Watching your parents age is never easy. While you may prefer to remember them as the healthy, strong and vibrant individuals they were for most of their life, you may end up watching in real time as their strength, stamina or even cognitive ability begins to fade.
Very often, it’s clear when an elderly parent is transitioning into the final years of their life. They may have a diagnosis from a doctor that says they only have a certain amount of time left. Or their physical or mental capabilities may be on a steady decline.
If your parents have entered this phase, your mind may be squarely focused on their health and well-being. Financial and estate planning concerns could be the furthest things from your mind.
However, it’s important for your parent to take final planning steps before it’s too late. If they enter a state of incapacitation, there may not be anything you or anyone else can do to change any planning mistakes your parent may have made. Incapacitation is the physical or cognitive inability to make or communicate decisions. It can impact everything from health care to financial management to estate distribution.
Below are three planning steps to discuss with your parent. If they’re facing declining health or a terminal diagnosis, they may want to consider these issues sooner rather than later.
Health Care Wishes
Your parent may have very strong feelings about how they want to be treated. However, if they don’t implement the right type of planning, it may be impossible for care providers to honor their wishes.
One effective tool is a living will. This document states explicitly which lifesaving methods your parent does and does not want doctors to use. For instance, your parent may state that they do not want to be resuscitated if it means they’ll be dependent on a breathing machine. The doctors will have this document on file and can review it before taking action.
Another helpful tool is a health care power of attorney. It lets your parent designate someone as their decision-maker should they become incapacitated. The decision-maker handles all communications and discussions with doctors. Ideally, your parent will have a lengthy discussion with the decision-maker in advance about their wishes.
Even if your parent becomes incapacitated, their financial obligations won’t be placed on pause. They will still have bills due, investment decisions to make, withdrawals to take from accounts and many other transactions that have to be managed.
A durable power-of-attorney document lets your parent designate a financial decision-maker similar to the health care power of attorney. That decision-maker can take withdrawals from accounts, make investment decisions, apply for loans, pay bills and implement any other transactions that your parent could do for himself or herself.
Another option is a trust. Your parent could retitle assets to be placed in the trust. They could then appoint themselves trustee and name a friend, loved one or adviser as the successor trustee. Should your parent become incapacitated, the successor trustee would take over management of all trust assets.
Finally, now may be a good time to have your parent review their beneficiary designations. Many assets are governed by specific beneficiary designations rather than by the will or trust. These assets include life insurance, annuities, IRAs, 401(k)s and more.
Beneficiary designations usually are final. They are rarely changed postmortem by the administrative company or a court. That means if your parent has inadvertently left someone off or kept an inappropriate person on as beneficiary, there is little that can be done to change it after his or her death.
This is especially important if your parent has gone through major life changes. Often, people will forget to take a spouse off of a policy after divorce. Or they may have a falling out with a child, remove the child and then forget to add them back on after reconnecting later. Ask your parent to take the time to check all of these designations.
Do you and your parent need planning help during this difficult time? We’re happy to help you and your parent analyze your needs and develop a strategy. Let’s connect today and start the conversation.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
16164 - 2016/10/18
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