The Conversation…

No, not that one. But for many it may rank up there with the dreaded birds and bees talk. Whereas one might make you squeamish, the other forces us to confront some realities we’d rather ignore: aging and its implications. Just like the birds and the bees, parents and children both shy away from talking about a future where children become the caregivers, or the parents are no longer with us.

But until we find the fountain of youth, it is an inevitability we all need to face. Our parents are independent adults, but situations can (and will) arise when they are no longer able to manage without assistance. Their needs may range from minor help around the house to requiring 24-hour care, management of their finances, or medical oversight. The scenarios are diverse.

There are numerous topics that families should cover to prepare for a multitude of eventualities. One thing is certain though: having important conversations and planning ahead of a crisis will mitigate future pain and tension and ease the process for all concerned. And a little forethought helps ensure that parents’ wishes and interests will be considered and honored. Because no one wants to try to figure out the rules when the game is halfway done!

Dip A Toe In

When it is time to take the plunge, start the initial conversation slowly. Try to find some sort of story or shared experience that can make the more personal conversation a natural progression. Don’t expect to get through everything or to receive all the answers in one go. It will be a process. Most importantly, avoid judgment, have an open mind, ensure that the lines of communication are open and keep your eye on the prize: ensuring your parents’ wishes are known and planned for.

Once the conversation has begun, there are four overarching themes to address: legal, lifestyle, financial, and what I will call the who and what of it all.

Assemble Legal Documentation

A good place to start is with the estate plan. An estate plan sets out how an individual would like their assets to be treated, managed, and disbursed after death. It includes management of properties and financial commitments should that person become incapacitated. An estate plan can and should be considered by everyone.

Pull together existing legal documents and aim to assemble a complete legal folder. It can feel overwhelming, but there are experts to help you. An estate planning attorney is an excellent resource to walk you through the process, as well as advise on, and draft, the necessary documents that fit your circumstances. If you need a referral, your Financial Advisor is a great place to start.

Listed below are some recommended legal documents:

Wills

• A Will, more formally known as a Last Will and Testament, is a legal document that specifically sets out how a person’s assets are meant to be distributed.
• A will takes effect after you die.
•  A will may be specific about items, quantities, and timing.
• Wills typically go through probate and distribution of assets is public.
• If a person dies without a will (intestate), they lose control of how their assets are distributed. Decisions are then left to judges or state officials. This can be costly and create delays as well as family friction.

Trusts

• A trust is a legal entity. The trust creator puts assets in the trust account and authorizes a trustee to administer those assets for the benefit of the trust creator or beneficiaries.
• There are many types of trusts. They can be established to provide legal protection for the trustor’s assets to ensure they are distributed according to their wishes.
• Trusts, unlike a will, can also take care of your assets while you are alive.
• Additionally, trusts can save time, reduce paperwork, and sometimes reduce inheritance or estate taxes.
• Trusts are not as common as some of the other documents listed but they are an important tool.
• If a Trust exists it must be funded to be effective.

Power of Attorney (POA)

• A POA identifies a person to act on your behalf when you are unable to do so. POAs can be used generally or for specific instances, like closing on a real estate transaction.
• A durable power of attorney authorizes an agent to handle financial and legal matters. They allow the authorized agent to manage bills, bank accounts, investments, apply for government benefits, negotiate with creditors, and file tax returns.
• The purpose of a durable POA is to plan for medical emergencies, cognitive decline later in life, or other situations where you’re no longer capable of making sound decisions.
• If you don’t have a general durable power of attorney, your family may be forced to go to court and have you declared incompetent before they can take care of your finances for you, which could be a very traumatic and painful situation.
• Note that the Treasury Department does not recognize a POA for negotiating Social Security or SSI checks. SSA requires an appointed Representative Payee.

HIPAA Authorization

• A HIPAA form provides doctors with the authorization to share medical and billing information with approved parties.
• It ensures the people designated to make medical decisions can communicate with your healthcare providers about your condition, treatment, and prognosis.
• Without written authorization, doctors cannot update your family members.

Medical Power of Attorney

• The Medical POA appoints an agent to handle specific healthcare decisions on your behalf.
• HIPAA gives the caregiver access to information, but the medical POA also allows an agent to make medical decisions if you become incapacitated.

Living Will or Advance Care Directive

• The Living Will gives you the opportunity to establish your wishes for emergency and end-of-life care before a crisis.
• This includes treatments that would aim to prolong your life if you’re terminally ill or permanently unconscious with no hope of recovery.
• The Living Will only comes into play if you’re unable to communicate your wishes yourself.
• A Living Will means your family doesn’t have to guess or argue about what you want.

