So in an ideal world, your parents will have found a good time to talk to you about what happens as they get older. But people are people and not everyone is going to be comfortable doing that.
If you are an adult child, you may need to raise the subject so that you can communicate about how you can help them with important decisions in their lives. Whether you (or they) are ready or not, the day very well could come when your parents’ care becomes a concern you must consider.
It used to be that more family members were in close proximity to one another. If an aunt or a parent needed financial or physical support, they could move in with another family member, or at least someone could look in on them. But more recently, families are spread all over the map, and more often than not, adult children and their spouses are working outside the home.
So here’s a quick wake-up call for what you need to know about this thought-provoking and sensitive subject. After all, statistics show that 40 percent of adults over the age of 65 will require some sort of paid extended care.
First Signs that Your Parents May Need Help
We’ve probably all noticed when a parent moves a little slower or needs a bit more help with physical activities. But one of the first signs that there may be cognitive issues is confusion with numbers. As financial planners, we look for signs that someone may be having more trouble managing their finances. Check to see how they are doing managing their checkbook. Are they paying their bills on time? Are their taxes getting prepared on a timely basis? CPAs will also notice when they see a change in how a client is behaving.
Things to Check On
Once you get your parents talking about financial matters and how you might be able to help, ask them these types of questions:
- Do they have a will, trust and powers of attorney? Are they comfortable sharing those with you?
- Are all beneficiary designations up-to-date? All titling of investment accounts appropriate?
- Should you create a Caregiver Mind Map? This type of Mind Map zeros in on all the things you need to consider as a caregiver. David Solie has put together a series of ten Mind Maps that cover topics like healthcare team, medications, transitional care. You can download them here »
- Do your parents have a recent Net Worth Statement. If they haven’t done one before, now would be the time. Make sure you not only understand their assets and liabilities, but income streams too.
- If there are lots and lots of accounts all over the place, can they consolidate? It’s so much easier on the surviving spouse or heirs if it’s cleaned up.
- If there are multiple real estate properties in several states, make sure they are owned in trust to avoid ancillary probate.
- Have they thought about needing more care in the future? (Most have.) Would they prefer that to be in their home or have they found a retirement community that appeals to them? Lots of times their friends will also be moving to continuing care retirement communities (CCRCs) and they have a chance to see what that’s like. Ask them what they want. Then think about if they can afford that. If not, is there some compromise that’s still acceptable?
- Do they (or you) know any geriatric care managers? This type of professional can guide them (and you) on issues like which retirement homes are in your area or who to hire if you want to bring caregivers into their home.
- Have they written down an estate inventory of their assets and where everything is located?
- Although it doesn’t happen as often, if your parents’ assets will exceed $11.7 million EACH, you may want to explore charitable strategies that can reduce income or estate tax while fulfilling a lifelong dream. A Charitable Lead Trust or Charitable Remainder Trust can set up streams of income for either the charity or the family members. This can happen during life or at death.
- Consider selling any assets with capital losses so you don’t have to reduce the cost basis at death.
- To get a “double step up” in cost basis on assets, consider transferring appreciated assets in taxable accounts to the less healthy spouse so that the surviving spouse gets a step up in cost basis at the first death and the heirs get another step-up when the surviving spouse passes.
While these are some of the financial issues you may want to consider, there are a whole host of other concerns that may need more attention as your parents grow older. Are they having trouble hearing? Do you find yourself having to repeat what you said often? Are they selectively “tuning you out”? You may need to offer to find an audiologist and take them to an appointment to see if they need hearing aids. After that, you may need to check that they are actually using them!
Do you have a list of your parents’ prescription medications? If something happens—you’ve got to call 911 or they need medical care—that’s the first thing they will ask you if you are responsible for them. Put it on your cell phone and then you’ll have it.
Some adult children find comfort in purchasing a “senior friendly” smart phone for their parent. These phones may be advertised through AARP magazine or other places focusing on seniors. You can find phones with a HELP button that alerts someone that your loved one has fallen or had some other type of problem. Help can be a button away. (When you set up the phone, you can have the emergency service call you too if something happens.)
These smart phones have larger buttons and speakers that can help failing eyes and ears. You may need to spend some time going through how to make and receive calls if this is new to your loved one. Maybe they’ll just enjoy using the camera on the phone to send photos to their friends.
Dementia is a growing concern as we age. I’ve found through experience that people can get very good at hiding it at first. But if you talk to your loved ones often, you’ll probably start to notice some signs. Part of this is normal aging. We all have our “senior moments.” But if you think your parent could be in danger of hurting themselves or others, or you/they just want an assessment, you can make an appointment with a neurologist to have a base line study done.
