How to Help Your Family Navigate Your Golden Years
If properly preplanned, your golden years, which often last two decades or more, can be just that…GOLDEN. Even if well financed, life does end. And end-of-life conversations are too often avoided by all family members because, well, they're just hard to have. But to ignore life’s often unpredictable consequences is unwise.
So, where to begin? At the beginning!
Find Your Home Sweet Home
End of life care is a challenge whether an individual or family has $20,000 per month to spend or are dependent on Medicaid.
Why?
There are very few optimal places to reside as one ages. Many elderly folks prefer to spend their final years at home. However, with this choice it’s logical to assume that one must finally confront the need to bring some form of outside care into the equation. For some, that could mean a family member who quits a job or who provides some lessor form of part-time care. This often creates a current and future dilemma for those individuals sacrificing a paycheck, and then later finding it difficult to rejoin the workforce after being away for a while. Whether an aged member asks for help or a family member volunteers, this alternative represents a major and continuing burden for that volunteer.
If you choose instead to bring outside care into the home, then an affordable caregiver or agency must be carefully researched to fill those needs. Predictable problems?
What if the caregiver misses time due to illness or other personal reasons? In short, if a private caregiver is hired, what happens when they are sick or not able to fulfull their duties? A family member may need to miss work to fill in.
If an agency is hired, does it have proper staffing so it can it send another caregiver on short notice?
Clearly, the risk of aging at home can be more difficult and expensive than anticipated. Need proof? Call a caregiving agency and ask about the cost of a few days for full-time care – a few hours a day a few times a week might add up to couple of thousand dollars per month. And full-time care can often cost several thousands per month.
Perhaps an assisted living facility or an adult family home could be a viable solution. It avoids the problem of hiring care, but there are very likely potential issues involving higher levels of care, including administering medication, facilitating mobility, and helping with basic needs, all of which can increase the cost of assisted living significantly.
Without question, the aforementioned challenges of where to live are real. No choice is without complications or without unanticipated financial burdens.
Consolidate Financial Assets
When it comes to managing the financial challenges of aging, simplicity is often the key.
It's wise to narrow down financial accounts to as few as possible. For example, consider consolidating your assets and putting them into a Vanguard or Fidelity account, and a single local bank account with one debit and/or credit card.
It's also recommended to assign only one custodian to your financial affairs. The more custodians or financial institutions involved, the more paperwork a caretaker must look after and phone calls an executor must make at death.
Ensure that your accounts are properly titled with current beneficiaries up to date and on file. And have that one local bank checking account set up to handle immediate cash needs upon death. This allows a single trip by the executor to the bank (with a death certificate in hand) to complete the paperwork. An even more efficient arrangement is to have the executor be a co-signer on the account. This eliminates the delay of waiting for a death certificate should immediate cash needs occur (funeral expenses, etc.).
And don’t overlook the filing of a final tax return. The executor will need to know who to contact to track down forms from each financial institution…hopefully only one. Remember, simplicity helps an executor and the family more than anything else.
Set Boundaries
In aging and death, setting boundaries is important. It’s not an offspring’s responsibility to provide endless parental care, nor to give up a career or drastically alter his or her lifestyle during a parent’s final years.
These decisions should be made within the family and take into consideration each person's circumstances. Want to help out one hour per week? That’s okay. Want to help out a few hours per week? That’s great. Want to move in to help? That’s okay, too.
Help often starts with occasional grocery shopping, which can lead to paying bills, finding caregivers, accompanying you to medical appointments, refilling medications, etc. Such tasks can mushroom, become more urgent and unplanned as time goes on, potentially leading to an offspring taking time off work or being away from their family. No one should be expected to do it all because it can quickly become overwhelming. Set clear boundaries in advance…and don’t keep moving the goal posts.
These demands on children can be minimized or eliminated by the aged taking full responsibility for their own final years through careful financial planning. But, that's not always fiscally possible.
Consider Prepaid Burial Arrangements
Tying up funds on prepaid burial arrangements can be problematic, including the uncertainty of where one might die. But for people in their 80s (those less likely to move during the later years), or for those with a known terminal illness, prepaid burial arrangements can be a blessing to the family.
It's one less stress to deal with and one less expense to handle during an emotional time.
Select Your Power of Attorney
It’s important to know the differences between Power of Attorney documents to ensure that you, the principal, has the right Power of Attorney as a patient. For example, Texas has four types of powers of attorney. Here are the definitions of those, according to Texas Law Help:
General power of attorney: A general power of attorney gives the agent the authority to act in a broad range of matters. A general power of attorney ends if the principal becomes mentally or physically disabled or incapacitated.
