The thought of a parent approaching the end of his/her life is often a disconcerting one. Discussing it can be difficult for all involved: children must struggle to find the best ways to bring up the subject, while aging parents begin to feel their independence threatened, if not already slipping away.
While the conversation can be an uncomfortable one to start, it’s in everyone’s best interest to have it. Knowing what topics to discuss and what information needs to be gathered can make the discussion more comfortable.
If you anticipate needing to talk to your parent about his/her future, the following are helpful points to think about beforehand.
First, it is important to discuss whether your parents have important legal documents in place, including a Healthcare Power of Attorney, a Durable Financial Power of Attorney, and an Estate Plan, which often includes a Trust and a Last Will and Testament. It is important to determine whether an aging parent has executed these documents, because the window to do so will be lost if and when a physician determines that an aging parent is no longer mentally competent.
Unfortunately, without these documents, you can find yourself in probate court trying to become a guardian and/or conservator while your aging parent is living, and you can find yourself there again trying to determine how to handle your aging parent’s estate once he/she has passed. For these reasons, it is imperative to encourage aging parents to plan and execute these documents with an attorney if they have not already done so.
If your parents have executed an estate plan, it is important that those whom they have selected to serve as their agents know where the documents can be found.
Finally, if your aging parent has a trust, it is imperative to ensure that the trust is properly and completely “funded” so that all appropriate assets will flow through the trust and avoid probate court.
Next, it is important to work with your aging parents to understand what their desires are for healthcare and for finances. For healthcare, a first step is often determining whether an aging parent wants to live on his/her own, and whether that is a possibility.
Based upon the answers to those two questions, you can then determine together whether your aging parent can remain in his/her own home, whether he/she can live with relatives, or whether a nursing home is most appropriate.
If remaining in his/her home, or moving in with relatives, other provisions must be considered. Will the house require any remodeling to accommodate the aging parent’s needs? If moving in with relatives, can that relative claim the aging parent as a dependent for income tax purposes?
If your parent desires to move into a new home, there may be other considerations to take into account, such as a hefty security deposit or a substantial contractual agreement, both of which can tie up a parent’s liquid assets.
At this point, a discussion about finances and healthcare come into play. What medical insurance do your parents have besides Medicare, if any? What is covered on their health insurance? Do your parents have assets set aside to pay for care in their home, if that is their preference?
A discussion about whether your aging parents have purchased long-term care insurance also is appropriate. If they have not, it is a good idea to consider whether to purchase this insurance coverage.
While on the topic of finances, it is important to work with aging parents to understand their financial goals, their income sources, their monthly debts and expenses, and financial logistics. This includes where they keep their financial records (tax returns, where their bank and brokerage accounts are maintained, whether they bank online) and where you can find their login information, and whether they have a financial planner, a CPA, and/or an attorney.
Without these in place, the parties must go to probate court to contest guardianship and conservatorship once the parents lose mental cognition. Adding to the stress are filing fees, inventory fees, and attorney fees, and the court could ultimately still be able to decide for the parents who would make their medical decisions.
By having agents named under a durable power of attorney and healthcare power of attorney, your parents are choosing their own health and financial advocates — and, subsequently, choosing not to waste time and money at probate court, where they are opening up their own personal affairs for all to see.
Just as you would want for your health and well-being, your parents should have proper healthcare coverage in order to be protected from the worst-case health scenarios. You should have a protocol in place that includes knowing who the medical biller is, what’s covered and whether more options should be in place.
It is important to ensure a full Medicare plan with all parts, including prescription coverage is in place, as no one wants to be stuck with a $500 fee for prescriptions. Perhaps a tandem insurance coverage plan that covers additional matters should be established.
Long-term care insurance covers nursing care (at a home or facility) and ongoing medical services, which will be helpful to you, the fiduciary, as you won’t have to be burdened with taking daily care of your parents directly.
However, there are those who choose to have in-home care, so it’s important to make sure the long-term care insurance plan has options for this kind of coverage. If it doesn’t, or your parents don’t have a long-term care plan, it can typically cost $20-$25 an hour for someone to do basic in-home assisting (such household chores and errands) that doesn’t include healthcare-related matters.
Look into whether your parents have assets in place, such as separate bank accounts or other liquid investments, that can pay for this kind of care. Otherwise, once your parents get cash-strapped, these costs can fall on you and your siblings.
Fiduciaries shouldn’t find out too late what their parents’ monthly debts and expenses are. With proper communication and knowing where your parents’ financial trails begin, you’ll have a better chance of making sure they don’t lead where they shouldn’t. This involves knowing:
As you assist your parents with their financial and healthcare matters, you should always bear in mind that your role is to help your parents and not take over their affairs. It is your parents’ desires and intentions that control for as long as they are medically capable of understanding their affairs and providing direction. If you overstep those bounds, you are potentially engaging in undue influence, which may land you in court.
So, be certain to regularly ask yourself and your parents if they are the ones directing their affairs and continuously inform your siblings of how you are assisting them and what matters you are addressing you with your parents.
It’s not easy to step into your parents’ affairs as they reach their twilight years, and this checklist poses scenarios that are hard to think about. But it’s important to take stock of the estate plan they have in place now before, say, a court intervenes with its own plan.
With more than 20 years’ experience in estate planning, probate, trusts, and living wills, David B. Mammel at Chapman Law Group can provide the answers you need to navigate legal matters involving your parents’ end-of-life years. Call David at (248) 644-6326.
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