How to Discuss Estate Planning for Aging Parents

August 24th, 2016

We have been through numerous awkward and uncomfortable discussions with our parents while growing up, ranging from studies, love interests and career. As an adult, you will find yourself amidst another tricky discussion; this time however, it will be about securing your aging parents’ interests, assets and ensuring that they are financially stable through their retirement.

8 Essential Things to Know When Estate Planning for Aging Parents

1. Getting started

Ask what kind of insurance they have, if they have done estate planning, about their actual income and expenses. If you are uncomfortable asking these questions alone, include close family members and consult with them.

2. Understanding Retirement savings

Understand all about retirement savings yourself before you broach this topic. Calculate how much savings your parents would need to lead a comfortable life as retirees. Once you understand the retirement saving principles and your parents’ portfolio of income, monthly expenses, assets, debts etc., you can gauge if they have planned their retirement properly or not.

3. Discuss issues about frailty

When you discuss estate planning with your parents, include scenarios of what has to be done in case of health issues like heart attack, stroke etc. It is also crucial to include health problems created by the deterioration of cognition or ability. Assess whether the house needs to be modified to promote their easy movement around the house and check if there are finances to support those modifications.

4. Expecting serious circumstances

Discuss with them who would be the given the power of attorney in case their health takes a serious toll, resulting in their inability to take decisions or other circumstances that may hinder with their ability to make sound medical and legal decisions. Your parents should be able to mentally make decisions on their own at the time of establishing the power of attorney rights.

5. Money for a caregiver

If your parents are living on their own and have trouble getting their daily chores done, you might want to consider hiring a caregiver if family members aren’t enough. Look into home health care costs, compare costs of different facilities available such as daily care or occasional visits etc. Determine if these services are essential; if yes, make sure there is enough money to cover these charges.

6. Nursing home complications

If your parents need to enter a nursing home, there may be complications involving estate planning. The rules may subject their assets to Medicare or Medicaid once they enter a nursing home. Having a will granting the estate to someone else won’t be valid. Discuss how you can legally protect their assets if such a situation arises. Remember that the laws are different for all states.

7. Understand what will happen to any debt they carry

Take legal advice and research well to completely understand the scenarios where debts owed by your parents are involved. The terms vary from state to state, insurance that your parents carry and to the company to which the debt is owed.

8. Do your parents have a reverse mortgage?

Reverse mortgage is when the reverse mortgage company is buying the home from your parents. They usually put strict and legally enforceable terms into the mortgage contract that may limit options or hinder with nursing home entry and Medicare. Learn the legal implications of reverse mortgage if your parents are interested in that.

It is understandable that these discussions will be uncomfortable but it’s something that needs to be done soon. Do not try to procrastinate it or, worse, avoid it altogether. Make sure your parents are protected through their golden years.