By FPA Members Elaine King, CFP®, CDFA™, and Philip Herzberg, CFP®, MSF

Last Updated: July 19, 2010

Howard Gleckman, author of the novel Caring for Our Parents, reveals that caring for an aging and frail parent or disabled relative may be the hardest thing you’ll ever do in your life, but it can also be the most rewarding.¹ As a Baby Boomer (between 46 and 64 years old) and part of a “sandwich” generation where you may care both for your parents and children simultaneously, careful preparation for the estate planning of an aging parent will significantly ease your financial and emotional burden and enable your family to spend fulfilling time with your loved one comfortably.

With collaborative input from financial, legal, tax and senior care professionals, you should consider the following estate planning insights in optimally strategizing to care for the multifaceted needs of your elderly parent and family:

• Establish health care directives for medical decisions of your aging parent: You should complete a living will or advanced health care directive specifying what life-sustaining medical treatments your parents will allow or not allow in the event of incapacitation (i.e. Do-Not-Resuscitate order). Also, make sure you draft a health care power of attorney ideally to authorize a representative to make medical care decisions on your parent’s behalf. Communicate decisions to your parent and other family members before implementing to ensure they fully understand and agree with these health care provisions.
• Designate a durable power of attorney to help manage financial affairs: You should select a durable powers of attorney to handle financial decisions if your parent becomes suddenly sick, incapacitated, or otherwise unable to carry your affairs. These financial powers of attorney to pay bills and make significant financial transitions become especially critical if your seriously ill parent is single and did not list joint tenants for certain assets or accounts.
• Draw up a will and/or living trust documents and update when necessary: At the very minimum, you need to have a professionally drafted will written to delineate what happens to your parent estate’s assets and property. Considering privacy and continuity of management in the event of incapacity, you should utilize a living trust to allow for your designated successor trustee(s) to step in and handle trust assets for your aging parent’s benefit. In light of evolving life circumstances, your elderly parent will most importantly have the comfort and flexibility in a living trust to name and update one or more successor trustees, personal representatives, and agents for non-trust property management and health care decisions.
• Keep organized estate planning records and inventory: If your elderly parent becomes incapacitated, you or a designated heir may have difficulty navigating their bookkeeping system or finding relevant estate planning documents and financial records inside the house or in safe deposit boxes elsewhere. Your parent can compose a letter of instruction, in conjunction with basic estate planning documents, to identify the location of these important papers and the key to their lockbox or computer passwords.
• Include long-term care insurance and possible responsibilities for the role of a caregiver in planning: Does your parent currently have long-term care to provide funds needed to pay for specialized care? Have your parent highly consider the option of purchasing long-term care insurance, based on your parent’s age and available resources to pay for the premium, and communicate with your parent the issues surrounding long-term health care (i.e. home health care, skilled care, assisted living facilities). Evaluate whether including a Geriatric Care Manager (GCM) may be a worthwhile consideration in strategizing for this long-term care process. Assuming the responsibilities for the role of a caregiver to your parent one day, you should carefully prepare by paying attention to the warning signs (i.e. early symptoms of Alzheimer’s disease) of your aging parent and staying informed about nursing homes and hospitals before your parent becomes incapacitated.

Protect your parent’s legacy and proactively prepare for you and your family to spend quality and rewarding time with your parent by planning in advance!

FPA member Elaine King, CFP®, CDFA™, is Vice President, Director of Wealth & Well-Being at Gibraltar Private Bank & Trust. FPA member Philip Herzberg, CFP®, MSF, is Director of Media Relations & Public Awareness for FPA of Miami-Dade.

¹ Howard Gleckman web site feature, “10 Things You Must Know About Caring for Your Parents.”