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| Role Reversal: Your Aging Parents and You |
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We all grow older, it's inevitable. Today, many individuals struggle to balance the needs of their growing family and aging parents. Since more people are living longer, more adult children find themselves assuming responsibility for aging parents. Even if your parents plan to live at a facility for active seniors, they may need help deciding when that will be and monitoring lifestyle issues until that day comes. That is when you can be of assistance in providing an objective perspective and youthful energy to accomplish the tasks that must be completed.
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Getting Started—Initiate a Dialogue
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Talking with your mom or dad about their living situation and the possible need for change is not always easy. A successful conversation depends upon the relationship you have with your parents, as well as your parent's mental, emotional, and physical condition. Many people put off serious conversations to avoid conflict or awkwardness.
Reasons to do it Now
Many individuals wince at the prospect of getting involved in their parents' money matters. However, consider the following benefits of doing so:
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It is better to talk while your parents can still have input. |
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Your parents might be unexpectedly relieved at not having to handle their affairs. |
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A child who gets involved before a parent's mental faculties deteriorate can avoid guardianship battles. |
Suggestions for Conversations With Your Parents
To the extent possible, talk with your parents gently and honestly about their wishes, their abilities, and their options. These conversations put you in a better position to make decisions later when your parent may not be able to do so.
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Share your own feelings and reassure your parent that you will support and help them. |
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Help your parent retain whatever control is possible when making his or her own decisions. Respect and try to honor their wishes wherever feasible. |
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Encourage the smallest change possible at each step so that your parent is more able to adjust to the change. |
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Educate yourself on legal, financial, and medical matters that pertain to your parent as background for your conversations. |
Respect your own needs and be honest with your parent about your time and energy limits.
Making the Conversation Non-confrontational
Getting together won't do any good unless a conversation takes place. The following phrases are non-confrontational and can help you get the ball rolling:
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"I have started to formulate plans in the event something happens to me. What about you?" Personalizing the situation and letting your parents know that you are making plans for yourself allows them to see that you are thinking about your own family. |
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"What health care measures do you want performed and who should make decisions when you can't?" Asking this question allows a discussion to begin without "money" being the primary topic. |
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"Have you put your 'final' wishes in writing?" This simple question is one of the best conversation starters. It's not about "who" or "how much," just what your parent wants to happen. |
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"What steps would you like to take to make sure mom/dad is cared for after you're gone?" This question changes the conversation from "What am I gonna get?" to "I'm concerned about mom/dad's well-being." |
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"What would you like to have happen to the (insert illiquid asset here)?" Talking about family heirlooms, rather than money, is a much better conversation starter. |
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Devising a Plan
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Taking Stock of Assets
Most parents avoid discussing money with their children. The first step is finding out what your parents have and what they need. Once you have established your parents' net worth, you should calculate future monthly income and expenses—both best-case and worst-case scenarios.
Naming Beneficiaries
It's a good bet that your parents haven't updated their wills in decades. They probably don't remember exactly who is going to get what, especially in regard to life insurance policies and retirement accounts. Double-checking wills and beneficiary designations can reveal how much their wishes may have changed over the years.
Working With a Financial Advisor
Increasingly, adult children are turning to professionals for assistance with their parent's care—especially if they live far away or if family members disagree on the parent's condition and needs. Professional help can be costly, but mistakes can cost much more financially and emotionally.
A financial advisor can help to increase income, cut taxes, reduce risk, and simplify record keeping. When evaluating needs, a financial advisor will also consider:
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Asset availability |
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Income sources |
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Expenses (present and future) |
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Financial management |
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Insurance coverage and limitations |
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Real estate needs |
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Legal concerns |
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Lifestyle interests |
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Directives for medical care |
Avoiding Probate
Probate is the court process of transferring property upon a person's death. Your parent can avoid the cost and exposure of probate by placing their assets in a living trust which can eliminate the need for probate and probate fees. They give up no control over their assets, yet can be certain that their estates are settled quickly and confidentially after they die. A living trust can also ensure their affairs are managed as intended if they become incapacitated.
Planning can make a huge difference in finding the best solutions. Knowing all of your parent's needs and resources is important before making any major financial changes. Financial decisions generally should be holistic in nature, recognizing that everyone—parents and children—all have different needs and resources, unique to their particular situation.
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Legal Considerations
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If your parent becomes mentally incapacitated, it may be necessary for you to step in to take care of their affairs. Advance planning by both you and your parent will help facilitate this process. You and your parents should discuss naming you as the power of attorney (legal representative) to conduct business like banking, signing financial documents, buying and selling investments, real estate management, and other duties.
Power of Attorney
A power of attorney is a legal instrument that is used to delegate legal authority. The person who signs (executes) a power of attorney is called the principal. The power of attorney gives legal authority to another person (called an agent) to make property, financial, and other legal decisions for the principal. The power of attorney may be general or limited, for a definite or indefinite period of time. As long as the principal remains competent they may change or end the power of attorney at any time. The power of attorney is effective only as long as the principal is competent.
