Your parents are aging, 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. Let’s face it – no one wants to talk about death and the financial realities that come with aging. So, 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 important financial decisions with your parents sooner rather than later.
Your parents will likely feel more comfortable and at ease if you have processed your own emotions and feelings before talking to them. Conduct research so that you are knowledgeable enough to present a clear and concise set of options for your parents. Having options allows your parents and family to make decisions and feel in control of the process. You are seeking progress, not perfection. You may not settle it all in one conversation, but the price of silence about your parents’ plan may be very costly.
Two of the most critical personal legal documents are a durable power of attorney for finances (DPOA) and a health care power of attorney. In California, the health care power of attorney will most often be combined with a living will in the form of an Advance Health Care Directive. All older adults should have these documents as they give legal authority to a designated representative to make financial, legal, and health care decisions on their behalf. If your parent does not have a DPOA and becomes incapacitated, you will have to go to court to get appointed as your parent’s guardian, which can be a complicated legal process at a time when your energy and resources are better spent on care and decision-making for your parent. If they do not have a DPOA and health care power of attorney in place, strongly consider making arrangements for them to meet with a trusted elder law attorney to properly draft these legal documents.
Often a parent will have a will, retirement account information and insurance policies that they have not revisited or updated in years or decades. When was the last time your parent reviewed beneficiary designations? Family circumstances change, and this can affect how your parent may want to designate beneficiaries. It is best to review financial and insurance data annually with your parents and make adjustments as necessary. For example, if all children are grown, it might be best to cut back on life insurance to save money on annual premiums.
Address Long-Term Care
Address the issue of long-term care. According to the PBS, 70 percent of all seniors will need some long-term care as they age. Even if your parent is healthy today, odds are that 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. Medi-Cal may also cover some long-term care costs, but neither standard health insurance nor Medicare will cover your parent’s long-term care expenses. This is a very common misperception.
Meet the Team
Ask your parents 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 parents are unable to do so. This information will allow you to help safeguard your parents’ affairs, and also be confident that your parents’ advisors are trusted, objective, and well-versed in elder financial issues. Your slightly detached oversight can provide your parents privacy and independence about their finances, but also allows you to protect them from unscrupulous advisors.
Understand Filing System
The last thing you need to discuss is where your parents keep their vital information so that before a crisis hits you know where to find important documents, online passwords, and forms of ID that you will need to facilitate your parents’ well-being. While you do not have to necessarily see all the specific contents of the information, particularly the financials, knowing where your parents keep this data is critical in a crisis. Check in frequently to ensure the information is still in the same place and then physically look to be sure it is.
Discussing your parents’ strategy is best begun while they are healthy. Proactive planning is the best way to help your family as your parents age. Contact my office today and schedule an appointment, if you would like to discuss how I can help you and your family with these important issues.