Financial Planning for Aging Parents
By Lisa Strohm
Your parents have always taken care of you, so what happens when the tables turn and they need you to take care of them? On top of the emotions of seeing a parent age or decline in health, this role reversal often leaves you responsible for your parents’ finances and estate. It’s in these circumstances that you realize the importance of having a plan, as the negative consequences of not having things in order just may fall on you.
Even if your parents are currently mentally and physically capable, it is time for you to step in and make sure they’re prepared for their later years. Here are some legal and financial considerations where advanced planning can make a world of difference for everyone involved.
Get Trusts and Wills in Order
You may have heard one of the many news stories about celebrities who died without a will and left their relatives and business partners with a mess. Case in point, almost 40 years after his death, the family of Jimi Hendrix was still going to court to fight it out.
While you may consider your family above such squabbles, it’s better not to test that assumption. You never know how large amounts of money will affect people and their behavior. It is important for your parents to have a will that spells out their final wishes, including who will carry out those wishes as the executor of their estate.
This is especially important in situations with blended families. It’s all too common for a will to never be updated and leave an ex-wife as the sole inheritor or executor of an estate. Not only do your parents need a will, but they also need to make sure it is updated to reflect their current situation and desired legacy.
The importance of double-checking beneficiary designations goes beyond just a will. Make sure your parents have gone through all of their accounts (including life insurance policies, retirement accounts, and other savings) and verified that their listed beneficiaries are correct.
Make a Plan for Long-Term Care
If your mom is over 65, there’s a 58% chance that she will need long-term care at some point, and on average that would be about 2½ years of care. For your dad, there’s a 47% chance that he will need long-term care. (1) Those numbers are high and need to be taken seriously.
Your whole family needs to come together to develop a plan for caring for your parents when the time comes. Discuss topics such as: Who will provide care for them? Who will pay for the care? Does it make sense for them to purchase long-term care insurance?
All too often, the most responsible or only local son or daughter ends up shouldering the entire burden. This leads to burnout and resentment toward the other siblings. Save your family the trouble and be proactive to come up with a plan that everyone can agree on.
One out of three Americans over age 85 has Alzheimer’s disease. (2) There’s a good chance that a time will come when at least one of your parents is no longer able to make decisions for himself or herself. Who is going to make decisions for them at that point, both financial and medical?
While this can be an uncomfortable conversation, don’t avoid it. This is something you need to discuss with your parents and get the proper legal documents in place before they become incapacitated. Having simple power of attorneys written up will save you the trouble of going to court to request the right to help your parents when they need it most. And if your parents are comfortable with it, it would be a good idea to have one or more of their kids added to a bill-paying account. This way, if an emergency situation arises, they can access cash reserves to pay bills and debt payments immediately instead of waiting for assets to be released or legal documents to be enacted.
Seize the Day
While it is important to have all of the proper legal documents in place and have a plan for how to take care of your parents when they can no longer take care of themselves, for most people, their biggest regret is simply that they didn’t have more time with their parents.
We all know that our time here on earth is limited, so we need to make the most of it. As you watch your parents age, it’s a visual reminder that your time with them is coming to an end. Consider creating a routine to make sure you spend time with them frequently while you still can.
Can you make a standing date for breakfast on Fridays or a phone call on Sunday afternoons? Carving time out of your busy schedule for your parents is one of the very best ways to prepare for these final years of their lives.
Share the Burden
It can be overwhelming to think about writing a will, planning care, and making these critical decisions, especially with all the emotions involved. Sometimes parents aren’t receptive to these discussions with their kids, the kids who at one time needed them to take care of their every need.
In these situations, it can be very helpful to work with an experienced financial professional, someone who knows the ins and outs of later-year planning and can be a neutral third party in emotional family discussions. If you would like help planning for your parents’ future, The Athena Network is here for you. Email me at email@example.com, call 484.224.3439, or click here to schedule your free introductory meeting.
Lisa Strohm, CFP®, MBA is the founder and CEO of The Athena Network and Good Life Advisors of the Lehigh Valley, fee-based wealth management firms. She specializes in providing financial planning, investment management, and life management services for women and their families across the U.S. With more than 18 years of industry experience, she sets her firms apart from traditional wealth management companies by focusing on providing clients with an educational, collaborative, supportive experience that inspires her clients to engage in their financial lives. If you have a question, please click this link to schedule a phone call today. To learn more, visit https://the-athena-network.com/ or connect with Lisa on LinkedIn and Facebook.
Investment advice and financial planning offered through Good Life Advisors, LLC, a registered investment advisor. Good Life and The Athena Network are separate entities.