Ep #10: Caring For Aging Parents

Benjamin Haas |
  • Get in the right frame of mind
  • Make checklists.  Trust, but verify
  • Review documents, beneficiaries, accounts
  • Understand what Mom & Dad really want
  • Understand your own situation, time & money
  • Make a plan for other considerations such as paying bills, gifting, property, and minors

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Full Transcript:

Benjamin Haas  00:03

Hi, everyone, and welcome to conversations where we will help you CFP your way out of it a podcast where you get into the minds of certified financial planners on how we think and feel about everyday financial planning questions, and what should really matter in your financial life.

Adam Werner  00:29

Good afternoon. Welcome back. or whenever you are listening to this.

Benjamin Haas  00:35

How are you, Mr. Werner?

Adam Werner  00:37

Doing just fine. How about yourself?

Benjamin Haas  00:39

I'll, I'll state the same.

Adam Werner  00:45

What we're going to talk about today is caring for aging parents, and what that may mean for what we call the sandwich generation. It's the 50 and 60 year olds that are now having to play a bigger role in their parents lives. And I guess, let me give a little bit of context and what I mean by or what we mean by caring for. It's surely not the physical or the emotional caring for that's not our area of expertise, that really is the financial side of things, and just taking on more responsibility for mom or dad later in life. So what are some suggestions? Or what would we be telling people that are in that position at this point?

Benjamin Haas  01:36

I think the first piece of advice that we need to give is trying to help someone get in the right frame of mind, I think we're probably talking to, you know, specifically a child who may be taking the lead on helping their parents as they're going through that aging process. And we're probably making certain assumptions here that I hope are fair to make. They're stepping in at this point, they're assisting with financial responsibilities really, from to two ends of this. They are maybe seeing some cognitive abilities are starting to fade, maybe they they're not able to keep up with things. But the other side of this that we have to be sensitive to is, some of this is also preparing for what is going to be inevitable in the future. And that's making sure that everything is buttoned up the way that it should be, while those things can still be taken care of. Of course, hopefully, while you know, parents are still in a good frame of mind. So, I guess you gave context, I gave that context that's framing this up, but I think my first piece of advice and chime in here on you know, anything that you would want to give to kind of frame that up too. It's almost to, to get over the hurdle of it feeling like I shouldn't be stepping in, in certain ways. In many ways, my best piece of advice is being okay with parenting your parents, right, it's not being judgmental, on their inability to do certain things. But, you know, it's, it's more so to guide them. And I think, you know, the way that you can go about communicating that or thinking about that, it's kind of recognizing that with the parallels to maybe parenting if you had your own kids. It's a list of chores. It's a checklist, these things have to happen. You know, have you done them yet? Do you need help doing them? Even beyond that, I'm thinking of my 12 year old, trust, but verify, like, make sure that things were actually done. Give guidance, maybe the Be honest about what you need, right? If you know, you're going to be in the driver's seat on the back end of all things, settling things, then it's not to step on toes, but it's okay to be honest about the things that you know, we're going to help you in your future settle things. And I think that's where we'll talk about documents next. But I think that's where I would first start, it really is not a time to feel like...well, those are mom and dad's matters. And I'm not going to step on toes. I don't want to insert myself. I think it's really important. Part of caring for the aging parent here is to make sure that certain things are done. And again, while they're of sound, mind and ability, start to talk about the things that they don't need to have kept or you know, that you need to be planning for in the future while they can give meaningful feedback.

Adam Werner  04:25

I think that's very well said, it's, it's a great point. Clearly we like as planners, anything you can do to prepare in advance usually gives you more options, more flexibility, it just sets things up for smoother process moving forward. We do acknowledge that and maybe you already said this at the beginning. Not all family dynamics are the same. I know in my own experience that not everyone is open to receiving that level of care or that level of involvement. We acknowledge that, again, everyone's situation is different, there are certainly going to be those little details that are going to impact someone's firsthand experience. But ideally, you know, some prep worker or some involvement usually makes things at least simpler moving forward.

