be the focus of your estate planning. Everything that you’ve worked so hard to build should be passed on to the loved ones who outlive you. However, have you considered your financial situation may be impacted by your siblings or your parents? Their estate plans, or lack thereof, pose a potential risk to your financial future.
Finances, Estate Planning and Siblings
You won’t be alive to see how your own estate planning works out. If you leave outdated or incomplete documents behind, you won’t be the one talking to attorneys, navigating probate and arguing with your relatives. But if you have siblings, there’s a good chance that you’ll be involved in settling their estates. You could even be the primary person tackling all these tasks. So you have a vested interest in how your siblings handle estate planning – especially if they’re parents to minor children.
Is there any chance you’ll eventually be given custody of minor nieces and nephews? If your sibling has a will, they may have already named you as the designated guardian. And even if your sibling dies without a will, or if the guardian named in your sibling’s will is unable to take custody of the children, custody could be given to you by the courts. A close relative, like an aunt or uncle, is often chosen for this job.
Think now about how that event would affect your financial plans. Say a terrible accident occurs and you become the guardian to a young niece or nephew. Does your sibling have life insurance that would help pay the bills? Would you have to dip into your own retirement savings to provide for the child? And how would taking custody affect your ability to work as much as your plans require? No matter the cost, you may be prepared to step up for your family in any way necessary – but talking through these options now could make you feel a little more prepared if that day ever comes.
In addition to talking to your siblings about their own estate plans, consider how you’ve included your siblings in your own plans. Do you have a sibling who will need financial support in their later years? If you want to provide some of that support, you may want to put plans in place now.
Planning for the future with Parents
What happens during your parents’ final years could profoundly influence your own financial position. There are a few scenarios to consider when it comes to aging parents.
What happens in your parents’ futures may affect your savings, your retirement plans and ultimately the size of your own estate. Say you have one surviving parent who is able to stay at home but needs a lot of help with day-to-day tasks. Will you want to cut back your work hours to provide that help personally? If so, and your earnings drop, would a ripple effect change your financial plans? If you have to hire a caretaker, will your parent’s insurance cover the costs? Or will you have to pay the caretaker directly, taking that money out of your own savings?
If your parent needs to enter a nursing home, will they have the savings to pay out-of-pocket for long-term care? When that money runs out, will it fall to you to continue paying for nursing-home care? Or will your parents be able to qualify for long-term care coverage under their state’s Medicaid program? How would that program’s eligibility conditions affect your parents’ estate plans?
Obviously, a ton of factors will determine how your siblings and parents influence your finances in the coming years. Their age, health and financial security are just some of the elements at play here. Financial planning helps you prepare for whatever the future brings.
At Sachetta, our holistic approach means we take it all into consideration. Your goals, your family relationships, your fears and hopes for your loved ones’ futures – we know these are the things that matter to you while financial planning, so they matter to us too.
How can Sachetta help your family get ready for the next chapter? Contact us today to learn more.