"WE WERE WORRIED ABOUT MY MOM after my dad died, but he had everything in order. It allowed us to focus on our grief instead of being bogged down in financial paperwork and family bickering." That's one of the candid responses Merrill and Age Wave received when they interviewed more than 3,000 Americans 55 and older for a comprehensive look at attitudes and practices surrounding legacy planning.
The resulting study, Leaving a Legacy: A Lasting Gift to Loved Ones 1, explores a range of topics, including what people most want to be remembered for (memories shared with loved ones, said more than two-thirds of the respondents) and the benefits of having your affairs in order.
Among the findings: Although most Americans recognize that people should have their affairs in order before they turn 50, only about half have a will by that age — and less than one in five have prepared a will, advance health-care directive and durable power of attorney, even though most acknowledge that lack of planning can leave their families in a bind. "Planning your legacy can give you the reassurance that you've done all you can to organize your life, articulate your wishes and shape how you will be remembered," says Kevin Hindman, managing director, Retirement & Personal Wealth Solutions at Bank of America. To get the essentials in place, he suggests, "seek trusted advice from family, friends, and financial, legal, and medical professionals. And make sure you have advocates who know your wishes and can work on your behalf."
While 87% of Americans say it's a parent's responsibility to initiate legacy-planning conversations, few do. What's the sticking point? In many cases, it may be children's reluctance to take part in difficult planning conversations that force them to acknowledge their parents' mortality. "Parents are actually more receptive to talking about legacy planning than their kids might be," says Matthew Wesley, director of the Merrill Center for Family WealthTM. "Most parents don't want to burden their kids with a mess, turmoil and conflict because of inadequate planning."
Although these frank planning conversations may be uncomfortable as they're happening, "it's necessary to have them so that everyone's expectations are out on the table," adds Cynthia Hutchins, director of Financial Gerontology, Bank of America. "Once you've had them, you can enjoy life more fully, knowing you've done your best to see that your wishes will be observed and your family well cared for." Here's how to get started.
Make it a life-affirming conversation
When it comes to talking with your family about your wishes — everything from how you want to be cared for to how you plan to distribute your property and financial assets — the sooner you get started, the easier it is for your loved ones. By starting early and returning to the subject regularly, you help to normalize it, points out Stacy Allred, head of the Merrill Center for Family WealthTM.
“Planning your legacy can give you the reassurance that you’ve done all you can to organize your life, articulate your wishes and shape how you will be remembered.”—Kevin Hindman, managing director, Retirement & Personal Wealth Solutions, Bank of America
"Introducing the topic gradually, maybe when your children are in their 20s, shows that you're planning for a normal part of life. You don't want to delay the conversation until you're older, when the subject may be fraught with more anxiety," she says. Allred also suggests broadening the topic to include more than the financial and medical essentials. "Talk about your values and the legacy you are working to create. Make it a life-affirming conversation, not one heavily focused on death."
Emphasize the benefits of planning ahead
"Relieving the burden on loved ones" was the top benefit cited by those surveyed for the Leaving a Legacy study, with 43% selecting that as the main reason for getting their affairs in order. Advance health care directives, durable powers of attorney for health care, wills and financial powers of attorney or revocable trusts are essential legacy-planning documents that people of all ages and income levels can benefit from. They not only offer you more control over your legacy, they also can help to make life easier for your family.
Key to the legacy-planning process is communicating your wishes to your family. One potential way to start that conversation is to bring up a personal story — perhaps the loved one of someone you know recently became gravely ill, causing upheaval in a family that was unprepared, suggests Hutchins. "You could follow the story with, 'That made me start thinking about what would happen in our family. Here's how I would like to see us handle it,'" she adds. "You might start by telling young adult children that you have a will, and that you've designated people you trust as your powers of attorney until your children are ready to assume those roles. Over time, you can share more details of your wishes and increase the depth of the conversation."
"Start the conversation by bringing up a story about someone who became ill, causing upheaval in the family. You can say, 'That made me start thinking about what would happen in our family. Here's how I would like to see us handle it.’”—Cynthia Hutchins, director of Financial Gerontology, Bank of America
When it comes to your health care, it can also help to focus the initial conversation on your personal wishes — not on the assets needed to pay for long-term care, advises Wesley. Talk about how your durable power of attorney for health care and your advance health-care directive will reduce the need for your loved ones to make tough medical decisions during what will undoubtedly be a difficult and very emotional time for them.
Call in the experts when you’re ready
"At some point, you'll want to address whether you've done the necessary financial planning to cover the costs of receiving extra medical care should you need it," Wesley says. "Often, inviting a financial professional to join the conversation can help." He or she can provide the entire family with a reality check on the cost of long-term care, which most people underestimate or incorrectly assume will be covered by Medicare, Hutchins adds. You could also get useful perspective on legacy planning as a whole, including ways you might use trust or life insurance strategies to help minimize taxes and manage assets for your loved ones.
Revisit your plan
“Perhaps, someday, you'll have grandchildren to consider in your will, or you'll be ready to think about leaving a broader legacy of giving to the causes you care about. Your ideas about how you want to spend your last years may change, based on the state of your health and where you all are in your lives," Hutchins says. "These are very fluid and dynamic conversations, and they're worth returning to periodically."
They're also an opportunity to reinforce the values you've taught over the years, reflect on the good times and remind your loved ones how much they mean to you, she adds.
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1 Merrill/Age Wave “Leaving a Legacy, A Lasting Gift to Loved Ones,” 2019
Age Wave is not affiliated with Merrill
Neither Merrill nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
Always consult with your independent attorney before changing or implementing any estate planning strategy