Your parent is getting on in age, but you don't have a clear idea if there is a plan in place for their care. It is a difficult topic to broach; no one wants to talk about getting older and the financial realities that come with aging. Instead of having a 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. The Public Broadcasting Service (PBS) has 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.
Your parent will be 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 conversation, but the price of silence about your parent's plan may be very costly to you.
Two of the most critical personal legal documents are a durable power of attorney (DPOA) and a patient advocate designation. All older adults should have these documents as it gives legal authority to a designated representative to make financial, legal, and health care decisions on your parent's behalf. If your parent does not have a DPOA and patient advocate designation and becomes incapacitated, you will have to go to court to get appointed as your parent's conservator and guardian which can be a complicated and expensive legal process at a time when your energy is better spent in the care and decision making for your parent. If they do not have a DPOA and patient advocate designation in place make arrangements for them to meet with a trusted elder law attorney to properly draft the legal documents.
Often a parent will have a Will or trust, retirement account information and insurance policies that have not been revisited or updated in years, sometimes decades. When was the last time your parent reviewed beneficiary designations? 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 with your parent and make adjustments if necessary. For example, if the parent's children are grown it might be best to cut back on the amount of life insurance they carry to save money on annual premiums.
Long Term Care Plan
Address the issue of long-term care. According to the PBS, a full 70 percent of all seniors will need some long-term care as they age. Even if your parent is healthy today odds are they will require long-term care at some point in the future and the costs are staggering. In Michigan, nursing homes can average $8,200.00 or more per month. Some life insurance companies will add a long-term care rider to an existing policy. Neither standard health insurance nor Medicare will cover your parent's long-term care expenses. Medicaid also can cover some long-term care costs, but there are asset and income criteria in order to qualify. Certain trusts can be created to shelter assets from a nursing home spend-down.
Meet the Team
Ask your parent about their financial advisors and request a brief introduction to them. Find out who they are and how you might contact them in the event your parent is unable to do so. This information will allow you to keep an eye on your parent's accounts and be confident the advisors are trusted, objective and well versed in elder financial issues. Oversight by you in a slightly detached way provides your parent privacy and independence about their finances but allows you to protect them from unscrupulous advisors.
Understand Filing System
The last thing you need to discuss is where this 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 parents 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. Check with them a couple of times a year to ensure the information is still in the same place and physically look to be sure it is.
Discussing your parent's strategy is best begun while they are healthy. Proactive planning 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 you and your family.