Many of us watch our parents getting older with some concern. They may be doing fine now, but we know that most older people eventually need some help. The need for help may increase gradually over time, but in many cases a sudden event causes their needs to increase dramatically. The help seniors need is usually both time-intensive and expensive. Here we’ll lay out some of the financial considerations to consider.
Having the conversation
When it comes to dealing with finances, discussing it with your parents can be an uncomfortable topic. No one likes to think about the prospect of losing their autonomy. As such, parents may put off having the discussion, and may resist your attempts to gather information.
On the other hand, there are plenty of horror stories about waiting too long and being unable to gather the facts. Once a sudden health event has happened, your parents may simply be unable to walk you through all the details of their finances. These are some of the biggest reasons to have the conversation now.
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In our article, Taking over Your Parents Finances, we discuss six questions you should be able to answer about your parent’s finances. With these questions in mind, you can gently ask your parents for information and build up knowledge, even if they are resistant to “having the conversation.” As you gather more information, you may find that their resistance eases up, and that you can get farther along with less effort.
Getting prepared
Being able to step in and help means knowing what needs to be done and being in the position to do it (or knowing who is). It also means knowing your parents’ wishes and having access to the professional advisors they know and trust.
- Knowing what needs to be done- Start by building a file on your parents’ finances, including summaries of what their bills are, when they are due, and how to pay them. Know where the money to pay bills comes from, and who has access to it.
- Being in the position to help- If you need to step in and start paying bills, you will need access to the accounts your parents use for bill paying. The simplest, most direct way to assure this is for your parents to add you as an authorized check signer on their checking account. In most cases, this can be done without needing legal documents. Over the longer term, your parents’ legal documents should name you (or another trusted family member they choose) as their agent for Durable Powers of Attorney. This becomes very important if they lose their capacity to sign documents and communicate directions for their finances. If their memory or cognitive abilities are starting to “slip”, make sure the Durable Powers of Attorney are in place and accepted at their bank and other financial institutions. If they have a living trust, the document should name you or others in your family as the successor trustee.
- Knowing their wishes and their advisors- This comes back to “having the conversation.” If your parents are willing to accept your help and have put you in the legal position to help, it’s important to talk to them about their wishes and preferences. Ask them for an introduction to their tax preparer, estate attorney and financial advisor, as well as their other professionals such as their insurance agent, business bookkeeper or business banker. Ask your parents to give authorization for these professionals to share information with you and to work with you when the time comes.
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Housing considerations
One of the biggest issues to consider for aging parents is where they live. As their need for assistance increases, living alone becomes much more difficult. If they need assistance, most seniors prefer to receive it in their home. However, in-home care can be very expensive if it’s needed full time. Traditional nursing homes can also be very expensive, but if full nursing home care isn’t needed, there are many alternatives available. See our article, Retirement housing options for seniors are expanding for more discussion. Many seniors choose to live with family, though that comes with its own set of issues if care is needed.
Taking care of their health
Planning for medical care is of utmost importance with seniors. Health issues can come out of nowhere, so it’s important to keep in close contact with them. The cost of care can be extremely high, and most seniors rely on Medicare. Often their health regimen revolves around the Medicare rules and insurance programs. It’s very important to make sure their Part B, Prescriptions Drug, and Supplemental policy premiums get paid so their coverage continues uninterrupted.
Please click here for our financial checklist What Issues should I consider for my aging parents?
Planning for all the health and financial considerations of aging isn’t easy, but it can be much easier when you have the right help. At Blankinship & Foster, our wealth management process helps you evaluate all the parts of your finances, clarify and organize them, and build sound financial plans designed to achieve your goals and objectives.
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