Planning to Care for Aging Parents
It has become a fact of life, especially as life expectancy has increased dramatically in modern times, that people often find themselves in the situation of needing to care of aging parents. While for the vast majority of us, this is very much an act of love and gratefulness, it is not without its challenges to be sure.
It can be even more complicated for the many, like my wife and I, who are part of what has become known as the "sandwich generation", meaning those who are still caring for children at home while simultaneously providing care and assistance to parents.
Fortunately, there are some steps that can be taken to make these challenging times a bit less of a burden. So whether you are in the full sandwich or just the half sandwich that involves caring only for older parents, here are a few tips. I would also add that if you are the parent not yet in need of assistance, many of these would be compassionate and loving things you can do now to help ease that burden later on your children.
Of first importance is getting estate and other legal affairs in order, and then safeguarding the documents produced in doing so. At a minimum, make sure that each parent has completed a will. Without a proper will, the disposition of property occurs according to state law, not according to what your wishes might be. All too often I have to sit with someone's heirs and witness the heartache that occurs when they learn of the consequences of their loved one having failed to execute a proper will.
Along those same lines, living revocable trusts are invaluable in protecting privacy, avoiding often expensive and drawn-out probate proceedings, and providing immediate management and ownership transfer of wealth and property.
Other invaluable documents needed include health care powers proxies, powers of attorney, and even funeral instructions and burial arrangements. An attorney or other advisor can explain the function of all these documents, as well as the differing kinds of legal issues they cover.
Also, consider a trusted advisor, such as the family attorney or accountant, to request holding this important information so that everyone knows where to go for help in a time that may be of great emotional difficulty. If you are the parent and are hesitant just yet to divulge all your affairs to your family members (hey, that's real), this can be an especially comforting idea. Just make sure your family knows where to go and to whom to talk.
Another important consideration is how the cost of care of aging parents will be paid. Should the purchase of long-term care insurance be considered, if the parent(s) still qualify? What retirement funds are available, such as employer pension plans or IRAs, and what is the tax status of each? Does the parent have other investment accounts that can be drawn upon, and if so, what is the tax impact to the parent of having to do so? The answer to all of these questions impacts the availability and amount of money for care.
Another, often sensitive, issue when it comes to the parents' care and money is the possible financial burden that might be placed on the children. If, as so often is the case, your parents' assets may not be sufficient, and you have siblings, it is important to have family discussions before the need arises and things get stressful about how each will contribute. And for goodness' sake, if you are married, absolutely do NOT leave your spouse out of the discussion!
A consideration of Medicaid is also warranted. Under Medicaid, people with means and income under certain levels may have their care paid from under a federally funded program. While the conditions vary among states, generally speaking, to receive Medicaid benefits, both an income and a resource level test must be met.
There are planning techniques that many use (or attempt to use) to rid themselves of personal assets so as to meet these tests by transferring ownership to heirs. For this to work, such transfers must have occurred before what is called a "look-back" period. For most states, including Arkansas, this period is 60 months from the date Medicaid is desired. This is a complicated area of the law, so don't just go transferring asset ownership to your children without consulting a knowledgeable elder law or other attorney specializing in Medicaid planning.
One final word – never forget that this whole thing isn't just stressful for you, it may wear greatly on your parent(s) as well. No one wants to feel they are a burden to someone else, especially the children they have loved and nurtured for so long. Remembering this and becoming partners in the journey comes with rewards all its own.