Durable Power of Attorney
A durable power of attorney is important if the principal becomes incapacitated. A durable power of attorney is designed to survive disability or incompetence and is an important alternative to guardianship, conservatorship, or trusteeship. Laws vary from state to state, so it is important that a durable power of attorney be drawn up by an attorney licensed to practice in the state in which your parents reside.
Health Care Power of Attorney
Also called a medical power of attorney or health care proxy. This durable power of attorney is for health care (as opposed to financial) issues. It authorizes you or another family member to make health care decisions for your parent in the event they are unable to make such decisions for themselves. Without such a document, many health care providers and institutions will make critical decisions, not necessarily based on what your parent would want.
Advanced Directive
An advanced directive is a legal document, written in advance of an incapacitating illness, that allows your parent to state their preferences about medical care. Most states recognize two forms of advanced directives—a living will and a durable power of attorney for health care.
Living Will
Also known as a "medical directive" or "medical declaration," a living will instructs a doctor, hospital, or medical provider to administer no life-sustaining procedures if your parent is terminally ill or permanently unconscious. Being terminally ill generally means there is less than six months to live. If your parent does not want artificial nutrition or hydration, the law requires that they say so in the document. Be certain to check state laws as each state has its own limitations.
Last Will and Testament
Unlike a living will, a last will and testament or living trust deals with financial and legal issues, whereas the living will deals with health care issues. A will protects assets and helps minimize the chances of your parent's estate being contested. Without one, it is likely their estate will not be distributed as your parent would choose.
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Other Legal Considerations
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Estate Planning. If your parents have established a relationship with an estate lawyer, organize a three-way meeting. Such a meeting has benefits for both you and your parents. If the family lacks an estate lawyer, you can search for legal specialists by geographic area online by using the "lawyer locator." |
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Joint property or joint investment accounts. This is the simplest way to ensure that you or another family member will be able to handle your parent's affairs if they become unable to do so. There are, however, financial and tax consequences to such an arrangement. No one should enter into such an arrangement without checking all the legal implications with an attorney. |
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Guardianship or conservatorship. The legal mechanism by which a court declares a person incompetent and appoints a guardian. The court transfers the responsibility for managing financial affairs, living arrangements, and medical decisions to the guardian. This procedure can take some time, usually when time is a critical factor. |
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Housing Options
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Staying Put. Your parents are probably accustomed to living on their own and would like to live in their own home for as long as possible. If they do stay in their own home, they may require certain services such as:
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Home care services are available in many communities and provide appropriate, supervised personnel to help older persons with either health care (giving medications, changing dressings, etc.) or personal care (bathing, dressing, and grooming). |
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Meals and transportation are available to help retain independence. Group or home-delivered meal programs help ensure an adequate diet. |
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Adult day care is similar to child day care. The person goes to a community facility daily for two or three days per week. Activities include exercise programs, singing, guest lectures, and current events discussions. |
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Respite care brings a trained person into the home to give the full-time caregiver time off to get a haircut, visit the dentist, or take a vacation. |
If your parent remains in their own home, there are several safety features to consider. The following is a safety-tip checklist when conducting a home safety walk-through.
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Check electrical and telephone cords and safely tuck the cords out of walkways. |
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Ensure rugs, runners, and mats are secured by non-slip backing or adhesive tape. |
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Test smoke detectors. |
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Install handrails on both sides of stairways and in the bath or shower. |
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Make sure porches, hallways, and stairwells are well illuminated. |
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Clear stairs, landings, and floors of clutter. |
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Write an emergency exit plan and review it with your parent. |
Nursing Home Facilities. If your parent is not capable of independent living, a nursing home may be an option. Nursing homes offer two levels of care—skilled nursing and intermediate care—depending on your parent's needs. Some nursing homes offer both levels of care at a single site.
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Skilled nursing facilities provide 24-hour nursing services for people who have serious health care needs but do not require the intense level of care provided in a hospital. Rehabilitation services may also be provided. |
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Intermediate care facilities provide less extensive health care than skilled nursing facilities. Nursing and rehabilitation services are provided, but not on a 24-hour basis. These facilities are for people who cannot live alone, but need minimum medical assistance and help with personal and/or social care. |
Other Housing Options. There are several types of retirement communities that provide living arrangements and services to meet the needs of both independent seniors and those who need assistance. They range from full-service communities to pay-as-you-go facilities.
