Eldery Parent's Finances
Bozman recommends three strategies that he says caregivers should consider for their own finances and for the finances of their aging parents, if they have not already been addressed:
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Power of attorney. This enables a person to appoint an "agent," such as a family member, to make legal, financial and health decisions when the person is no longer able to do so themselves. The document might enable the caregiver to pay bills, or sell certain assets, or, it could extend to all financial decisions, including selling an elderly parent's home and managing all assets.
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Gifting. A gifting clause is very important because an agent is not permitted to gift or transfer any money, personal property or real estate to himself unless the power of attorney contains specific authority to do so. Botzman says he has clients who have gifted their home to their children, but still live there. It's called a life estate, a grant or reservation of the right of use, occupancy and ownership for the life of an individual. Parents can live their entire lives in the home, without the children, but the home can never be taken by authorities to pay for medical expenses.
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Long-term care insurance. Long-term care insurance helps you pay for health care services, which can be very expensive. A policy also ensures that you can make your own choices about what long-term care services you receive and where you receive them. This is another example of a time when early planning is key. The best rates and range of services are available when a person is still healthy. Middle age is the best time to think about buying long-term care insurance because that's when a person is most likely to qualify for a policy and when premium costs are at their lowest. Caregivers can also purchase long-term care insurance for their parents, but again, price is the issue for seniors. Botzman also recommends checking with employers – more and more are offering this as a benefit, with reasonable group rates.
Of course, the problem with this type of financial planning is figuring out how to open the discussion on a topic many families never discuss. Botzman calls family financial planning "the grey elephant in the room that everyone knows is there, but no one wants to talk about."
One suggestion to open the lines of communication is to reference something you saw on the news or read in the paper: "I read about long-term care care insurance yesterday in the paper. Do you know about this?"
However you approach it, planning ahead for certain types of assistance is an enormous help, one less thing a family has to worry about during trying times.
Financial planning laws and insurance programs vary widely depending on location. Always seek advice from experts before making significant financial decisions.