Estate Planning for Your Aging Parents’ Need

Howard Gleckman, author of the novel Caring for our Parents, reveals that caring for an aging and frail parent or disabled relative may be the hardest thing you’ll ever do in your life, but it can also be the most rewarding. 

As a member of the evolving “Sandwich” Generation spanning in age from the mid-20s to the early 70s, you may feel the ever-challenging financial squeeze of simultaneously caring for you and your spouse, your aging parents, and your dependent children. And, not uncommonly, these events often occur at the same time.

Caring for aging parents is a loving and admirable choice, but it also creates a unique set of financial needs. Should you, as the caregiver, predecease your parents, how would that level of care be continued?

You can take your elderly parents into your own home to provide care. Alternatively, you may find suitable residential care options for your aging parents.

Basic Planning Steps 

Whether a planning problem is simple or complex, the same following basic steps apply:

• Define the goal (or goals). What is it you are trying to accomplish? As early as possible, you should identify your senior parents’ core values and proactively incorporate them into your family’s financial objectives. You may have to prioritize amongst competing goals.

• What resources are available? This could be time, money, and the personal efforts of you and other family members. Are government resources, such as Medicare and Medicaid, available? Are resources available in your regional area, if you need a safe place to discuss sensitive issues relevant to your loved ones’ health, aging, or caregiving?

• Develop a plan. List the steps needed to achieve each goal and then carry them out. As your parents age, health problems can become overwhelming to the point where your senior parents are no longer able to live a full and independent life due to physical restrictions or mental impairment. Planning ahead facilitates this transfer of temporary or permanent responsibility from a parent to an adult child. Deciding when to intervene, what needs to be done, and who will be responsible are pivotal issues.

Essential Documents Your Family Needs

With collaborative guidance from financial, legal, and senior care professionals, you should consider the following key estate planning documents and insights in optimally strategizing to care for the multifaceted needs of your elderly parents:

• Establish health care directives for medical decisions of your aging parents: Seek the counsel of an estate planning attorney to complete a living will or advanced health care directive specifying life-sustaining medical treatments your parents will permit in the event of incapacitation (Do-Not-Resuscitate order). Also, make sure you draft a health care power of attorney to authorize a representative to make medical decisions on your parents’ behalf. Communicate decisions to your parents and other family members before implementing to ensure they fully understand and agree with these health care provisions.

• Designate a durable power of attorney to help manage financial affairs:  You should select a durable power of attorney to handle financial decisions if your parent becomes suddenly sick, incapacitated, or otherwise unable to carry your affairs. These financial powers of attorney to pay bills and make significant financial transitions become especially critical if your seriously ill parent is single and did not list joint tenants for certain assets or accounts.

• Draw up a will and/or living trust documents and update when necessary: At the very minimum, you need to have a professionally drafted will written to delineate what happens to your parents’ estate assets and property. Considering privacy and continuity of management in the event of incapacity, you should utilize a living trust to allow for your designated successor trustee(s) to step in and handle trust assets for your aging parents’ benefit. In light of evolving life circumstances, your elderly parents will most importantly have the comfort and flexibility in a living trust to name and update one or more successor trustees, personal representatives, and agents for non-trust property management and health care decisions.

• Keep organized estate planning records and inventory: If your elderly parents become incapacitated, you or a designated heir may have difficulty navigating their bookkeeping system or finding relevant estate planning documents inside the house or in safe deposit boxes elsewhere. Your parents can compose a letter of instruction, in conjunction with basic estate planning documents, to identify the location of these important papers and the key to their lockbox or computer passwords.

Assess Long-Term Care Strategies

With the chances that your parents will live longer, you also need to look at the possibility that they may need long-term care, which often begins with home care and transitions to a nursing home. If your parents have a long-term care insurance policy, be sure to find out the policy’s terms, such as when the policy pays benefits, and how much in benefits are provided. 

You should also take time now to look at supportive housing arrangements, such as an assisted living facility or continuing care retirement community, for your parents in the event you are not able to take care of your parents by themselves.

Evaluate the cost affordability and overall feasibility of a life care facility, as fees vary considerably by location and community size. Understand that as your parents age, they may experience a reduction in their capacities and require additional services over time that were not needed when they entered the community. 

Be mindful that most medical insurance, including Medicare, does not provide any reimbursement for assisted living. This care may be integrated into many long-term care insurance policies, which may cover costs associated with room and board and other assisted living needs. Think about engaging a professional Geriatric Care Manager (GCM) for your aging parents in planning for the necessary kind and quality of eldercare.