Medicare Authorized Representative

• An Authorized Representative is a person chosen by a Medicare beneficiary to help with Medicare-related matters.
• The Medicare Authorized Representative can request information, handle Medicare claims and payments, and appeal Medicare coverage decisions.
• Importantly, Medicare requires a Medicare Authorization and does not accept a standard POA.

This is by no means an exhaustive list but covers some of the most critical documents for general planning purposes. Being an active participant in defining your wishes and choosing people you trust gives you more control over your interests and ensures your wishes are followed.

Understand Lifestyle Choices

When having a dialogue with your parents, this may be the most challenging topic to tackle. It can trigger some of the strongest feelings and biases. Try asking open-ended questions and make sure to listen. You want to understand where your parents are coming from.

What are your parents thinking about where they want to live as they age? Have they thought about downsizing or expressed an interest in single level living? Where would they move? Are they imagining a condo, retirement community, or something else? Have they considered senior living options? If they want to remain in the family home, will it require modifications? Or are they hoping to live with their children? Discuss the pros and cons of the various care options. Explore the kind of care they may need and where it will be sourced.

If they have a defined plan in place, does it include options for different stages of need? Does their current plan work for each parent should they find they are a lone surviving spouse? These are likely the most painful questions to have to answer, but knowing the answers and your parents’ wishes helps ensure the best outcome no matter the circumstances.

Once you have a good sense of what is known and where gaps exist, you can work together to research, fill the holes, and establish a plan together. Make sure everyone has all the pertinent information. Try to include the whole family when possible.

The Financial Picture

This is important on two levels. First, understanding your parents’ financial situation and funding sources will let you know whether they can meet the demands of their plan. Second, from a succession perspective, it is important to understand all the assets and liabilities of their estate and confirm everything is up to date.

There are some obvious items to review, such as checking, savings and investment accounts. You will also want Social Security, annuity, and insurance statements. Insurance covers not only life insurance, but home, auto, medical, and long-term care coverage. Next, make certain everything is properly and consistently titled. Are there beneficiary designations for retirement and insurance accounts and are they up to date?

Do your parents own multiple properties? Are there mortgages? Do one or both parents own a business? Is there a succession plan in place? And lastly, what other outstanding debts do they have?

Crucially, once you have collected all the information and discussed their plans, it is important to understand if their balance sheet can support them and for how long. Ask to meet their financial advisor to gain a better understanding of their strategy and whether it is still appropriate given their evolving needs.

The Who’s Who

Now that we have our estate plan, financial plan, and lifestyle plan in place, let’s get through some administrative who’s who. To be as effective and helpful as possible, you need to know who the players are, why they are there and what they are addressing.

Below is a list of who and what you need to know:

• List of various doctors and their contact information
• Healthcare details
  • List of medications and purpose
  • Diagnoses with brief descriptions
  • Note any allergies
• List of contacts for insurance contracts
• List of contacts for financial accounts
• Trusted Advisor contacts
  • Financial Advisor
  • CPA
  • Attorney

Arrange an introduction to trusted contacts and, at a minimum, the primary care physician. Go to a meeting or appointment. It is important to have some connection and familiarity with these contacts before you absolutely need them.

Before I conclude, there is one more crucial item to focus on: the funeral. Do your parents have a resting place planned for their burial or ashes? If not, do they have a specific location in mind? Do they want to be cremated? Is there money allocated for this? Do they have specific directions for how they want their life celebration to be carried out?

There is a lot of information you need to know, and important documents you want to make sure your parents have in place for every stage as they age. And don’t forget to ensure updates are made when necessary. While it may seem daunting, the more you prepare in advance, through an open dialogue, the easier it will be when decisions and actions are required. And though these can be difficult conversations to initiate, they can also provide your parents with positive feelings of control and serenity as they look toward their later years. After all, by having these discussions, you are enabling your parents to help take the reins and be active participants in their future planning.

About the Author
Jennifer Scher, CFP®
Jennifer is a Certified Financial Planner™ practitioner and comes to FBB with over 15 years of experience in financial services and business development. Jennifer has a passion for guiding clients as their goals and needs evolve with life’s changes. She is committed to helping her clients achieve their objectives so they can enjoy the lives they envision. Jennifer began her career in institutional sales and project management at Morgan Stanley in New York. This was followed by a post working on the international portfolio trading desk with Goldman Sachs. Her most recent Wall Street role was in transition management with JPMorgan. Jennifer is a native of Washington, DC, and holds a Bachelor of Arts Degree from Wesleyan University and a Master of International Business from the University of South Carolina MIBS program. When not at work Jennifer enjoys spending time with her daughter, camping, traveling, and enjoying life.