As the adage goes, there are two guarantees in life: death and taxes. We will all die someday. If we are lucky enough, we will slip away peacefully in our sleep when we have lived a long, long life. But no doubt, it will happen to all of us.
Unfortunately, too many people pass away without leaving a will or other instructions to their loved ones that can speak for them when they no longer can. This can create great hardship and stress for friends and family at an already difficult time.
According to a 2017 survey by Caring.com, only 42% of Americans have a will. A lack of advance planning can cause enormous emotional and financial strain on those left to pick up the pieces. Family and friends must deal with a loved one’s estate after they pass away. And, oftentimes, they also must cope with advanced illness and mental incapacity in the weeks, months, or years leading up to the transition.
Anticipating the aging and death of a parent is not an easy process, and for this and other reasons, many people avoid discussing estate and advance care planning with their loved ones. However, as the baby boomer generation ages, many adult children are finding themselves in precarious financial situations as they struggle to cope with their aging parents’ health care needs and funeral arrangements or find themselves in desperate situations with incapacitated parents who have left behind no advance health care directives.
Further, scrambling to find documents, make arrangements, and pay for care may come on the back of balancing grief, work, and family life and can cause irreparable damage among siblings who disagree on what mom or dad’s wishes may have been.
Although there is likely to be a great deal of stress, grief, and even family disputes at the passing of a parent, no matter how much advance planning is done, some of it can be mitigated by taking the time to learn about your aging parents’ wishes and the basic elements of their estate and advance care plans.
End-of-Life Planning to Discuss With Your Parents
It’s important to understand what you need to know regarding your parents’ end-of-life planning, which includes both their estate and advance care planning.
What Estate Planning Have They Done So Far?
Do your parents have a will? A trust? Accounts with named beneficiaries or pay-on-death or transfer-on-death accounts? Joint accounts with rights of survivorship?
It’s important to know what types of estate planning your parents have done so that you’ll understand what will happen with their assets after they die. Whether or not you are the chosen executor of their estate, having this knowledge will help mitigate family disputes that arise from misunderstandings as well as help you know what to expect.
You’ll also want to know who your parents have chosen to execute their estate, as the executor will be the one taking charge of all your parents’ assets on their death.
Advance Directives Your Parents Should Have in Place
End-of-life planning isn’t just about estate planning; it also includes advance care planning. Advance care planning means planning for the possibility that your parents might become physically incapacitated or mentally unsound, resulting in them being unable to make decisions for themselves.
It’s crucial to talk to your parents while they’re still healthy about what their wishes would be if these things happen because they’ll be unable to tell you what they want once they become incapacitated. If you wait to have this conversation, it may be too late.
However, planning for these eventualities is more than just knowing what your parents would want. It also means having a set of legal documents, called “advance directives,” in place that can speak for your parents when they can’t.
Without advance directives, doctors may be unable to speak with you about your parents’ condition, they may give your parents treatment they wouldn’t have wanted, and your parents may be placed in a situation where they can’t be taken care of financially.
To prevent this, these are the basic documents your parents should have in place, according to estate planning attorney Walter R. Pierce, author of “Expect the Unexpected: Facing Mortality Issues with Dignity and Confidence.”
1. A Living Will
A living will is a legal document that states your wishes concerning the use of life-sustaining treatment if you become permanently unconscious or terminally ill. It authorizes the doctors to follow your instructions about the kind of medical treatment you want under these circumstances, and it only affects care that artificially prolongs death.
Living wills can get very specific. They can state whether you do or do not want breathing assistance, artificial hydration or feeding, blood transfusions, and even certain medications.
2. A Durable Power of Attorney
A power of attorney (POA) designates a specific individual, known as an “attorney-in-fact” to make decisions for you. POAs can be “special” or “limited,” meaning they can be for one particular purpose, such as authorizing a spouse to purchase a house and put your name on the deed, or they can be “general,” giving the attorney-in-fact all the powers you would have if you were present.
