Due to modern medicine and longer life expectancies, people are facing a double challenge that’s increasingly common.
Due to modern medicine and longer life expectancies, people are facing the double challenge of saving for their own retirement while simultaneously becoming caretakers for their aging parents. This can be a stressful position for adult children, especially when you’re unaware of your parents’ financial situation and final wishes.
To help your parents and ease your own worry, start the conversation now about estate and healthcare planning. While these conversations can be difficult, they are imperative and may reduce the stress and unforeseen costs caused when a loved one becomes ill or unexpectedly passes away. The following guidelines and information may help you initiate and guide this difficult discussion.
1. Choose the right time and place. Starting the estate planning conversation just after finishing Thanksgiving turkey may not be a good idea. Give your parents advanced notice that you would like to talk about these issues and allow them time to prepare for the conversation. Offer to meet them alone or with your siblings. Also, choose a setting that is comfortable, such as a home or familiar restaurant. If appropriate, you may want to meet with your parents and a financial planning professional.
2. Know what to ask. Remember, there is information that you need and other information that you want. You need to know if your parents want life-saving measures in the case of a medical emergency, but you don’t necessarily need to know how your mother is dividing her heirloom jewelry. Start with questions about topics that affect both of your parents and you. Be prepared to explain the specifics of what is needed. For example, is there a plan if one or both of your parents become incapacitated? Do they have a directive that gives someone the authority to act on their behalf? What are their wishes, if any, for funeral arrangements? Do your parents have an attorney to ensure that the proper documents are in place?
3. Understand your estate planning needs. There are many different types of estate planning documents that can be useful for families, but the three most important are: a Durable Power of Attorney, a Health Care Directive or Living Will and a Last Will and Testament.
- Durable Power of Attorney—This document appoints an individual to act on another’s behalf and can be “springing,” which means it only goes into effect when the owner becomes incapacitated. Most attorneys and financial planners recommend you have separate powers of attorney for financial decisions and healthcare issues. The healthcare power of attorney will give a person or persons the ability to make healthcare decisions on another’s behalf.
- Health Care Directive or Living Will—This document gives medical professionals and others guidance as to the types of life-prolonging medical treatment a person may elect or deny and is critical if he or she has specific wishes.
- Last Will and Testament—This document names one or more persons to manage the estate and directs the distribution of the property after an individual passes away. It is helpful that these people know their role well in advance. Also, you may want to make sure that these individuals can still meet the desires of your parents even if needed 20 years from now.
Once these basic documents are in place (with periodic reviews scheduled to ensure they are up to date and still meet your parents’ wishes), you are off to a great start with the estate planning process, and hopefully, the weight has started to lift for both of you. However, if you are met with resistance or tension when it comes to these plans, you may want to stop the conversation and arrange a time to meet with a professional. If your parents have not done any planning, don’t try to solve the problem over lunch. Encourage and offer to schedule an appointment with an attorney or financial planner to work through this important process.
Matthew Starkey is president of KHC Wealth Management. He can be reached at 913-345-1881 or [email protected]. Check out KHC’s blog at kcfinancialplanning.com.