Tip of the Week: Talk To Your Parents (3/13/00)

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	Talk To Your Parents Financial Tip of the Week by Deloitte & Touche OnLine March 13, 2000

It's a difficult subject, but you need to ask your parents about money.

See our archive of previous tips on your money, your taxes and your financial plan.

Because many Americans have aging parents, it's wise to make sure their finances are in order.

Do your parents have the necessary documents? It's starts with a well-prepared and updated will, but don't stop there. A will details how assets should be distributed. If a person's assets are less than $650,000 a simple will will probably suffice. The tax code currently allows people to pass as much as $650,000 to individuals or trusts without incurring federal estate taxes. That amount will gradually increase to $1 million by the year 2006.

Married people with larger estates should consider a two-share plan (also know as a bypass or A/B trust). A two-share arrangement enables high net-worth individuals to take advantage of their unified credit ($650,000 per person in 1999) and potentially pass $1.3 million dollars to beneficiaries free of federal estate taxes. By coordinating the unified credit with the unlimited marital deduction, no federal estate tax will be due upon the passing of the first spouse and $650,000 will be removed from estate of the second spouse while being available for her/his support. This results in well over $200,000 passing to beneficiaries that could otherwise pass to the government in the form of estate tax.

For more about estate planning, see our Estate Planning Guide.