POAs can also be “durable,” meaning they extend into times of incapacity, both physical and mental. A durable power of attorney becomes crucial when your parents are unable to make decisions for themselves. Without one, making any decision or paying bills on behalf of the incapacitated parent is impossible without going to court and establishing guardianship, which can be a difficult and time-consuming process. So don’t wait until your parent becomes incapacitated; have them designate someone now, while they’re still healthy, to act on their behalf when they’re no longer able to act for themselves.
3. A Durable Power of Attorney for Health Care
A durable power of attorney for health care is a legal document that authorizes whomever you designate to make health care decisions for you if you’re unable to make them for yourself.
4. A Do Not Resuscitate Order (DNR)
A DNR order addresses the various methods used to revive people whose hearts have stopped functioning or who have stopped breathing. These could include chest compressions, electric heart shock, artificial breathing tubes, and special drugs.
If you wish to be resuscitated should you need such life-saving measures, you don’t need to do anything as doctors normally take every possible measure to keep you breathing and your heart beating. If you don’t want this, however, you may include a DNR provision in your living will.
Where Are These Documents Located?
None of these planning conversations will matter if you don’t know where to find all the necessary documents when they’re needed.
A 2014 UBS report on why families should talk about inheritance found that while 80% of parents have wills, half haven’t told their children about them. That includes where they’re located or even whether they exist at all. This can be a huge problem, especially if adult children are expected to fill any of the fiduciary roles of executor or attorney-in-fact for health care or financial management. A 2015 study by Fidelity found that 92% of parents expect one of their children to fulfill the role of executor, but 27% of those chosen as executor didn’t even know they were chosen.
The executor has a huge role to fill in managing their parents’ estate. They will be the ones called on to gather all of their parents’ financial documents, pay all the creditors, and then disburse the remainder of the estate according to their parents’ wishes. If the executor can’t find all the necessary documents – including not only the will but also information for every single financial account, as well as anything else that needs to be managed or “closed down,” such as social media accounts – their job will be challenging.
The solution is to have your parents make a “life file” that includes:
- The account number, institution, and any login information for all of their financial accounts, including bank and investment accounts
- Legal information, including their will, any POAs, and trust information
- Policy information and details for any life insurance policies, pensions, and Social Security claims
- Titles to all assets, including vehicles and homes
- Medical information and advance health care directives
- Social Security cards and birth certificates
- Credit card information, outstanding debts, and any recurring expenses and payments, such as subscriptions
Include anything that would be required to manage either your parents’ estate or any financial and health care decisions they’d be unable to make for themselves if they become incapacitated.
And don’t forget about digital accounts, including usernames and passwords, that might be required to shut down anything online. I’ve heard many a tale of individuals passing away and leaving no ability for survivors to delete things like Facebook accounts.
Because this life file will include everything about your parents’ lives, be sure to keep it in a very safe place and share its location with the family members who need to know about it.
Advance Care Plans Your Parents Should Make
People are living longer than ever. But, although lifespan has increased, quality of life hasn’t necessarily done the same. Longer life can mean an increased need for long-term care, such as assisted living and nursing home care.
According to the U.S. Department of Health and Human Services, someone turning 65 in 2019 has a 70% chance of needing some kind of long-term care in their remaining years. This could be care provided at home or in a facility, and the costs can be enormous.
Nursing home care can cost upwards of $8,000 per month, according to the 2018 Genworth Cost of Care Survey. Assisted living, on average, costs about $4,000 per month. These costs may prompt many to consider at-home care, but home care might not necessarily be less expensive. Home care could involve hiring a home health aide, which could also cost $4,000 per month, according to the Genworth study, assuming the need for 44 hours per week of help.
Even taking on the task of caring for your aging parents yourself may not save costs, as full-time care for an aging parent could require you to reduce your work hours or even leave your job. Additionally, CNBC reports that as many as 68% of caregivers provide financial support to their aging parents by paying for medications, food, transportation, and other living expenses.
These costs can be significant, so it’s critical to have a family meeting to discuss who will provide care for your parents and how costs will be managed. Be sure to ask:
- What Are Their Wishes for Care?Is one or the other of your parents vehemently opposed to spending their final days in a nursing home or assisted living facility? Do they prefer to age at home? Although family situations may prevent some of these wishes from being carried out, it’s helpful to at least know what your parents’ desires are.
