Initiating the conversation with your parents about their care and senior estate planning needs can be an emotional process. But your parents (and you) will be much better off in the long run if you put effort into having these difficult discussions.
According to a recent Merrill Lynch report in partnership with Age Wave, only about half of people aged 55 and older have wills. Furthermore, only 18% have the three primary estate planning documents: a will, health care proxy, and power of attorney.
Helping your elderly parents create an estate plan is one of the best ways to help secure their future — which is why we created this guide to help bring clarity to the process.
Where to begin with estate planning for elderly parents
Let’s say you’re middle-aged and your 80-year old parent has yet to create a will, power of attorney, or other pertinent estate plan documents. In this case, you may have to take charge to help protect your parent and their legacy. So, where do you begin?
Don’t delay the conversation
According to a survey from Brookdale Senior Living, 30% of Americans say they are unsure if their parents have an estate plan, and another 40% say they are clueless about what’s in their parent's will. Though it can be challenging to bring up this subject with your parents, being aware of your parent’s financial situation makes it easier for you to offer help if and when needed.
When it comes to estate planning discussions, it’s best to be proactive versus reactive — you don’t want to wait for your parent’s health to decline or a crisis. Just think about how much better you will feel once you sit down with your parents and get everything out in the open.
Involve the family
It’s a good idea to involve your siblings and other relatives in these conversations to avoid future conflict or miscommunication. Bringing transparency to the process will keep everyone on good terms and decrease the likelihood of a family member contesting the will. Not to mention, involving family provides more support for your parent and helps ease the burden on one person.
Lead with sensitivity
The conversation may bring up uncomfortable emotions for you and your parents — leading with sensitivity and respect is key. Be sure to approach the conversation gently and empathetically, so your parent knows you have their best interest at heart.
Ensure protections for the surviving spouse
Another way to help care for your elderly parents is to ensure the surviving spouse is taken care of if one of them passes away. One way to achieve this is for your parents to set up a trust and name one or more responsible children as the trustees during the parents’ lifetime.
Check-in with your elderly parents
Staying in close contact with aging parents is vital. If you have ongoing communication with them, you are more likely to be kept informed on matters that could affect your parent's well-being or their estate.
Review financial statements
The elderly are particularly vulnerable to financial scams, which is why it’s vital to review your parent's finances with them regularly. When reviewing the statements, be on the lookout for signs of fraud, such as unusual transactions.
Keep important information organized
It’s crucial to help your aging parents stay organized with their essential legal, financial and medical paperwork. Help them create a system that tracks their information via a secure digital vault or a physical binder or folder.
Be sure to organize the following information:
- Doctor’s names and contact details
- List of their medications
- Bank accounts checking and savings
- Retirement accounts
- Brokerage accounts
- Contact details of their lawyers and financial advisors
- Usernames and passwords for all of their accounts
Getting this information organized will make your parents' lives easier and help ensure a smooth estate settlement process down the road.
What estate plan documents does your parent need?
There are several important estate planning documents for your parents to consider. If they are reluctant to create certain documents, try to have them complete the documents related to their healthcare, such as a health care power of attorney, living will, and HIPAA authorization.
- Healthcare Durable Power of Attorney: The person your parent names as their healthcare power of attorney will be responsible for making medical-related decisions if they are incapacitated. These could be decisions related to treatment options, medications, and end-of-life care.
- Living Will: A living will shouldn’t be confused with a last will and testament since they are two separate documents. A living will gives your parent the ability to outline specific end-of-life wishes, such as remaining on life support and organ donation.
- HIPAA Authorization: Your parent should fill out a HIPAA authorization to give someone permission to access their personal health-related information. If your parent has an accident or falls ill, you want to help make timely decisions regarding their care — and you will need access to their medical information to do so.
- Last Will & Testament: An essential legal instrument is the last will & testament. This is where your parent can detail the specifics of their final wishes regarding their wealth, including cash, property, and any other assets.
- Trusts: If your parents have high-value personal assets or real estate, they may want to consider establishing a trust to help avoid a lengthy and costly probate process. Trusts are a good option if your parent wants more control over the distribution of their estate.
- General Durable Power of Attorney (GDPOA): A GDPOA authorizes an individual or number of individuals to act on your parent's behalf in a wide range of matters such as financial and legal. Questions for your parents to consider before filling out their GDPOA are the following.
- Should they appoint their spouse as the first agent?
- Who should they name as the alternate agent?
- Should they designate more than one agent (co-agents?).
It’s a good idea to take your parents’ GDPOA to their financial institutions ahead of time to ensure the banks and brokerage firms will honor your parent’s GDPOAs.
If you are their health care power of attorney, be sure to bring your elderly parents’ legal documents to the doctor when you take them so that the health care provider is comfortable discussing your parents’ treatment decisions with you.
Your aging parents may need more help in the years to come, so it’s crucial to be proactive. Helping your parent create an estate plan, organize their financial information, and provide ongoing support will ensure they have the golden years they deserve.