Caring for aging parents

Having a conversation with your parents about their finances can seem like a daunting task. However, it is an essential step in helping to ensure their financial well-being as they get older. Here are some practical tips to help you navigate these discussions.

Start the conversation

Talking about money can be difficult. However, it’s important to initiate a financial conversation with your parents before they become too ill or incapacitated. Your parents may be unwilling to talk to you at first because they are reluctant to give up control over their financial affairs, or they are embarrassed to admit that they need your help. It’s important to approach the topic sensitively and make it clear that you fully respect their needs and concerns.

If they are still hesitant to talk to you and are capable of managing their affairs for now, you may want to revisit the discussion later. Or you could suggest that they talk to another family member, trusted friend, attorney, or financial professional.

Organize financial and legal documents

Once the lines of communication are open, you can help your parents organize their financial and legal documents. Start by creating a personal data record that lists the following types of information:

Financial: Include all of your parents’ bank/investment account information, including account/routing numbers and online usernames and passwords. You should also list any real estate holdings, along with any outstanding mortgages. Do your parents receive income from Social Security, a pension, and/or a retirement plan? You will want to include that information as well.

Legal: Find out if your parents have had any legal documents drawn up, such as wills, trusts, durable powers of attorney and/or health-care directives. Locate other important documents too, such as birth certificates, property deeds, and certificates of title.

Medical: Determine what type of health insurance your parents have — Medicare, private insurance, or both. You should also have the names and contact information for their health-care providers, their medical history, and any current medications.

Insurance: List what other types of insurance coverage your parents have — life, home/property, auto, or long-term care, for example — along with the names of their insurance companies and policy numbers.

Store the data record and any other pertinent documents either electronically or in a secure, fireproof box or file cabinet.

Help with managing finances

You can help your parents manage their finances by examining their budget and finding out their monthly income and expenses. Track your parents’ spending to make sure that they are living within their means. You should also discuss ways to address any outstanding debts they may have.

Find out how your parents pay their bills and expenses. If they still use traditional methods, encourage them to set up safer and more convenient ways to bank such as direct deposit and making payments online, instead of mailing paper checks. If your parents are uncomfortable with electronic payments, remind them to mail all bills inside the physical post office and not to use outdoor mailboxes, which may be targets for mail theft.

Do your parents need additional support in managing their finances? There are ways for you to obtain the necessary authorization to assist them. One way is to become a joint account holder on certain bank accounts. This can give you direct access to manage transactions, monitor account activity, and ensure bills are paid. However, being a joint account holder may have certain legal and tax ramifications. Another option is for them to obtain a durable power of attorney, which is a legal document that grants you authorization to make financial decisions on their behalf, even if they become incapacitated. It may also be helpful for them to add you or someone else as a trusted contact for their accounts.

Discuss estate planning issues

If they haven’t already done so, make sure your parents have certain legal documents in place — such as wills and/or trusts — to ensure that their estate planning wishes are followed. In addition, they may need to have a durable power of attorney, health-care proxy, and living will in place so they have someone to manage their money and health-care issues if they become ill/impaired. Issues surrounding the care of an aging parent can be complex. Consider consulting a financial professional and/or elder law attorney who specializes in financial and legal issues that affect older adults.

Questions about estate planning? Contact First Financial’s Investment & Retirement Center by calling 732.312.1534. You can also email mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com

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The cost of care for the elderly continues to rise. If you have aging parents who need assistance, there are important considerations and resources that can help them grow older gracefully.

First, let’s consider the various living options. Depending on their independence, your parents may be able to continue living in their current home. However, you may need to make safety modifications, which can get expensive. For instance, a first-floor bathroom, grab bars in hallways in bathrooms, and an emergency response system may be necessary.

If they need assistance with meals, Meals on Wheels is free for anyone over 60 years of age.

You might also consider an in-home aide if your parent needs additional personal assistance.

Some families choose to move an aging parent into their own home. If your parent has dementia or other health issues, adult day care can be helpful, as it allows them to socialize with other adults.

If your parents are independent and can care for themselves, they may be eligible to enter a continuing-care retirement community, where they can become eligible for future nursing care, if it becomes necessary. Consider purchasing long-term care insurance, which can help pay for nursing home costs or the cost of an in-home aide.

If your parents need the more comprehensive care provided by a nursing home, research the options extensively. You may need to reserve a space far in advance, as waiting lists are often long at popular facilities.

Just as you consider the various living options for your parents, so too, should you research the financing options for long-term care, which can be a tremendous burden for many adults.

Medicare will only pay the full cost of professional help if a physician certifies that your parent requires nursing care and if the services are provided by a Medicare-certified home health care agency. Even in such a case, Medicare will pay for nursing home care for the short-term only, with benefits restricted to low-income individuals with limited assets.

Tax considerations can help offset some of these costs, as you can claim a federal tax credit up to $3,000 off the cost of in-home care or day care.

No matter your current situation, developing a financial plan can be an important step in providing adequate support for your parents’ future well-being. Consult with a financial professional if you need help reviewing your plan or options.

Questions? Contact First Financial’s Investment & Retirement Center by calling 732.312.1534. You can also email mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com

Securities and insurance offered through LPL or its affiliates are:

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

This material was prepared by LPL Financial, LLC

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