- Do They Have Long-Term Care Insurance?Although Medicare is available to everyone once they turn 65, it doesn’t cover the costs of long-term care, such as assisted living, nursing home care, and home care. For those who can afford it, long-term care insurance covers these costs. The drawback, however, is that it can be expensive, especially the older you are when you apply for it, and not everyone qualifies.
- What Expenses Does Their Health Insurance Cover?Your parents may have health insurance from their former job that continues into retirement, they may have Medicare exclusively, or they may have some combination of both. Regardless, not all plans are created equal. Familiarize yourself with your parents’ coverage and benefits, especially if you’re in a position where you’re required to make health care decisions for them or provide financial assistance in paying for care or medications.
- Have They Set Aside Enough to Cover Medical Costs in Retirement?According to Fidelity’s 2018 Retiree Health Care Cost Estimate, couples who turned 65 in 2018 need to have saved approximately $280,000 to cover health care expenses in retirement. If your parents aren’t 65 yet, keep in mind that this estimate increases every year.
- If Not, How Will Costs Be Covered?If your parents haven’t saved enough to cover the costs of health care, you might find yourself in the same position as the majority of adult children, who end up paying for health care and medication needs in addition to providing care for their aging parents. Make sure to plan and discuss with your family, including any siblings, how these costs will be managed.
It’s also helpful to know how the costs of some forms of care are covered. For example, although Medicare doesn’t cover the cost of a nursing home stay, Medicaid does. In fact, most residents of nursing homes have their stays covered by Medicaid. However, Medicaid doesn’t kick in until your aging parent meets its poverty thresholds, and it will first eat through any retirement income your parents are receiving.
What Are Your Parents’ Wishes for a Funeral?
My mother passed away suddenly without ever having expressed any wishes about her funeral. We had no idea if she would have preferred to be buried or cremated, have her ashes spread somewhere, or be interred at a specific location. So we were left to make all these decisions on our own.
Although funerals are really for the living, if your aging parents leave no instructions about their desires, you may be left struggling with doubt about whether you made the right decisions, on top of the grief you’ll be experiencing. So make sure to have this conversation before it’s too late.
It’s also worthwhile to ask if your parents have made any financial arrangements for their funerals, such as buying funeral insurance or prepaying for their funeral or a particular burial plot.
How to Talk With Your Parents About Estate & Advance Care Planning
End-of-life planning isn’t an easy topic of conversation, but it’s an important one. According to 2016 research by Independent Age, a website focused on supporting older generations, almost four out of five people think having discussions about aging and death is important, but less than a third have actually had such conversations.
The study finds that some of the key reasons for avoiding the conversation include a lack of knowledge, worry about the reaction of family members, avoidance of undesirable possibilities, and a feeling that the timing isn’t right.
Yet, the cost of avoiding the conversation can be monumental. Older individuals may experience greater anxiety about the unknown; adult children may feel overwhelmed by the responsibility of making decisions on their parents’ behalf, especially when they don’t know what their wishes are; and adult children are likely to make decisions that are different from those their parents would have made.
There are also potential financial ramifications if no planning is done. These could include adult children having to pay for advanced medical care, taking on caregiving themselves, paying for the funeral (the average cost of which is upwards of $7,000), or dealing with paying higher estate taxes than are necessary.
Having “the talk” about end-of-life planning is unquestionably important, but how do you approach such a difficult topic? Consider the following tips from Catherine Hodder, estate planning attorney and author of “Estate Planning for the Sandwich Generation: How to Help Your Parents and Protect Your Kids,” and Ellen Goodman, founder of The Conversation Project, which aims to help families talk about their end-of-life wishes.
1. Be Patient
This is likely to be an ongoing conversation with your parents and not a one-time thing. Think about when the right time to bring up the conversation might be, and consider doing it a little at a time.
