It’s easy to procrastinate, but here’s why you should talk to your parents about estate planning and how to start the conversation.

This item is reprinted with permission from Nerdwallet. This article provides information for educational purposes. NerdWallet does not offer any advisory or brokerage services, nor does it recommend specific investments, including stocks, securities, or cryptocurrencies.

If you have a parent over the age of 65, say, you may have started to think about their future. But because end-of-life planning can be emotional and overwhelming, it’s tempting to postpone these conversations – and even more enjoyable to avoid them altogether. If there’s one lesson to be learned from the pandemic, it’s that waiting until the last minute to prepare is rarely a good idea.

Not having a plan can create two kinds of roadblocks when a parent dies. First, it may force you to sort out their financial situation while trying to grieve, says Cameron Huddleston, author of “Mom and Dad, We Need to Talk.” And second, it can be costly.

A good way to avoid both scenarios is to start talking with your parents about estate planning. While the term may sound like a task for wealthy people, it is an essential process that ensures that clear guidelines exist for all kinds of situations that accompany end of life.

Here’s an overview of why estate planning is important, plus some tips to get you started.

Why estate planning is important

Define intentions and priorities

An estate plan is an opportunity to set conscious intentions about the inevitable in life. So asking your parents to take stock of their possessions and possessions (including digital records and policies) isn’t just about numbers and paperwork; it is also an opportunity to assess readiness.
Careful planning also ensures that you can intervene in a medical emergency or if a parent becomes disabled.

You can start by asking your parents the following:

  • Who do you want as your primary caregiver?

  • How will we pay for health expenses?

  • What are your preferences for medical care? Who should make medical decisions on your behalf?

  • How should we manage your property upon your death? Should we sell it, or should a family member inherit it?

  • Do you have any valuables that you want to treat in a specific way?

  • Where are your most important documents? Do we have access to all of your digital files?

Legacy looks different to everyone

Inheritance often requires approval, the legal process of asset allocation. If the right documents are in place, it can be a relatively quick and painless process. But when someone dies intestate, that is, without a will, things can get tricky.

Also see: “Am I the mean mother-in-law?” ” I have a son. My husband has 4 children and says we should divide our estate in 5 ways. I do not agree. And now?

“Whether you wrote your will or not, there is an estate plan for you – and it’s the one the state created,” says Joshua Goldstein, Wills, Trusts & Estates Partner at Davidoff Hutcher & Lemon. At New York.

Each state has its own rules, but the common denominator is that the state may need to intervene if there is no will. And depending on the complexity of the situation, you may need to hire a lawyer. The hours spent blocked in legal proceedings can add up. So making sure your parents have a will and that the beneficiaries are clearly identified in all policies and documents is a preventative measure that can pay dividends.

Estate planning is tax planning

When wealth transfer occurs, which means assets are passed from one person to another, taxes are inevitable. And a good estate plan should seek to minimize liability.

There are several types of valuation that can come into play when a person dies, but the most common are inheritance and inheritance taxes. Most people won’t be affected by federal inheritance tax (in 2021, it will only apply to assets over $ 11.7 million), but states have their own rules and thresholds for it. which concerns the two types of taxes. In Pennsylvania, for example, if you inherit your parents’ house, you will have to pay 4.5% inheritance tax within nine months of their death. On a $ 400,000 house, that could equal $ 18,000.

Strategizing with a tax planning professional can help your family anticipate – and perhaps lessen – some of the financial burdens associated with transferring assets.

Don’t miss: How an “auto-nudge” could help you make better money and life decisions

How to talk to your parents about estate planning

Preparation is the key. Here’s a quick guide to make the conversation easier.

  • Know the documents. An estate plan may include the following documents: a will, a proxy, a health care attorney and even a trust. Each serves a different purpose, but what they have in common is that they all appoint a designated party to act in a manner recognized by law. Know the documents to find out if your parents already have them or need to be updated.
  • Pay attention to family dynamics. Consider who should be involved in the conversation. If you have siblings, now is a great time to be on the same page. If you are part of a blended family, this is your opportunity to clarify the chain of command. Getting all that chopped up information now can help your family avoid conflict later.
  • Pick a time to speak (although there is usually no better time than the present). Suppose you have a hard time bringing up the topic, in addition to the questions listed above. In this case, there are many scripts and strategies that can serve as conversation starters, says Amanda Singleton, an AARP family care expert. You can also use anecdotes or even ask for advice on your estate planning to facilitate the conversation.
  • Seek professional help. A well-designed estate plan should involve a qualified professional. This could be a tax planning expert, a wealth manager or a lawyer specializing in wills, trusts and estates. Whichever person you choose to loop, be sure to research their background and qualifications.
  • Followed. Estate planning is information sharing, says Michael Liersch, advisory and planning manager for Wells Fargo WFC,
    -0.72%
    Wealth and Investment Management, and that requires frequent checking and monitoring. “The conversation really has no end. It has a start and evolves, but it’s really essential not to think of it as a one-time conversation. ”

The most important benefit of a well-thought-out estate plan is that it can allow you to focus on what matters most when difficult times arise, such as grieving and supporting your family.

Also see: Whatever your age, here’s how to tell if your finances are on the right track.

And the key to going through all these steps successfully? Gratitude, according to Liersch. When planning your estate with your parents, this is one of the best ways to start the conversation and keep it going.

This article is intended to provide general information and should not be taken as legal guidance.

More from NerdWallet

Sabrina Parys writes for NerdWallet. Email: sparys@nerdwallet.com.