It is essential that as your parents’ age, you have conversations with them about their finances and estate plan. To broach the topic, you might bring up current events like the coronavirus pandemic, its effect on economic conditions, and how it relates to the security of their financial future. The conversation should come from a calming place of love and concern. Speak to them respectfully about how the coronavirus pandemic has you thinking about the importance of their planning and preparedness.
Once you begin the conversation, move away from the pandemic as your introductory technique as you do not want to create a sense of panic or fear. Instead, delve into legal and financial reviews, processes, and parameters. US News reports that your parents’ financial analysis should include essential legal documents, financial accounts, and associated vital contacts, long-term care decisions, and claims. If you live apart, lay the groundwork to help them with their finances remotely.
It is generally most comfortable to begin your conversation with legal documents that hopefully your parents already have in place like a will, trust, living will, and a health care proxy. If your parents do not have these documents, they must retain an attorney and create the ones that best suit their needs. If you need to help your parents manage their finances, you must have a durable power of attorney. A durable power of attorney allows you to make financial decisions for your parents in the event they become incapacitated. This is an essential estate planning document. In the absence of a durable power of attorney, the courts become involved, and solving health or financial issues becomes a lengthy, expensive process over which you have little control.
If your parents already have their legal documents drawn up, find out where they keep them and review them carefully. You will want to make sure that they have been signed correctly, that they reflect the state law in which they reside, and they are not otherwise outdated. If any documents need to be amended. or it’s been more than 3-5 years since your parents had their estate plan reviewed, suggest they meet with an estate planning or elder law attorney.
Once you have assessed your parents’ legal documents, it is time for some financial discovery. Even if your parents do not currently need help, having an overview of their finances and a durable power of attorney to help them in the future is crucial to their aging success. Begin by listing all of their accounts, account numbers, usernames, and passwords as well as employee contact names. Include insurance policies, the agent’s name, and where the policy is, as well as how they pay their premiums. Include any online medical accounts or list their doctors’ names and office numbers. The idea is to create a comprehensive list of all of these accounts. Gather your parents’ Medical and Social Security numbers and their drivers’ license numbers. Know where they keep this information so that in the future you will know where to look. Also, learn about any online bill paying or automated, recurring activity. These usually include monthly bills like electricity, natural gas, water, etc. but may also include quarterly payments or annual subscriptions.
If your parents still live in their long-time home, discuss if it is viable that they live out their days there, or if downsizing to a retirement community or moving closer to where you live appeals to them. Help them come to a decision that is best for their set of circumstances. For additional tips on how to frame this conversation, you can watch our video about “How to talk to your elderly parents about money management.”
That said, it would also be a good idea for your parents to speak with an estate planning and elder law attorney before making any final decisions as to their home. That way they can best understand the potential ramifications of their actions do not inadvertently miss out on future opportunities for government benefits and aid, or trigger negative tax consequences.
If they do have long-term care, be sure you have a copy of the policy, contact information, and the name of the insurer and agent. Review the requirements for receiving benefits so you can help them when they need to file a claim as most policies have a waiting period of 30 to 90 days before benefits begin. Know what to expect. If they do not have long-term care insurance or some other mechanism to aid them in times of need, talk about the topic, and try to come up with a solution.
Digital technology has made oversight of parents and their finances easier than ever as long as you have a durable power of attorney and access to their account information. If they do not yet pay their bills online, or use auto payment, help them set up this option for their monthly bills. Remind them you will provide oversight to ensure proper billing. Offer to help them with their annual tax filings. Your help relieves some pressure on them and provides you with information about the goings-on in your parents’ accounts. For your parents’ peace of mind, you can establish a monthly video chat to let them know their bill payments are progressing normally. Your involvement will allow you to identify any abnormalities in account activity, which may indicate scam attempts.
If your parents are private people and may be reluctant to share financial information with you, offering an option to have a licensed professional fiduciary to assist with monthly bill pay could be a good compromise. Having these financial and planning conversations with your parents today can help them live more securely and with less stress as they age. Most parents will try to avoid these discussions with their children because they may not be adequately prepared for what can lie ahead. Conversations that focus on proper legal documents and gathering financial account information will give you the data you need to help protect your parents.
We would be happy to help you and your parents with critical planning documents. Our Orange County law firm is open and taking new clients, and we hope to talk with you soon about your particular needs. Please contact us or schedule an appointment with us to discuss your estate planning needs.
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Kevin Snyder is a husband, father, and an Orange County estate planning attorney at Snyder Law, PC in Irvine, California. He’s all about family and passionate about estate planning, elder law, and veterans. He founded Snyder Law to help people be prepared and have the peace of mind they are protecting their families and aging parents for when life happens.