One of the most difficult times in our lives are when we finally start to notice our parents are aging. Maybe you don't see them as much as you used to, and when you do, they aren't as sharp, or physically active. Maybe you do see them often and the day-to-day changes are more difficult to notice. Maybe they have a health scare, like a cancer diagnosis or a heart attack.
A lot of us in our 40s are in what is called the "sandwich generation", where we are simultaneously caring for young children while also dealing with the challenges of aging parents. When my mom passed away earlier this year, I was lucky because, as a financial planner, I knew a lot about what needed to be done, what information I needed, and how to do certain things. I was also lucky because as an only child of a single parent, I didn't have siblings to argue with, or another parent to consider.
Many of you might not be so lucky. In addition, you may not have the insight into your parents' financial lives that I had. These aren't conversations that are comfortable to have with your parents, and many of them struggle to face their own aging and mortality. I hope this post will give you a framework for your discussions to help make it easier, and help you think about things you need to know ahead of time.
What documents do they have or need?
Now is the time for you to find out if you parents have a will, trust, financial power of attorney (POA), health care power of attorney, and HIPAA authorization in place. Having these documents in place before something happens can mean the difference between being able to help or not.
If your parent goes into the hospital, they may sign a document that will give the doctors permission to talk to you about their medical care. If not, the HIPAA authorization can be vital in your ability to get information about your parents diagnosis and care.
The healthcare POA or living will gives you the permission to make medical decisions on your parents' behalf, as well as spells out what kind of end of life care they desire. It's so hard to talk about these topics ahead of time, but you need to know how they feel about being kept alive mechanically or brought back to life after cardiac arrest.
It was critical that my mom had named me in her POA documents. I was able to manage her financial affairs seamlessly once her doctors made the determination that she was unable to do so herself. I was able to sell her car and access her bank accounts prior to her passing. Even though I only had a short time (it was two weeks between when she was diagnosed with Stage 4 liver cancer and when she passed away), it was legally beneficial to do these things before her death.
A financial POA expires upon death. That's when the Will becomes very important. Although you may be embarrassed to ask your parents about their wills, you need to know if you're the one who will be responsible for taking care of the estate, or help your other parent do so. It's also important to know if a trust is in place and what the provisions are.
Can you find them and access them?
It's great to have the documents in place, but the next challenge is for you to find them and be able to access them. Do you have keys to your parents' house? What if they've stored documents in a safe, or safety deposit box? Do you have access to those or at least copies of the documents or contact information for the estate planning attorney who drafted them?
What happens if they don't have them?
Please encourage your parents to sit down with an estate planning attorney and get this taken care of today. The last thing you want is for something to happen and you aren't legally able to help.
Do you know what kind of insurance your parents have?
Health - almost all senior citizens use some combination of Medicare, a supplementary health care plan and a prescription drug plan. You need to know who the providers are (to make sure any out of pocket costs/premiums are paid when your parent is sick), and what may be covered (or not). I was surprised that while Medicare covered the some of the actual hospice providers (social worker, nurse, equipment for your home, etc), it doesn't cover care in a facility or nursing help at home for hospice patients. Medicare also only covers a certain number of days of care in a hospital or rehab facility, and only under certain circumstances. I'm not a medicare expert and didn't become one when my mom was sick, but I know people are always surprised about what it does and doesn't cover. Social workers can be extremely valuable in helping you find resources, and there are other private medical consultants that specialize in geriatric care who can help.
Long-term care - This is an important policy to find out if your parents have. It's important to know what company the policy is through, and have a copy of the policy. Coverage can be expensive, and there are different levels, but it's meant to fill the gap after Medicare coverage expires or doesn't apply. There is typically a waiting period before you can use it, as well as a maximum daily benefit in coverage. In my case, my mom also had a rider that covered some costs for hospice care. Dealing with this while she was sick was a pain, but at least it helped with some of the financial burden. Had she been alive longer after she got sick, it would have been much more valuable.
Life - It's possible your parents have life insurance and you need to understand what kind it is. If it's a permanent policy (as my mom's was), there may be a cash value you can access prior to death in cases of a terminal diagnosis. My mom's illness was so short, I didn't even get the paperwork to access the cash value, but in her case it would have been about half the value of the policy - extremely helpful had she needed extended care. Again, you need to know what company the policy is through, have a copy of the policy and understand any riders it contains. After my mom passed, I was able to provide the death certificate and get the funds in less than two weeks. Be prepared when the life insurance company asks you if you just want them to hold onto the money for you in an account they manage, or gives you several other payout options.
Personal Financial Data
Although it seems freaky, it's important to know as much personal data on your parents that you can.
SSN - my mom's Social Security number was extremely easy to remember so I had memorized it long ago. This probably won't be the case for you, but you need to know where to find it. I can't even remember everyone who asked me for it, but it's key information.
Digital Assets - If your parents are active on social media or other online activities, many providers will have a procedure you will need to go through to access their accounts. There are also software providers that can help you organize and plan for your digital assets - I've not tried any as of this time so I can't speak to how useful they are. This area of estate planning is evolving rapidly, but this article may be of use. What's important to understand is that the rules vary by state and provider. Your parents may have much more of a digital footprint than you think and these assets need to be included in any planning that's done.
Bank/Investment Accounts - I knew where my mom banked, I had her ATM card from her purse, and I knew her PIN. As I mentioned earlier, when I had the financial POA I was able to go to the bank with the POA paperwork and note from the doctor and access my mom's accounts while she was still alive. This was helpful to pay bills and begin to understand her full financial picture. Once she passed away, access is revoked, and someone will need to settle the estate before assets in your parents' names are released. It may be possible to set up beneficiary designations or Transfer on Death (TOD) instructions on many accounts so that they aren't tied up in the estate settlement (probate) process. Again, something to plan ahead for.
Credit Reports - If you parents have debt, it's helpful to have them pull a credit report so that there's an inventory of that. Although you're usually not responsible for most parental debt, there can be cases where you are. Check out this article for more information.
This area of our parents' lives is very emotional. Beyond the legal documents, the insurance, and the financial information, please make sure you understand their final wishes and plan for them financially. Funerals and other final expenses can be very expensive, with a simple cremation starting at about $600 all the way up to more than $10,000.
My mom had made no written desires and hadn't arranged her plans in advance, so I was left to make all of those decisions myself. It's hard to balance financial considerations with expectations of family and friends as to what should happen. Don't be caught off guard by this decision - plan ahead if possible.
If there's a theme I could pick for this post - it's plan ahead. Making financial decisions under stress is always difficult, but when you combine it with emotionally challenging situations with your parents, it may not be possible to make sound choices. I really hope this post has helped you out. This article has a lot of great information and resources to help you start the conversation today.