Limited or special power of attorney: A limited or special power of attorney gives the agent the authority to handle a specific matter or for a limited period of time.
Durable power of attorney: A durable power of attorney is a general power of attorney but continues if the principal becomes mentally or physically disabled or incapacitated.
Springing power of attorney: A springing power of attorney gives the agent authority only if and when the principal becomes disabled or incapacitated.
Medical power of attorney: A medical power of attorney gives the agent the authority to make medical treatment decisions for you if you come mentally or physically unable to make your own decisions.
I recommend carefully analyzing your situation before deciding on a Springing Power of Attorney (either Ordinary or Durable). What seems appropriate in the legal world doesn’t always work in reality. Case in point, the Springing POA is typically not activated or effective until two physicians declare someone incompetent. In the case of an extreme health event, when someone is hospitalized and unable to communicate or pay their bills, most doctors usually have no problem declaring the patient incompetent. Often, however, as people age, cognitive impairment becomes a more problematic issue in determining competence or incompetence. Being human, medical providers are less eager to risk being sued for declaring someone incompetent…and often err on the side of caution by declaring someone competent. A patient might know who or where he is and what is happening around him, but may be incapable of paying his bills, eating properly, or taking his medications. In short, he or she is competent most of the time, but not always.
Simply put, a Springing POA could add extra stress during challenging times. The patient might not be “incompetent enough” for a Springing POA to be activated even though that patient needs a decision made immediately. A General Durable POA gives an attorney-in-fact the authority to make those immediate decisions regarding finances and property. By the way, for a Power of Attorney to become effective once a patient becomes incapacitated, it must be a Durable POA.
Put Experts on Standby
It often makes sense for an executor to have an attorney or CPA on standby to address specific questions about an estate. Sometimes it is costly, yes, but it might actually save time and money in the long run.
A capable executor can handle the probate process and navigate everything without legal help, but why not have some expertise available if needed - and reduce the potential liability of doing something incorrectly? Often, virtually all elder income is reported to the IRS on various 1099s or other IRS forms. And often, those personal tax returns can be hefty, but relatively simple due to the consolidation of most income-producing assets with a single custodian. A familiarity with TurboTax makes it even more simple to e-file tax returns without fear of mathematical error.
Manage Inheritance Expectations
Inheritances can be uncertain simply because families have no assurances of what end-of-life care may involve, ie. how much it will cost. Here are some things to consider:
The executor should deal with inheritance matters quickly and efficiently, and be done with them ASAP.
Recipients should suffer no guilt associated with receiving an inheritance. It can be unsettling - even life changing - to receive assets (money) when someone dies. Receiving assets simply because someone dies can feel strange, but don’t let it. It’s a normal part of life.
Some recipients treat an inheritance differently, often as "separate" funds. But at the end of the day, it’s your money, like any other asset in your bank or investment portfolio. Treating it differently is generally not a good idea, leading to careless decisions if treated like “bonus money” rather than what is now an important part of your estate.
Prior planning helps to decide what to do with an inheritance. There is nothing wrong with anticipating its receipt, and what you plan to do with it. Upon receipt, if you don’t have an immediate need, consider investing it as part of your own long-term financial plan. If you have an immediate need, try to preserve the principal and dip only into the earnings of that principal.
Treat Loss as Part of Life
There are many emotions entangled in death and money. Grief can be a difficult emotion. There are patterns of grief, yet everyone’s situation is different. A terminal illness allows grieving prior to death. It’s part of the cycle of life…to be celebrated. Grief fades but doesn’t go away. Families simply build memories around those who have passed.
Some families hire an eldercare consultant to help process loss. Many have close friends or acquaintances with whom to communicate - folks who have gone through the process of navigating long-term or “difficult” elder care behavior. Aging parents can become difficult. However, others (like this blogger) can remain kindly old gentlemen!
In Sum
End of life care is not always a great time - it can be complex and often more expensive than anticipated. So simplify and consolidate. Establish and maintain boundaries. Take the opportunity to plan prepaid burial arrangements. Consider having an attorney and a CPA on standby if help is needed to handle more complex end-of-life matters. And remember, it’s a difficult time wrapping up someone’s life…final taxes to be paid, debts honored, and inheritances distributed.
But overall, it's a time to celebrate a good life.
Note: This content was inspired by a thought-provoking article written by Elliott Appel about lessons he learned about money and death in dealing with his father’s final years. Appel is a caregiver consultant and founder of Kindness Financial Planning LLC.