Having a plan in place to care for your aging parents is one of the most loving things you can do for them. And as you ensure their wellbeing in their later years, you can also make sure those plans are on the best financial path.
Financial advisors often see clients faced with the challenge of what to do about their parents’ financial situation when they can no longer make decisions for themselves. Consulting a professional is a great first step to getting on the right track with helping your parents manage their wealth.
Here, we’ll review the basic steps to take to establish a plan for the wealth and long-term care of your parents, so your parents can have a good foundation to make decisions along with a financial advisor about your family’s specific circumstances.
Facing an Awkward Conversation
An important first step to wealth and long-term care planning of your parents is to actually have a difficult conversation with them. Before you make decisions for them, you should try to hear first-hand about their wishes for how they want their wealth managed and their health decisions made when they are unable to do those things for themselves.
It best to have these talks sooner rather than later. You never know when life can take its inevitable turn. As a NerdWallet article points out, “by having difficult conversations and focusing on key areas of your parents’ well-being, you can help alleviate the administrative and emotional burden of caring for them.”
Ask yourself if it is better to broach an uncomfortable topic today and fully understand your parents’ wishes, or to wait until, say, they have dementia and you are fumbling around guessing about what they would do? The latter situation sounds gut-wrenching. Reassure your parents you are not trying to control them or take advantage of them. When you know what they want for their wealth and health, you can better take care of them.
To help with your difficult talks, here are five key issues to discuss with your parents and family concerning finances and long-term care:
1. Health Care Decisions
Talking about medical decisions can ensure your parents get the professional care they need, and in the manner they would prefer. One of the more difficult, but more important points, is directives for end-of-life decisions. If they haven’t already, encourage your parents to articulate in writing how they would like medical decisions to be made in the event that they become unable to make those decisions for themselves, particularly if they end up on life support.
Getting the right health care also means finding the right long-term care provider for your parents when they reach an advanced age. It’s never too early to start getting on the same page on this topic, but it’s especially important if your parents are showing signs of Alzheimer’s or dementia.
2. Transportation Plans
Driving is not a right, it’s a privilege. That’s why we have to pass tests to make sure we’re qualified to get our driver’s licenses. With age, we can lose our ability to drive safely. Whether our eyesight struggles or our reflexes become too slow, our bodies can age out of being able to drive a vehicle.
That’s why it’s important to connect with your parents on how they will get transportation to the places they need to go – from the grocery store to doctor’s appointments. Will a family member drive them? Will they rely on a professional driver or public transportation? The key to determining what’s best for your parents is to consider what solution to alternative transportation keeps them – and keeps everyone else safe.
3. Housing Plan
Perhaps your parents have already downsized from the house you were raised in. But if they’re like many people, they will need to change their housing situation once again as they age.
Talk about the options for housing for your parents when they get to a point when they can’t care for themselves. Consider if staying with you or one of your siblings is best, or if it’s better to rely on full-time care in a senior home.
If a plan is in place for them to live with a relative like yourself, try to make sure that home is equipped for them to deal with the physical limitations age can bring. Perhaps that means installing ramps or electric lifts for your stairs, or converting a ground-level room into a bedroom for easier access.
If it’s decided that your parents will more likely reside in a long-term care facility, you might want to review your options now so you can be prepared to help them move as soon as they need to. Consider the costs as well as the services and whether your parents will feel comfortable there.
4. Living Trust Plan
Hopefully, your parents will have already consulted with a financial professional to help them develop a will and have also appointed appropriate designees on their retirement accounts. Estate planning can be complicated. The sooner you can help your parents get all of their estate affairs in order so that it is divided to heirs as they would like, the sooner you can enjoy the sense of security that comes with that planning.
They should also consider establishing a “living trust” – again, the earlier, the better. A living trust is a legal document that dictates how their assets will be passed on or who will control their assets if they are unable to. The difference between this and a will is that with a living trust, your family receiving an inheritance will not have to go through the hoops of probate, which can be complicated and take a lot of time.
The Bottom Line
Talking about money in the context of death or illness can be uncomfortable, but these kinds of discussions can make everyone more secure in the long-run. Once you get past the awkward phase of broaching the subject, you can get on the same page as your parents about how best to help them manage their wealth and long-term care as they wish.
You might be surprised to find that, although it’s a difficult subject to broach, this kind of conversation can bring everyone a sense of peace.
Here’s to the Wellness of Your Wallet!