2. Be Transparent With Other Family Members
Try to include siblings in the conversation so it won’t seem as though you’re trying to be controlling or secretive. It will also help avoid family disputes and ensure everyone is on the same page. Remember, you aren’t trying to ask about your inheritance; you’re merely attempting to understand your parents’ wishes so that when the time comes, you’ll know how to make the appropriate decisions.
3. Keep Notes
Because this will be an ongoing conversation, your parents may change their minds about their wishes. Make sure you keep a record of any wishes so you’ll have those notes to refer to. Also, remember that, no matter what your parents tell you they want when it comes to designating who gets what, none of that will matter unless it’s written down in a will.
4. Don’t Pressure
This is not the time to argue over who gets what or attempt to right past wrongs. Remember, the purpose of the conversation is to ease the financial and emotional strain of end-of-life decisions.
Keep in mind that this can be a difficult conversation not only for you, but also for your parents. Very few of us like to talk about death and dying. Think about how you would feel if you were the subject of the conversation. Would you be anxious about the possible future or scared of dying? Exercise compassion and empathy.
Your job isn’t to tell your parents what they should think, feel, or do, but to understand their wishes. The conversation could also bring up a lot of feelings, especially feelings of sadness and regret. Allow your parents to express their feelings without judgment.
7. Consult an Attorney
In addition to helping you with any legal documents, an attorney who specializes in estate planning can help mediate the conversation and suggest topics for discussion you may not have thought of otherwise.
8. Consider How You’ll Begin the Conversation
It can be intimidating to open a conversation with, “Let’s talk about end-of-life planning.” Instead, try opening with a family anecdote and using that to lead into a conversation on what your parent might want. For example, “Remember when Grandma died, and we didn’t know what to do for her funeral because she never told us?”
Or you can try to phrase it in a way that asks for your parents’ help so that your questions will appear less controlling. For example, “Mom, I need your help. Someday I might have to make decisions for you, and I don’t want to be in that position and not know what you would have wanted.”
9. Focus on Values
Goodman suggests that it can be difficult, if not impossible, to cover all possible end-of-life scenarios. Instead, try to focus on your parents’ core values and get a general feel for what they want that can guide future decisions.
10. Have the Conversation When Your Parents Are Healthy
Don’t wait until your parents are no longer mentally or physically capable of telling you what they want. For many of the decisions you may be called on to make, if you wait, it will be too late. Have the conversation now before you need the answers.
Also, keep in mind that sometimes, just starting the conversation can be the hardest part. According to Goodman, “The fear that stops people is getting over that threshold. Because once you’re over that threshold, these conversations are not scary and not depressing. People will tell you after they’ve done it that it was the warmest and most intimate conversation they’ve had with their loved ones.”
Remember, though, that if you find the whole conversation uncomfortable, you’re not alone. That’s why, although so many people believe it’s an important conversation to have, few have had it. If you’re in need of more direction, Goodman offers conversation starter kits on her site.
Although talking to your parents about their end-of-life planning is unquestionably difficult, the conversation is critical. If nothing else, it can help families avoid panic when they find themselves dealing with the death of a loved one. The 2016 Fidelity Investments Family & Finance Study found that 93% of adult children who had end-of-life planning conversations with their parents felt significantly greater peace of mind. Similarly, 95% of parents reported having greater peace of mind after having these conversations.
Further, Chris McDermott, senior vice president of Private Wealth Management at Fidelity, cautions that multigenerational estate planning conversations are not merely for the wealthy: “No matter how much wealth a family has accumulated, discussions about estate planning are essential to ensure the wishes of parents are carried out.” He adds that “understanding your parents’ goals and expectations – and having an agreed-upon plan, including the role each family member plays – helps ensure more positive financial and emotional outcomes for all.”
No one likes to talk about death and dying, and it can be especially difficult for adult children to contemplate their parents’ aging and death. The loss of a parent is never easy, and the grief process can be profound and ongoing. That emotional difficulty is only compounded, though, if one or more of your parents experience physical or mental incapacity or die without you knowing their wishes, having the necessary legal documents in place, or knowing where you can find them when needed.
Have you talked with your aging parents about their estate and advance care planning? Or are you struggling to figure out how to open the conversation? What do you think might be holding you back?