You may have thought that the birds-and-bees lecture was the most awkward chat you would ever have with Mom and Dad. But now that you’re an adult, a few more uncomfortable conversations may be looming: the ones about your parents’ aging, end-of-life concerns, and all the accompanying financial considerations. It’s tempting for both parents and children to put off the Big Talks. But vital issues, like power of attorney and long-term-care insurance, have to be discussed. (After all, you don’t want your parents to be among the 55 percent of Americans who currently do not have a will, according to the online legal resource FindLaw. com.) For your parents’ wishes to be honored, they need to have the right financial and legal paperwork and plans in place, says Martin Sabel, an elder-care strategist in Houston. “Once you know what your parents want,” he says, “the process of growing old is easier on everyone.” Here are the five important questions adult children should ask their aging parents, along with strategies to make the Q. and A. more comfortable for all.
The Question: Do You Have a Will?
Why it’s important: A will is the future of anything that a person values—not only money and property but also pets and even token mementos. When someone dies without a will, her estate is divided in probate court, where a judge decides who gets the assets. “This can cost thousands of dollars and take months,” says Christina Lesher, a Houston-based elder-law attorney. “Even if the deceased told a loved one her wishes before she died, a verbal statement won’t hold up in court. The judge will base his ruling on laws and legal precedents of the state.”
How to bring it up: “I don’t want to upset you, but if something happened to you, I would want to know that your wishes were being honored. Do you have a will?”
How to start the process: Most people should meet with an attorney to have a will drawn up. It’s an easy process that shouldn’t take more than a couple of sessions, as long as you know who will be named as beneficiaries and designated as executor. Or, if you have a simple estate (no property, few or no investments), consider using DIY software from Nolo.com ($35 to $50) to create a legally binding will.
The Question: Do You Have a Power of Attorney?
Why it’s important: This designation gives another party the ability to make both legal and financial decisions in the event that a person is unable to do so himself. (If no paperwork exists, many assume that a spouse or the oldest child gets the default power of attorney. However, the decision will be made by a judge.) Without this document, a spouse may not automatically be able to tap funds to pay for long-term care or sell a home that the couple owned jointly, says Joy Loverde, the author of The Complete Eldercare Planner ($20, amazon.com).
How to bring it up: “Mom, I want someone designated to make my decisions for me in an emergency, so I’m getting my paperwork together. I would feel so much better if you did the same.”
How to start the process: Your best option is to have a lawyer draw up a power of attorney. Find a local one who focuses on elder law through the National Academy of Elder Law Attorneys (naela.org). You should be able to accomplish this task in two to three appointments.
The Question: Do You Have Advance Healthcare Directives?
Why it’s important: Advance healthcare directives include a living will (which gives written instructions on the degree of life-sustaining measures that should be taken), a health proxy (which appoints another party to make health-related decisions in the event that a person is unable to do so), and a HIPAA release (a document that allows another person access to someone’s medical records, which is useful for insurance claims). “It’s difficult to make decisions in a crisis, and memories about conversations differ,” says Lesher. “Having clear, written instructions protects families from becoming embroiled in arguments or, even worse, lawsuits.”
How to bring it up: “If you were ever on life support, I would be really torn up and not in the best frame of mind to make a decision. I know we talked about how you feel, but I think it would give both of us some relief if you put it in writing.”
How to start the process: Advance health-care directives vary by state. It’s simple to download the specific ones you need for your state at the National Hospice and Palliative Care Organization’s website (caringinfo.org).
The Question: Do You Have an Authorized User on Your Bank and Investment Accounts?
Why it’s important: If an account holder becomes incompetent or dies, family members may need to have access to her funds to cover expenses such as medical care, a nursing home, or funeral arrangements. “Some banks have their own documents that must be in place before the institution will recognize your power of attorney and release funds,” says Lesher. The most straightforward way to keep your parents’ money from being tied up in probate court is to name a trusted family member as a co-owner of investments and accounts. (Often this is the same person who has power of attorney.) This allows both parties to not only deposit and withdraw funds but also close an account. Additionally, when one account owner dies, the other owner is usually entitled to the balance through the “rights of survivorship.”
How to bring it up: “Dad, I’m not trying to take over your money, but there are a few documents that would let me handle your finances just in case I ever needed to. Can we talk about them?”
How to start the process: With your parents, visit their bank or brokerage house to fill out the appropriate paperwork, which can usually be done in about half an hour.
The Question: Have You Thought about Long-Term-Care Insurance?
Why it’s important: Most long-term assisted-living or nursing-home expenses are not covered by Medicare, says Loverde. And long-term care (which includes anything from extended home assistance to a nursing home) is very costly: According to Genworth, a provider of long-term-care and life insurance, the median annual price tag for a private nursing-home room was a staggering $81,030 last year—and those costs are climbing steadily at a rate of more than 4 percent a year.
How to bring it up: “I read about how much assisted living can cost, and I was stunned. I would want you to have the best care if it ever came to that. Have you looked into insurance?”
How to start the process: Use the LTC Insurance Evaluator at SmartMoney.com to see whether long-term-care insurance makes sense for your parents. (Go to aaltci.org for information on various policies.) As with health insurance, coverage varies among policies, so you’ll have to figure out which is most fitting. While you’re investigating, consider a policy for yourself. Rates average $1,460 annually for someone who enrolls at age 45 but jump to about $3,100 a year for a 65-year-old.
For advice on managing the day-to-day and help for aging parents, visit realsimple.com/agingparents.