For the first two decades or so of your life, your parents were there to help and guide you. From your first steps to buying your first home, their care and experience has shaped who you are. As the years go by, the people you once relied on for everything now rely on you for many things. They need you to carry boxes and help them read fine print. The roles have reversed, which can leave you responsible for your parents or the estate they leave behind.
Watching your parents age can be difficult at times, but having a plan in place can take a lot of weight off your shoulders in an especially stressful transition. Let’s discuss some legal and financial considerations where advanced planning can make a world of difference for everyone involved.
1. Get That Will in Place!
How many times have you heard a story in the news about a celebrity who died without a will and left their relatives and business partners with a raucous legal battle? Case in point: Almost 40 years after his death, the family of Jimi Hendrix was still going to court to fight it out.
While you may consider your family above such squabbles, it’s better not to test that assumption. You never know how large amounts of money will affect people and their behavior. It is important for your parents to have a will that spells out their final wishes, including who will carry out those wishes as the executor of their estate.
This is especially important in situations with blended families. It’s all too common for someone to neglect to update their will and leave an ex-wife or ex-husband as the sole inheritor or executor of an estate. Not only do your parents need a will, but they also need to make sure it is updated to reflect their current situation and desired legacy.
The importance of double-checking beneficiary designations goes beyond just a will. Make sure your parents have gone through all of their accounts, including life insurance policies, retirement accounts, and other savings and verified that their listed beneficiaries are correct.
2. Start the Long-Term Care Conversation
If your parents are over 65, there’s a 70% chance they’ll need some sort of long-term care services in their lifetime. (1) That’s a high possibility that should be taken seriously.
Your whole family needs to come together to develop a plan for caring for your parents when the time comes. Discuss topics such as: Who will provide care for them? Who will pay for the care? Does it make sense for them to purchase long-term care insurance?
All too often, the most responsible or local son or daughter ends up shouldering the entire burden. This leads to burnout and resentment toward the other siblings. Save your family the trouble and proactively come up with a plan that everyone can agree on.
3. Assign Roles and Responsibilities
One in nine people age 65 and older have Alzheimer’s. (2) There’s a chance that a time will come when at least one of your parents is no longer able to make decisions for himself or herself. Who is going to make decisions for them at that point, both financial and medical?
While this can be an uncomfortable conversation, don’t avoid it. This is something you need to discuss with your parents and get the proper legal documents in place before they become incapacitated. Having simple powers of attorney written up will save you the trouble of going to court to request the right to help your parents when they need it most. And if your parents are comfortable with it, it would be a good idea to have one or more of their kids added to a bill-paying account. This way, if an emergency situation arises, they can access cash reserves to pay bills and debt payments immediately instead of waiting for assets to be released or legal documents to be enacted.
4. Invest in Your Relationship
While it is important to have all of the proper legal documents in place and have a plan for how to take care of your parents when they can no longer take care of themselves, for most people, their biggest regret is simply that they didn’t make the most of their time with their parents.
We all know that our time here on earth is limited, so we need to spend it investing in those we love. As you watch your parents age, it’s a visual reminder that your time with them is coming to an end. Consider creating a routine to make sure you spend time with them frequently while you still can. Can you make a standing date for breakfast on Fridays or a phone call on Sunday afternoons? Carving time out of your busy schedule for your parents is one of the very best ways to prepare for these final years of their lives.
5. Enlist the Help of a Professional
Writing a will, planning care, and making these critical decisions, especially with all the emotions involved, can feel overwhelming, to put it mildly. And sometimes parents aren’t receptive to these difficult conversations with their children, the kids who at one time needed them to take care of their every need.
In sensitive situations like these, it can be incredibly beneficial to work with an experienced financial professional, someone who knows the ins and outs of latter-year planning and can be a neutral third party in emotional family discussions. At Anderson Financial Strategies, we are dedicated to supporting, educating, and providing informed direction to each and every client. If you would like help planning for your parents’ future, please call us at 855-237-4545 to schedule an executive briefing to discuss your goals.
Shon Anderson is president and chief wealth strategist at Anderson Financial Strategies, LLC with over 15 years of experience. As a fiduciary, Shon’s mission is to provide his clients with quality financial expertise along with rapidly responsive service through an honest relationship. He specializes in providing family office-style services to help his clients organize and focus their financial life. Shon graduated from Wright State University with a bachelor’s degree in financial services and an MBA in finance. He is a CERTIFIED FINANCIAL PLANNER™ (CFP®) practitioner and holds the Chartered Financial Analyst (CFA®) designation. His insights have been quoted in leading financial news publications such as CNBC, Yahoo Finance, Fox Business, Consumer Reports, Forbes, Bankrate.com, Investment News, and Kiplinger. Shon serves as an adjunct professor teaching personal finance courses at Wright State University, leads CFP® exam review courses for Keir Educational Resources, and is president of the CFA Society Dayton. Shon and his wife, Jessica, reside in Sugarcreek Township, Ohio, and are blessed with triplet daughters, Elizabeth, Bridgette, and Alexandra, along with their son, Jacob, and dog, Jack. Over the years, Shon has been involved in several volunteer organizations including the Wright State chapter of Delta Tau Delta as an alumni adviser and was a Big Brother in the Big Brothers/Big Sisters program. To learn more about Shon, connect with him on LinkedIn.