Question: How do you convince your parents to do estate planning, especially if they don’t like talking about “death”?—Fitz Villafuerte, blogger via Twitter
Answer: Among the many disciplines of financial planning, estate planning is perhaps the most uninteresting to many Filipinos. Usually, estate planning comes into the minds of many when it is too late already. Without a doubt, proper estate planning will not only save the family a lot of taxes, it also preserves family relationships with the orderly distribution of estate.
I believe the reason many of us do not prioritize estate planning is we really do not see the need for it and probably do not understand much of it. Many believe estate planning is only for the extremely wealthy people and is not for the average Juan.
While some wealth is a prerequisite to estate planning, it is not limited to rich families. There have been many relationships strained because of an unsettled estate and it is sad to see family bickering because of it, or worse, taking each other to court. Usually, fights arising from estate distribution are difficult to resolve. They require a lot of time and emotional stress before finding a solution.
Also, a big part of the estate is diluted because of heavy transfer taxes if the parent fails to do a proper estate plan.
While discussing the merits of estate planning may help enlighten parents, it is not easy as you have pointed out. Many Filipino parents avoid discussing plans for the estate like it is taboo. Children also feel they are disrespectful if they bring up the matter of family estate and its distribution.
I think many parents avoid estate planning discussion for fear of losing control. There have been some stories of older couples who have been left in a financially stressful position when wealth was distributed among children too early. Such stories haunt many Filipino parents that they avoid discussing the matter.
Love and respect is the best approach for this situation. We must always remember that when parents are still living, their wealth belongs to them and they are not obligated to give inheritances. We need to be empathetic with the concerns and wishes of our parents. If your parents are objective, you can discuss the merits of financial planning in a straight-forward manner. However, if they get emotional (as most of our parents do), a more tactful approach that is filled with love and respect is a better approach. It can help if we ask our parents what their real wishes are with regard to their estate, what their plans and how we can help them ensure that their wishes are carried out even after they passed.
Timing is also crucial—we need to be mindful and sensitive about the emotions of our parents.
Even if we think of them as capricious, their sentiments are very valid from their perspective. If you have siblings, it is best that you and your siblings make your parents feel that all of you are more concerned about family unity than about getting your inheritance or trying avoiding taxes. Estate planning, after all, is more about proper distribution which is in accordance to the wishes of the owners of the wealth.
You and your siblings must also be prepared to accept whatever your parents decide with regard to their estate what is fair may not be equal and what is equal may not be fair.
If all else fail and your parents are adamant about not getting into any estate planning, we will need to respect their decisions because after all, it’s really their money and not ours.
“A good man leaves an inheritance for his children’s children, but a sinner’s wealth is stored up for the righteous.” – Proverbs 13:22, NIV
Catch me at my annual personal finance seminar entitled “Steps to Financial Peace,” a comprehensive and life-changing experience that will take you to the many processes of achieving real financial peace. It will be held on May 18, 2012, 10 a.m. to 6 p.m. at the Victory Center, 4th Floor of V Mall in Greenhills. Check out www.randelltiongson.com for details. We will also run this program in Cebu on May 26 and Davao on June 2. These events are being presented by BDO.
(Randell Tiongson is an advocate of life and personal finance. He is a director of the Registered Financial Planner Institute (Phils.). He can be reached through randell@randelltiongson.com. For inquiries e-mail to info@rfp.ph. or visit www.rfp.ph)