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Life care or continuing care communities typically provide a continuum of care from independent living to nursing home care on the premises. The individual must be independent when they enter the community. These communities generally require an entrance fee and monthly service fee. Residents usually get one meal a day in a dining room, maid service, linen service, maintenance, and transportation to shopping and cultural events, travel planning, and a pull cord to an emergency nurse. If nursing care is needed, it may be provided at no extra cost. |
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Assisted living communities are rental retirement communities for independent seniors who need some assistance. Generally they provide a homelike atmosphere, three meals a day, maid, linen, and laundry service, availability of a registered nurse, and many personal care services in an all-inclusive rent. |
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Adult congregate communities are designed for persons age 55 and older. Residents buy co-ops or condominiums and typically pay a monthly fee for grass mowing, leaf raking, and snow shoveling. A pay-as-you-go medical center is generally on site and a nurse is typically on duty 24-hours a day to make home visits in emergencies. |
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Rental retirement communities with fee-for-service nursing units may charge residents an entrance fee plus monthly rent. When the need for nursing care arises, residents may pay an extra daily fee and stay in a nursing unit, usually located on site or nearby. |
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Veterans Administration (VA) Nursing Home Care provides care to eligible veterans. Veterans with chronic conditions, including dementia, requiring rehabilitation or short-term specialized services, or those who need comfort and care at the end of life are served in VA nursing home care units. Most VA nursing home care units provide short-term, restorative, and rehabilitative care. Longer term care is available for veterans who meet eligibility criteria and/or require end of life care. Prolonged care for those who are unable to sustain placement in a community nursing home, or who lack a clinically appropriate community alternative is also available for those who qualify. The majority of VA nursing home care units are located on the campus of VA Medical Centers throughout the United States. More information is available on the web site of the U.S. Department of Veterans Affairs. |
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Paying for Health Care
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Health care costs are a major expense for most seniors and as the chart below illustrates, continue to rise faster than inflation. What cost $100 in 1993, cost $167 in 2006. What can really create financial hardship for families is when your parent needs daily care. The average annual cost for an assisted-living facility, which helps relatively healthy seniors with daily activities, such as eating and bathing, is $35,616. The average price of a private room at a nursing home is $75,190. In larger cities, nursing home costs can exceed $100,000.1
Medicare. Medicare is a Federal health insurance program which helps defray many of the medical expenses of most Americans over age of 65. Medicare has four parts:
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(Part A) Hospital Insurance helps pay the cost of inpatient hospital care. The number of hospital days Medicare pays is governed by a system based upon patient diagnosis and medical necessity for hospital care. Medicare does not pay for custodial care or nursing home care. It will, however, cover up to 60 days in a nursing home as part of convalescence after hospitalization. |
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(Part B) Medical Insurance pays for many medically necessary doctors' services, outpatient services, and some other medical services. Participants pay a monthly premium. |
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(Part C) Medicare Advantage pays for services of Medicare managed care plans (MMO, PPO, or PFFS). |
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(Part D) Prescription Drug Program provides prescription coverage to everyone with Medicare, regardless of income, health status, or how an individual pays for prescription drugs today. |
Medicaid. The Medicaid program provides medical benefits for people with low income, few or no resources, or no or inadequate medical insurance. Although the Federal government establishes general guidelines for the program, the Medicaid program requirements are actually established by each state. Whether or not a person is eligible for Medicaid will depend on the state where he or she lives.
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Other Insurance
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Employer Insurance. Some companies provide health care insurance to retirees. If your parent is retired, check with their prior employer's human resources department to see what is available.
Medigap. Medigap is privately purchased supplemental health insurance. It is designed to help cover some of the gaps in Medicare coverage, but does not cover long-term care. Purchasing additional insurance allows the policy holder access to a greater choice of facilities without dipping into personal financial resources.
Supplemental Health Insurance. Supplemental health insurance pays a cash benefit to the insured. The amount of cash and how it is paid out depends on the supplemental health insurance plan or policy. Some popular supplemental health insurance policies are specific disease insurance, such as for cancer, accidental death and dismemberment insurance or accident health insurance, and hospital indemnity insurance.
Veterans Insurance. The Department of Veteran Affairs state, and local government agencies offer veterans and their families health care services. To find out if your parent is eligible, log on to the U.S. Department of Veterans Affairs web site.
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Helpful Resources
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www.aplaceformom.com—This free eldercare referral service's web site has tips on what to look for when visiting facilities. |
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www.ec-online.net—An internet community for those providing eldercare. |
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www.elderlifeplanning.com—Offers support and resources for caregivers, including information about long-term care, home health care, and insurance. The site also contains a discussion forum and a database of eldercare professionals. |
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www.familycaregiversonline.com—Features a thorough section on home safety, including fall prevention. |
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www.homeinstead.com—Offers a database of in-home care and assistance providers located throughout North America. Providers are bonded and insured, covered by workers' compensation insurance, and have passed a criminal background check. |
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National Association of Geriatric Care Managers—The goal of this nonprofit professional association of practitioners is the advancement of dignified care for the elderly and their families. |
Additional Reading
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The Complete Eldercare Planner: Where to Start, Which Questions to Ask, and How to Find Help, by Joy Loverde, Times Books, 2000. |
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The Fearless Caregiver: How to Get the Best Care for Your Loved One and Still Have a Life of Your Own, by Gary Barg, Capital Books Inc., 2001. |
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How Did I Become My Parent's Parent?, by Harriet Sarnoff Schiff, Penguin USA, 1997. |
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You and Your Aging Parent: A Family Guide to Emotional, Physical and Financial Problems, by Barbara Silverstone and Helen Kandel Hyman, Pantheon Books, 1990. |
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The preceding information has been provided for informational purposes only. Neither New York Life Investment Management nor its representatives provide legal, tax, or accounting advice. Please contact your own advisors.
Securities are distributed by NYLIFE Distributors LLC, 169 Lackawanna Avenue, Parsippany, New Jersey 07054.
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