Cognitive issues should be considered in any good financial plan as we age. It’s normal for cognitive abilities to start to decline past age 60. It’s also common that our confidence in our decision making may stay strong and that could lead to some behavioral finance types of mistakes.
So part of building a sold plan is putting safe guards in place that can help as we age. For example, some people like annuities as a way of building a solid stream of income that covers basic expenses especially later in life. You’ll hear that called “longevity insurance” sometimes.
Finding someone who your parent can trust is another way of bridging these cognitive decline issues as they age. That may be you, the adult child, or a trusted advisor. If it’s the latter, it’s best to start building that relationship early enough that everyone is confident in the trustworthiness of the professionals long before you actually need to lean more on their expertise and compassion. We encourage our clients to bring an adult child who wants to know more to their meetings when they feel comfortable.
Part of the value a trusted advisor can bring is alerting you to issues that need addressing like when it’s time to name a co-trustee or successor trustee. You want to do that early enough so that your parent is still competent. You may get to a point where you need to have a loved one declared incompetent. Typically you’ll enlist a physician to write a letter if you’ve reached that point. Your advisor can coordinate all parties including the estate attorney who will need to make legal updates as necessary. This takes sensitivity and compassion on everyone’s part to do the best thing for the person experiencing cognitive decline.
At some point you may need to talk to your parents about where they want to live if they need more care. Let’s look at that next.
Types of care
Many families have an extra room in their home for a parent. Even if this is the best possible solution for the parent (and it may not be), be sure to consider the effect on the caregiver. Women typically assume the role of caregiver, but not always. There are ways to help ease the demands on the caregiver like adult day care facilities or bringing a health care professional into the home.
In-home care can allow a parent to remain in their own home. You can hire skilled professionals who can help people with activities like feeding, bathing, and even some basic medical attention. This type of caregiver usually charges an hourly or weekly rate, which varies depending upon the level of skill required. Some of these costs may be covered by health insurance, but more likely they may be covered through a long-term care policy that also pays for home health care.
Assisted living, like in-home care, can provide a certain level of independence. But most assisted living facilities will provide a more formal support system, with a level of care that can change as needed. According to a recent Genworth survey, the national average monthly base rate for assisted living is about $4,000, or $48,000 a year. Of course, rates vary depending on where you live as well as factors like the level of accommodations (private or shared room, for instance).
The highest level of care would come from a nursing home, or long-term care facility. Nursing homes differ from assisted living facilities in that they offer comprehensive medical care. Of the three, this is the most expensive, and typically costs $6,800 to $7,700 per month (just under $100,000 a year). Of course you can find care at lower costs. But most people are surprised at how much nursing homes cost and that typical insurance doesn’t cover this.
Paying for Care
Health insurance will probably cover a stay in the hospital, but it soon ends if the patient is transferred to some type of rehab care. Medicare will cover the first 20 days of skilled nursing home care, and will cover some or all of the next 80 days, but after that your parents will be on their own. If your parent is a dependent, you can deduct some of their medical costs (assuming you paid for them) on your income tax return. If you pay their medical costs directly to the providers, those payments won’t be considered gifts.
In a perfect world, cost would not be a factor, and our parents would receive only the best care when needed. But in reality, cost and the time needed to care for someone else should be carefully considered. With some thought, you and your parents can develop a plan that can make these concerns less worrisome.
Take the time to understand what insurance your parents have in place. Are they on Medicare? What type of Medicare (A/B/D or C?)? Do they have a supplemental Medigap policy? Do they have a Health Savings Account? Do they have long-term care insurance? What exactly does it cover? Lots of seniors need help filing claims and following up if there are issues with payment.
Just Being There
“When you love someone, the best thing you can offer is your presence. How can you love if you are not there?”
One of the many life-changing lessons I’ve learned from Thich Nhat Hanh is sometimes the best thing you can do for a parent is just be there. Just sitting side-by-side enjoying the moment. Allowing for silence, waiting and listening brings joy. No agenda. Just sharing time together. Don’t overlook the simplest ways to honor a parent.
Once you start talking to your parents about elder care issues, you’ll likely find that it’s something they’ve been thinking about as well, and they’ll probably be relieved that you’re willing to help them make these important decisions. And by beginning the process, you’re giving your parents a wonderful gift: peace of mind.
You may find yourself in the position of becoming a caregiver for a parent. It can bring great joy and healing. It can also be exhausting. Remember to find time to take care of yourself—whatever that means to you.
“You are the only person who can give yourself permission to do the things that create joy in your life. When you have joy in your life you are able to give joy away.”
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