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Preparing to help aging parents
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If you have your parents during much of your adult life, consider yourself fortunate. As they age, however, you will need to become increasingly aware of added responsibilities you may have to assume. And by planning ahead, you can help make everyone’s lives easier.

In dealing with various matters relating to your parents - particularly financial matters - the key is open and frequent communication. And that means you’ll need to find out everything you can about your parents’ assets, debts and estate plans.

You can start by finding out if your parents have a simple will drawn up. If they don’t, urge them to get one. Your parents have worked hard all their lives and they want their assets distributed according to their wishes instead of a court’s decree, which is what would happen if they die "intestate" (without a will). Even if your parents have a simple will, they may still need to take further action. If you think they have a sizable estate or want to give significant gifts to charitable groups, encourage them to consult with an attorney who specializes in estate planning.

You’ll also need to learn whatever you can about your parents’ savings and investments. Which banks and financial service providers hold your parents’ assets? Where are the records of these accounts? Do they work with a financial advisor? You’ll need to learn these things in case your parents become incapacitated or die unexpectedly. State treasurer’s offices regularly advertise "unclaimed" property, including investments - some of which have simply eluded the attention of family members.

And, speaking of incapacitation, you may want to encourage your parents to create a durable general power of attorney, which allows them to appoint another person to conduct their business affairs if they are physically or mentally unable to manage them. You can also ease some potential worries by having your parents create a medical power of attorney, which empowers you (or another relative or close friend) to make health care decisions for your parents if they get seriously injured or become ill and cannot make health care decisions on their own.

Long-term care is another subject you might want to discuss with your parents. Of course, they may never need to enter a nursing home or require the services of a home health care worker. However, if they do, the expenses can be enormous. For example, the average annual cost of a private room in a nursing home is more than $75,000, according to the 2006 annual MetLife Market Survey of Nursing Home and Home Care.

If your parents needed to come up with this type of money, it could wipe out their financial independence - and possibly place a burden on you or your siblings. Currently, Medicaid pays almost half the costs of long-term care, but, to qualify for this government program, your parents would have to "spend down" almost all their assets - an unattractive prospect. Consequently, you may want to talk to your parents about other ways of paying for these costs.

Start discussing these types of issues with your parents soon. As you can see, there’s a lot of ground to cover, and the sooner you start, the better.


Evans is a financial advisor with Edward Jones in Richmond Hill.

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