Benjamin Haas  05:19

And let's stay there real quickly, before we segue into some of those things that we want to talk about, like documenting things. Family dynamics, roles and responsibilities. We understand that it's, it can be overwhelming, and yes, some of these conversations may be uncomfortable, and hence, that's why you can involve people like us. But I think the advice that I'd also give is, don't just deal with defaults. I'm thinking of, you know, a person that they may be willing or wanting to take the lead, but they have other siblings Well, which one is closest with Mom and Dad, either from a relationship standpoint, or physically, logistically. Who's the oldest, do they have the default position here. It's just really important not to think about people for, you know, what they could be more so than who is the person that is best suited to do this job. There's a lot of responsibility and making sure things are documented on the front end, but then also making sure that those things are carried out on the back end. So I really think it's important, even if it's uncomfortable, to really think objectively about who is best suited to do what?

Adam Werner  06:32

I could not agree more, just as you were going through that, just like the scenarios in my head of just the family dynamics that I know firsthand. The default typically is, well, the oldest child is the one who has power of attorney as the executor. And that may not always be to your point, the person who is best suited to actually carry out those items or to actually, you know, take the ball and run with it when help is needed. So , even just even just having that conversation as a family. Again, you said it, they're usually not the most comfortable conversations. But in our experience, those are the those are the more meaningful things that really do set the stage moving forward. To make it easier on the collective family. If you just kind of throw it out there, get it out in the open and start to have that discussion.

Benjamin Haas  07:25

And we can start that conversation. great segue with a checklist, right? So let's maybe give those tangible things in this podcast, too. What are the things that if you are taking the lead, or you're asked to take lead on in this way, caring for aging parents? Let's just start to list some of those things. What are the documents that we would suggest making sure that mom and dad have thoughtfully put together? Where would you start?

Adam Werner  07:53

Clearly state documents, so making sure that the will or wills are properly reflected of what they would want to see happen? If there's any special considerations that need to get thrown in there, that those are all taken into account, its powers of attorney. So if for some reason someone becomes incapacitated, either physically or just cognitively, to have somebody that can step in and help carry out, continue to pay bills, all of those things that that need to continue to happen. So documenting a power of attorney is incredibly important. Health care directives, right, the advanced directives. We view this the same as the will. What you want to see happen when you pass away, how do you want to assets to transfer it's while you are living, what do you want to have occur with your own care? It's the Do Not Resuscitate. It's, you know, all of those things that you want to make sure are crystal clear that if you are in a situation where you can't make those decisions on your own, that you either have it already laid out, or you're nominating somebody who can make those decisions on your behalf.

Benjamin Haas  09:04

And I would highlight there this power of attorney is so important if part of caring for aging parents is again, some sort of diminishing cognitive ability. I've seen a lot of situations where well, I have three kids, I'll list them all and they equally can weigh in on that, you know, even that can be cumbersome to now have multiple people have to sign multiple things. You know, what you feel is fair is not always the best structure to getting things done. And again, in an ideal world, everyone gets along. And you know, that makes it a little bit easier. I'll certainly admit that. But I think having meaningful conversations on the front end to not only make sure these documents are done, but that they're easy to execute is a really important thing. And even there, I think there's a lot of defaults that will be in documents like that, where we would say they're probably like a typical situations, which would make it even more important to think about what should be documented differently, call it special circumstances. Let's maybe throw some of those out there because they are common. So I think about situations with minors. Where money may be left behind if we're doing, you know, not only something through the will, but we're checking beneficiaries on financial accounts, are they as they should be? If there are situations where there are minors that could potentially be inheriting money? How is that going to be handled? What are the expectations? Can they be responsible about it? We always talk about special needs. If there is a situation where somebody else is already disabled, or has some sort of other need that needs to be cared for, then that needs to be documented potentially a whole different way. And we can't just leave money outright to a situation with that. Again, what else is on your list there?

