By Kevin Roberts
If you are getting closer to retirement age, you have probably started thinking about potential details and decisions, possibly even planning for the many milestones you reach along the way. And while it’s critically important to have all your ducks in a row, have you given any thought to your parents’ financial situation?
It’s often a shocking moment when you realize your parents, who taught you much of what you know and guided you to responsible adulthood, now need your help. There is a point in adulthood where roles reverse and, sooner or later, you will either be responsible for your parents or the estate they leave behind. At this pivotal juncture, you realize that the negative consequences of not having things in order will fall on you, not them.
Even if your parents are currently mentally and physically capable, it is time for you to step in and make sure they are prepared for the latter years of their lives. Here are some legal and financial considerations where advanced planning can make a world of difference for everyone involved.
Have An Updated Will
There is always some story in the news about a celebrity who has died without a will and the raucous legal battle that ensues as their relatives and business partners vie for a piece of their estate. 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 clearly spells out their final wishes, including who will carry out those wishes as the executor of their estate.
This is especially important in situations that involve blended families. It’s all too common for a will to never be updated and leave an ex-wife 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.
Develop A Long-Term Care Plan
If your mom is over 65, there’s a 58% chance that she will need long-term care at some point, possibly around 2½ years of care. For your dad, there’s a 47% chance that he will need long-term care. (1) Those numbers are high and need to be taken seriously.
Your whole family needs to come together to develop a plan for caring for your parents in old age. 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 only 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 be proactive to come up with a plan that everyone can agree on.
Plan For Incapacitation
One-third of Americans over age 85 have Alzheimer’s disease. (2) There’s a good 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 power of attorneys written up will save you the trouble of going to court to request the right to help your parents when they need it most.
Appreciate The Time You Have
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 at the end is simply that they didn’t have more time with their parents.
We all know that our time here on earth is limited, so we need to make the most of it. As you watch your parents age, it is 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 on a regular basis 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.
You’re Not Alone
It can be overwhelming to think of writing a will, planning care, and making all these decisions, especially with the many emotions involved. Sometimes parents aren’t receptive to these discussions with their kids, those who at one time used to spit up on them and needed them to take care of their every need.
In these situations, it can be very helpful 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. We at Roberts CPA Group and Lifetime Wealth Design are here for you. If you would like help planning for your parents future, schedule your free consultation online!
Kevin Roberts is a CPA and CFP® specializing in providing virtual CFO services to individuals, families, small businesses, and professionals in the medical, professional service, and restaurant industries. He has more than 20 years of experience in accounting and taxes, and more than seven years in the financial services industry. Regardless of the services he provides, Kevin strives to offer clients confidence knowing that their financial aspects are being addressed and monitored by professional and competent individuals. Based in Louisville, he works with individuals, families, and businesses throughout Kentucky. Learn more by connecting with Kevin on LinkedIn or emailing firstname.lastname@example.org.