What Issues Should I Consider for my Aging Parents?
This fall we have been reviewing estate planning with all of our ongoing clients. It’s something we do every several years just to make sure everything still aligns with their wishes. Inevitably, in some meetings the topic shifts from our clients’ estate planning to their parents. In fact, several of our clients have been working so hard trying to get their parents’ affairs in order that they haven’t even gotten to their own yet!
While it’s important to have your own estate planning in order, have you thought about your parents’? Theirs may be more urgent than your own. A common misconception we often hear is, “My parents are too young and healthy to talk about that stuff!” The truth is, it’s best to talk about it while they are still young and healthy and can be as objective and reasonable as possible.
With the holidays fast approaching, this may be perfect timing. Getting together with family gives you a good opportunity to have a discussion with your parents or siblings, or even just assess where your parents are. Every family is different so you will have to discern whether your parents are ready for an open conversation or if this is something you need to just start thinking about or bring up with your siblings. Whichever level your family is on, here are some things that you should be thinking about as your parents age.
How long do your parents plan on staying in their current home? For many, the answer is forever. In that case, you need to consider what will happen when they can no longer maintain the home the way they are now. Will they hire outside help? Will a friend or family member step in? Will they be paid for their help?
Consider how feasible it is for them to stay in their home once they have health or mobility issues. They may be able to make modifications to the home, such as a wheelchair ramp, or hire in-home caregivers. But at what point do they need to leave the home and how will that decision be made? Also, where will they go? If their hope is to move into a retirement care facility, they will need the finances to pay for it. Living with a family member may be an option, but the whole family needs to be clear and in agreement on what kind of care each family member is willing to provide and if there will be any compensation involved.
As teenagers, we count down the minutes until we can get a driver's license and have the freedom that comes along with it. As we age, it’s one of the hardest freedoms to give up. However, there comes a point for most people when it’s no longer safe to be behind the wheel of a car. Whether it’s poor eyesight, delayed reaction times, loss of memory, or lack of patience with others, the natural effects of aging can make driving dangerous.
It’s important to have a plan for your parents to transition out of driving. There should be triggers that start the process, such as concerned family members or fender benders. Please don’t wait for a serious accident to bring up the topic. It doesn’t have to be a sudden change where they hand over the keys for good. It could start with not driving at night or in the rain or on the freeway, and taper down from there. Make sure your parents are aware of their other options, such as ride-sharing apps, public transportation, and rides from friends and family.
Health tends to unmistakably decline in old age, so it’s more often discussed than some of the other topics here. The first thing to do is to be aware of the insurance coverage that your parents have, whether Medicare, a supplemental plan, long-term care insurance, or life insurance with a long-term care or critical illness rider. Once you know the insurance coverage they have, you will have a better idea of the options available to them. You may need to come up with a plan to pay for care that isn’t covered by insurance.
If part of your plan involves family caregivers, it is important for everyone to be on the same page. Make sure that your parents’ expectations align with what the rest of the family is willing and able to do. Also, discuss ahead of time any compensation that will be provided to family caregivers and how it will be determined.
An advanced directive, or living will, allows your parents to spell out what life-sustaining measures they want to be taken on their behalf. Consider also, how things will be handled if they face an illness, cognitive impairment, or limited mobility.
You (or someone in your family) will likely at some point either need to help your parents manage their finances or will inherit their finances. As such, it is a good idea to help them get organized so that they (and later, others) know what they have, how it works, and how to access it. A net worth statement that lays out all of their assets and liabilities can be a great starting point. Check their state’s unclaimed property finder and ask about safe deposit boxes to make sure you aren’t missing anything. Once everything is clearly laid out, they may want to consolidate accounts to simplify their situation.
Understanding their different income streams will help you to know what kind of lifestyle or healthcare they can afford and also anticipate decreases in income if one of them passes away. It can also be helpful to familiarize yourself with their tax situation and make sure they are taking required minimum distributions if they are over age 72 or have inherited retirement accounts.
To be prepared for whatever the future may hold, you will want to have contact information for your parents’ accountant, financial planner, and insurance agent, if they have them. Setting your parents up with an online password manager can really simplify things for both them and anyone who will help them in the future.
Everyone (including you) should have certain estate planning documents in place. These are the ones that we recommend everyone have:
- Will - Directs the disposition of possessions that do not pass by beneficiary designation (and names a guardian for minor children).
- Health Care Directive/Living Will - Notifies medical providers of the life-sustaining measures you want to be taken on your behalf.
- Medical Power of Attorney - Gives someone authority to make medical decisions for you if you are incapacitated.
- Financial Power of Attorney - Gives someone authority to manage your finances if you are incapacitated.
Consider reviewing your parents’ estate planning documents to make sure they are up-to-date and were created according to the laws of the state where they currently reside. If they have trusts in place, double-check to make sure they reflect current estate law. Also, it is a good idea to have the contact information for your parents’ estate attorney, in case something happens.
Planning for Transitions
One of the biggest things is simply for everyone to be on the same page regarding transitions and what will trigger them. While your parents may be fully independent and self-sufficient right now, that likely won’t last forever. There will come a time when they need to give up their car keys or have help managing their finances and it is vital to discuss WHEN before the time actually comes. That is easy to write, but it can be incredibly difficult to do in practice. However, no matter how difficult it is to do, it is imperative if you want to love your parents well.
Deuteronomy 5:16 says, “Honor your father and your mother, as the Lord your God commanded you, that your days may be long, and that it may go well with you.” We usually apply that to children being obedient but it equally applies to adult children as their parents age. Honoring your parents means helping them think through future transitions and caring for them as they need it, in a respectful manner.
At Guide Financial Planning, we know that finances can be intimidating and helping your parents with their finances can be even moreso. We are here to help. Our clients range in age from their 20’s to their 70’s, so whether you’re looking for a partner for yourself or your parents, we’re here for you. You can schedule a free introductory call here.
About Guide Financial Planning
Guide Financial Planning is led by founder Ben Wacek, who is a Christian fee-only Certified Financial Planner™ and Certified Kingdom Advisor®. He has a passion to help people of all income levels make wise financial decisions and steward their resources from an eternal perspective using Biblical principles. Based in Minneapolis, MN, he works with clients both locally and virtually throughout the country and abroad. You can follow the links to learn more about Guide Financial Planning and our team and the services we offer.