Your parent is getting older, but you haven’t discussed or don’t know whether there is a plan in place for their care. It is a difficult topic to broach; no one wants to talk about death and the financial realities that come with aging. Instead of having a tough, yet proactive conversation early in a parent’s aging process, most families have a reactive discussion under high levels of stress and emotions while their parent is experiencing an adverse health event. It has been reported that 85 percent of time long-term care decisions are made during a medical crisis. The message is clear, be proactive and start discussing the important financial questions with your parent.
You and your parent will feel more comfortable and at ease if you have processed your feelings before talking to them. Conduct research so that you are knowledgeable enough to present a clear and concise set of options for your parent. Having options allows your parent and family to make decisions and feel in control of the process. You are seeking progress, not perfection. It may not all become settled in one discussion but having accurate information available will be a starting point for the conversation rather than having to scramble in the midst of a medical crisis.
Two of the most critical personal legal documents are a durable financial power of attorney and a durable healthcare power of attorney. No matter your age, anyone over 18 should have these documents as it gives legal authority to a designated representative to make financial, legal, and health care decisions on someone, and in this case, your parent’s behalf. Ask your parent if they have these documents prepared. If they do not and they were to become incapacitated, you will have to go to court to get appointed as their guardian to make decisions on their behalf. This can be a complicated, lengthy and expensive legal process at a time when your energy is better spent on the care and decision making for your parent. If your parent does not have these documents in place, have a discussion with them about planning to meet with a trusted elder law attorney to properly draft the legal documents.
The other critical legal documents are often prepared, but not updated. A parent will have a will, retirement account information and insurance policies that have not been revisited or updated in years, sometimes decades. Have beneficiary designations been reviewed? Are there beneficiaries listed for accounts consistent with current estate plan desires? Family circumstances change, and the birth of a child, death or divorce can affect how your parent may want beneficiaries designated. It is best to review financial and insurance data annually and make adjustments if necessary. For example, if a spouse has passed away, ensuring there are contingent beneficiaries, so the account does not pass through to probate.
Long Term Care Plan
Address the issue of long-term care. Even if your parent is healthy today, odds are they will require long-term care and the costs are staggering. Some life insurance companies will add a long-term care rider to an existing policy. Medicaid can cover some long-term care costs, but neither standard health insurance nor Medicare will cover your parent’s long-term care expenses. Medicaid rules can be difficult to understand, and an elder law attorney is a great resource for information regarding possible benefits available.
Meet the Team
Ask your parent about their financial advisors. Find out who they are and how you might contact them in the event your parent is unable to do so. If this information is not updated frequently, the account handler may be outdated. Getting this information can help your parent stay organized and ensure there is accurate and up to date information allowing you to be ready should the need to act on their behalf arise.
Understand Your Parent’s Filing System
The last thing you need to discuss is where their vital information is filed so that before a crisis hits you know where to find the important documents, online passwords, and forms of ID you will need to facilitate your parent’s well-being. While you do not have to see all the specific contents of the information, particularly the financials, knowing where they keep the data is critical in a crisis. Remember that as your parent ages they may start to change the location of the information. Have an annual review with them to make sure the information is still in the same place and physically look to be sure.
Discussing your parent’s strategy is best begun while they are healthy. Being proactive and planning during this time is the best way to help your family as your parents age. Contact our office today and schedule an appointment to discuss how we can help with long term planning or how to start the conversation with a loved one.