I have been blessed with a pair of wonderful parents. They have selflessly loved and cared for me and my siblings our entire lives – and for that I am very thankful. As the years have progressed, my perspective has widened as I have witnessed friends, family and clients extending parental care for their aging parents. The journey of caring for an aging loved one can be emotionally and financially challenging. To that end, we wanted to include a few practical tips to care for aging parents (or other loved ones) in the context of their finances.
1) Include Your Siblings
The first step in caring for your aging parents is to discuss the situation with the rest of your family – usually your siblings. It is essential to be on the same page when caring for an aging parent. How is each sibling going to be involved? Financially or emotionally? How can an out of town sibling also provide support? Having these conversations with siblings can help everyone be on the same page before approaching your parent(s).
2) Speak With Your Parent(s)
Finances can be a very personal topic. That being said, most children will need to understand their parents’ financial situation to better assist them as they age. To meet your parents “where they are” can require empathy and patience.
A parent might be embarrassed about poor financial decisions they have made. Or they may have significant financial savings and are hesitant to share this private information.
Our recommendation is to explain that your goal is to partner with them to meet their goals and to help them if and when they decide they are not as interested in handling the “day to day” of their personal finances. You want to make sure to communicate that this is a partnership and that you are not attempting to “take over.”
3) Review Estate Planning Documents
“An ounce of prevention is worth a pound of cure.” This old saying is especially true as it applies to estate planning documents. Our recommendation is to proactively help your parents create and/or update their estate planning documents (will, durable power of attorney, living will, durable power of attorney for health care, etc.). These documents need to be reviewed for the named executor, trustee, etc. NOW is truly the time to make this happen. It is much simpler, cheaper and less stressful to take care of this while your parents are still alive and able to help make these decisions. It is also important to review the beneficiary designations on your parents’ retirement accounts, annuities, and any life insurance policies.
Lastly, it is very important to review account ownership. Most estate planning attorneys recommend that an elderly couple title their joint assets as JTWROS (joint tenants with right of survivorship). Many single seniors will add a child to the ownership of their account.
4) Consolidate Accounts
Sometimes parents will have two different checking accounts, three CD’s or savings accounts, retirement savings at different investment firms, a safety deposit box, and the list goes on. Our prudent advice is to encourage and assist your parents to consolidate their assets to help them better manage their affairs and simplify your role in settling the estate. Consolidation will be done at some point and the process is easier, quicker, and likely less expensive if done now versus later.
5) Plan For Long-Term Care
Depending on the age of your parents, they might be too old to obtain long-term care insurance. If so, there are a few different options to prepare your parent(s) for potential future long-term care needs. Since Medicare and other insurance coverages do not pay for long-term care needs, paying for this coverage can become a significant financial burden to the family. We often recommend that parents hedge their long-term care costs via the sale the of their primary homestead. Once your parents reach the point of needing this type of care, it is unlikely that they will be able to return home and live on their own.
6) Help Them Avoid Financial Scams
Unfortunately, financial scams at the expense of the elderly are increasing each year. Educate your parents about these schemes and always remind them to transact with reliable sources only. They should never share their personal financial information with anyone over the phone. You should keep track of their spending habits and make sure you are notified of any purchases that are not “normal.”
We Are Here To Help
Our team specializes in planning for retirement and post-retirement issues. We are here to encourage and help you care for your aging parents. If you have questions about any of these complex subjects, please give us a call. We are here to help.
About The Author
Matt Price serves as a Partner and Senior Vice President for The Price Group of Steward Partners. He resides in Houston with his wife, Emily, their two daughters and the family golden retriever. Matt studied at the University of Pennsylvania – Wharton School of Business for his Certified Investment Management Analyst (CIMA®) designation after receiving his undergraduate degree from the University of Tennessee - Knoxville. Over the past 9 years, Matt has helped families make high quality, common sense decisions regarding their wealth and their legacy. Matt firmly believes that everyone needs a wealth coach!