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Having “The Talk” with Aging Parents

Caring for an aging parent is a mixed blessing for adult children. They know they are lucky to have their parents with them.; However, watching parents age and endure the challenges of aging can be heartbreaking. Even in the best circumstances, loss of hearing, vision, agility, and overall health is sad to witness.

Conversations with parents about aging may be difficult, especially if the family is not accustomed to talking candidly about money, illness, or death. However, there are matters to address which, if ignored, can turn their later years into a daily crisis struggle of conflict and paperwork.

Estate Planning Basics for Aging Parents

If parents do not have a Last Will and Testament, a General Durable Power of Attorney, and an Advance Health Care Directive, now is the time to create these essential documents. While assets having a surviving joint owner or a designated beneficiary are not subject to probate, other assets are. Without a Last Will, the state will determine who inherits such assets. This can include assets ranging from real estate to tangible personal belongings and everything in between. Without a Will, the estate must be probated, which means settling debts, taxes, and expenses and making inheritance distributions will be overseen entirely by a court. All documents become part of the public record. On the other hand, having a Last Will, even if there are few assets, will allow parents to control which of their loved ones inherits their “probate” assets.

Trusts are a popular way to administer assets without probate, particularly if keeping “family matters” and assets private is important. When a Trust is created, assets are then titled in the name of the Trust and are managed by the Trustee. Depending on the type of Trust created, there may be tax benefits, and assets can be passed to the next generation far more efficiently. If the Trust continues to administer the assets long-term for ones once inherited, there may be significant creditor protection available. For example, a Trust may protect the inheritance from a divorce, lawsuit, or bankruptcy. In addition, a Trust can keep the inheritance in the direct family line of your parents.

Two Kinds of Power of Attorney are Needed

Having a General, Durable Power of Attorney for aging parents prevents significant problems. For example, what happens when parents need a family member to step in and run their financial affairs? This document gives an “attorney in fact” (commonly a trusted family member) legal authority to pay bills, file tax returns and make day-to-day financial decisions. Without it, the family will be required to petition the court to assign a guardian, an expensive and time-consuming process. With an “immediate” General Durable Power of Attorney, the attorney, in fact, has the authority to act the moment it is signed. Alternatively, with a “springing” General Durable Power of Attorney, they have authority only when the parent is deemed “incapacitated,” as defined in the document.

A Durable Power of Attorney for Health Care Decisions, also known as a Healthcare Proxy, is part of the Advance Health Care Directive. The terminology varies somewhat from state to state. This document is equally important as the General Durable Power of Attorney. A Durable Power of Attorney for Health Care Decisions allows a spouse or other person to be appointed healthcare agent. The agent may make medical decisions and speak with healthcare providers in this role. A HIPAA Release is also needed, so the healthcare agent may access the parent’s medical records and talk to the health insurance company.

Planning for End-of-Life Decisions

This is the hardest discussion for children to have with loving parents, and with good reason. No one wants to contemplate their death. However, without this conversation and the legal documents to support it, the parent may be placed or taken off of life support too soon or too late! To help make these decisions clear now so they will be honored later, a Health Care Treatment Directive or Living Will must be included as part of the Advance Health Care Direction planning. Beyond that, parents and their children also need to discuss “final arrangements,” including burial or cremation and the type of funeral or memorial service they want. This is especially necessary if the family includes a difficult sibling or another family member who could torpedo the process. These decisions and instructions should be reduced to writing.

Peace of Mind Arises from Planning

An estate plan in place during the later years of life creates peace of mind for aging parents and their adult children. When it is time for important decisions to be made thoughtfully, as memorialized through a carefully prepared estate plan, the family can set aside and get back to enjoying life together.