Sooner or later, many of us have to face difficult, uncomfortable situations: age-related health issues in a parent or parents, and the potentially awkward but highly necessary discussions about protecting their interests, securing their assets, and making sure that there will be money, insurance, support and other factors so that they can get any care they need.
1. Getting started: the basics
If you’ve never discussed end-of-life or late-in-life issues with your parent or parents, then start slowly, especially with in-laws. Unless everyone has a very close relationship, the child of the parents should probably be the one to bring up the subject. Likewise, if your parents don’t like to talk about money, it’s a good idea to ease into the topic slowly.
Start with questions about insurance and planning before asking about actual income if the parent or parents in question are uncomfortable with money talk. Include siblings and any other close family members when possible, especially the parents’ siblings (if any) if the family relationships are strong. It can be helpful to consult with anyone who is close to the family to gain insight into how to approach these topics, too.
2. How much do you understand retirement savings?
Make sure you do your homework ahead of time and understand sound retirement savings principles before having the discussion. If you know how much it takes to live a comfortable retirement, you’ll better be able to understand if your parents have planned well, and you will feel more confident in the discussion. To assess the situation with your parents, you will need to have some idea of their income, monthly expenses, debts, and assets.
3. Discuss issues about frailty
When having the discussions, and there should be more than one, don’t focus solely on major catastrophes like a stroke or heart attack. Slower or more subtle declines in ability or cognition should be considered, and plans developed in the case of either situation. It’s important to discuss issues about frailty, the risk for falls and the needs they may have, such as improvements for access around the house. Take a look around their home. Is there a downstairs bathroom with handrails? Is the house adaptable to a wheelchair ramp? Is the flooring compatible with the use of a walker or cane? Are hand railings secure?
If possible, walk the house with a modification professional, or even do something to temporarily disable yourself — tie a splint to your leg, walk around wearing one high heel shoe, or tape or tie your legs closely together — some kind of scheme in which you may need to lean on something to get around securely, and see what you notice. Next, ask yourself if the finances are in place to remedy anything that needs modification.
4. Expecting serious circumstances
While a gradual decline in functioning may be likely, it is also vital to talk about what to do under more serious circumstances. While it might be uncomfortable, talk about provisions if an event such as a stroke incapacitates your parents. Who will be able to make legal and medical decisions for them?
Without legally defining who has power of attorney if they become unable to make decisions, that authority will be bestowed upon the “next of kin.” The first would be a legally married partner, next a parent, and next, the oldest child in most cases. If this isn’t an ideal arrangement for your family, or you want to avoid surprises, then it is important to sit down with a lawyer experienced in family and estate planning law to establish first, second and third power of attorney. This is also important if your parents simply become unable to drive, and needs someone — the person who holds power of attorney — to take care of regular needs like banking in which the accountholder would normally need to be present.
It is important to note that power of attorney needs to be established legally while your folks are still mentally able to make sound decisions, so this is a discussion and action that needs to take place sooner rather than later.
5. Money for a caregiver?
If they are well enough to stay at home, but may have trouble cooking or taking care of other tasks, are enough family members or other caregivers in place to meet their needs? If not, is there enough money to cover paying for a caregiver?
Start looking into what home health care costs in your area, how widely available that kind of care is, and compare the costs of occasional visits versus daily care, the cost for range of services, and add up what that care might cost over several years. Is your family prepared for this? Are there clear steps you can take to prepare for this? Every situation will vary, and yours may change. Do as much research as possible to understand if stay-at-home care is feasible for your family.
6. Nursing home complications
It is critical to understand what will happen to your parents’ assets if they enter a nursing home, especially if they will be relying on Medicare. It is absolutely essential to have this discussion with a lawyer, and with as many stakeholders present as possible, and with thorough research and preparation completed before the meeting.
Why? Because while rules from state to state may vary, when a person enters a nursing home using Medicare or Medicaid, any of their assets, like their home, will be subject to seizure by Medicare or Medicaid, even if a will is in place which grants the asset to someone else. Further, Medicare or Medicaid will look back over the spending for a number of years before entry into the nursing home, and may deny payments based on a variety of factors.
For these reasons, there is no substitute for sitting down with a competent, experienced lawyer in this area to discuss the options to protect those assets or keep them in the family if legally possible. Understand that the laws vary by state, so if they move, any financial protections put in place in one state may not work in another.
7. Understand what will happen to any debt they carry
This is going to vary by state, company to which the debt is owed, and any insurance your parents may carry. Again, research and competent legal consultation are unavoidable if you want to avoid potential unwelcome surprises.
8. Do your parents have a reverse mortgage?
Speaking of surprises, if your parents have any interest in, or already have a reverse mortgage, it’s time to learn about the legal implications. In short, a reverse mortgage means that the reverse mortgage company is buying the home from your parents.
It is also likely they have put very strict and legally enforceable terms into the mortgage contract that may limit options or wreak havoc with nursing home entry and Medicare. If a reverse mortgage is or may be involved, you have lot more homework to do.