As the end of the year approaches, people tend to look for ways to cut their taxes by making charitable contributions and putting more cash in tax-deferred retirement plans. It’s also a great time to consider a smart estate-planning move: helping your elderly parents inventory their possessions through a “four boxes” system.
A family inventory will not only tidy up their home, it can help your mom and dad get their financial house in order, too.
What Estate Planning Is Really About
Your elderly parents may question your motives, so make it clear that the exercise is not about contemplating their deaths or trying to get their assets. It’s about hearing the stories and memories that go along with the possessions they’ve collected over a lifetime, so you won’t have to play a guessing game later about what is valuable, emotionally and financially.
The 4 Boxes Inventory System
Here’s how the “four boxes” organizing approach works:
Put four boxes in each room of your parent’s house:
1) “Keep Until I Die” For items with sentimental value, such as family heirlooms, personal letters, wedding china and photo albums.
2) “Appraise and Sell” For unwanted items of value.
3) “Keep with Me” For unsentimental items, such as furniture and art.
4) “Garage Sale/Donate” For unwanted items.
Then, go room by room with your parents, sorting their possessions.
For bigger items that won’t fit in boxes — like furniture, pianos and workout equipment — consider putting pictures of them on index cards and then dropping the cards in the appropriate boxes.
My Mother and the 4 Boxes
I went through this exercise with my mother two years ago when, at age 89, she realized it was time to downsize from two homes to one. The 10-hour drive between her places in Delaware and South Carolina had become too much.
In addition to dealing with the logistics involved in moving everything to her South Carolina home, we reviewed key financial information, including her will, power of attorney, living will, beneficiaries, retirement savings, budget and her new cost of living. Then, we inventoried her possessions.
Using the four boxes approach, it was amazing to unleash the stories behind her acquisitions.
“Tell me about this piece,” I would say to her, sparking tales about how she got certain pieces and the role each one played in her life. Without going through this process, I would have missed out on hearing the stories that will now become part of my family’s legacy.
The final step was selling my mother’s Delaware home. The proceeds from the sale helped supplement her retirement income, providing comfort that — at nearly 90 years old — her cash flow would continue.
I encourage you to consider how a four boxes inventory might be helpful to your family. The process can actually be a bonding experience and help prompt a re-assessment of savings during the later years of a parent’s retirement.
ING Retirement Coach Holly Kylen is a financial advisor with ING Financial Partners. Securities and Investment advisory services offered through ING Financial Partners, Member SIPC.
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