Adam Werner  10:58

So it's those special circumstances, because of God forbid, there's something negative in a family, there's history of substance abuse, financial abuse, things like that. You want to make sure that you are documenting things properly, that money is going to go where you want it to go. Outside of that, divorce, whatever the divorce rate is in the United States right now. Yeah, 50% was kind of the number that was thrown out there, you want to factor that into whether it's your son or daughter getting a divorce and making sure that your money goes to your bloodline and doesn't leave the family. Or it's a blended family, your son or daughter marries a second time around. Now, there are stepchildren and just making sure that the documents to your point that a lot of those default to the bloodline. But if there are other pieces of the family now, if there are other children, the stepchildren or adopted children, when there are items like that, you just want to make sure that it is clearly documented somewhere, that money is going to go where you want to go.

Benjamin Haas  12:07

And odds are in our experience here, many people have that just default Will you know where it is I leave everything to my spouse and then equally to my kids, odds are your parents haven't, haven't thought through any of those special circumstances. And therefore, God forbid they again, they can't update a Will anymore, or they pass away as part of your you know, in that time where you were really starting to care for them. If they haven't thought about it, then they're going to be unintended consequences of where things now have to go. So it just kind of highlights that point, again, uncomfortable or not get the right documents in order, even something as simple as get them to jot down where things are. Where can where can you find financial documents, personal documents, passwords, special keys, cards, birth certificates. This is all going to be very helpful in the future. And we're highlighting again, before that cognitive ability goes away. Have them weigh in on all these things.

Adam Werner  13:08

It's work on the front end for that person to document or we call the list of the ledger of all of my financial accounts and passwords and just all of that important information. But to have that it in a consolidated spot goes so far when it comes to actually having, whether it's power of attorney, or you're the executor of the will, when that time comes to be able to go to one spot and be able to just go down that list and start to do that work. It just makes it so much cleaner, and so much simpler.

Benjamin Haas  13:42

And it doesn't even have to be that the typical stuff of you know, the will and the power of attorney to healthcare directive and list your accounts. It can be simple. I love you notes, right? Where do you want certain things to go? What would you want other people to know. If there is some sort of family heirloom, if there is something that was special to you, you're not sure who would want it? Okay, just document and make notes so that loved ones that people were talking about here that are going to be doing the caring for the aging parent, that they have insight that it doesn't become this question mark of what would have been wanted? I have one more bullet point under this document. I think we see a lot of situations where the, the mentality was to diversify savings and investments by institutions. And that really can become very cumbersome to somebody that then needs to help organize things on the back end. So I think there should be conversation on how can we consolidate, in it in a responsible and meaningful way? How can we consolidate some of these relationships, some of these institutions, so that on the back end, when things need to happen, when it's putting a power of attorney into effect, it's not having to send that off to 12 different places. It's three, for example.

Adam Werner  14:59

It just simplifies the process along the way.

Benjamin Haas  15:06

I guess I jumped to the third piece of advice, if it was getting the right frame of mind and then document things. We go back to doing your own financial planning.  Understand your own situation. What would you want to highlight there?

Adam Werner  15:22

It's you certainly you hear I don't want to say horror stories, but you hear the trying situations that some people get put into when they are the primary caregiver for an aging parent. And if they are still in their earning and working years, it's how do you it's the time constraint up? How do you balance both? How do you continue to, to work and earn and work on your own financial plan? Meanwhile, you're being pulled in another direction to make sure you're caring for your parent, either physically, financially, emotionally, all of the above? So yeah, there could certainly be that circumstance where you're not able to work, the degree you are working. What domino effect does that have on your own financial plan? Clearly, that's where we would want to play that role, too. And making sure that if you have to do this for a loved one, what is going to be the effect on your own personal financial plan? And what trade-offs do we need to incorporate to make sure that you're going to be okay, as well?

Benjamin Haas  16:18

I think I think you put that really well, I think it's just really important to think about scenario planning, kind of understand the trade-offs, things that you're not thinking about, right? Maybe you do have benefits at work that would allow you to care in a way that doesn't put your own job in jeopardy. But if you're earning less money, it's less social security, it's less potential pension, it's all those Domino effects. You do it out of love and care, but it's not to be surprised by these other dominoes. And certainly, when it comes to the family dynamics of things, you know, you'd hate to be the one that feels so responsible for that. But then that leads into other resentments or, why can't my siblings do this, ideally, people work together. But our point is, if you were going to be caring for the loved one, let's on the front end, think about what your own situation and limitations are.

Adam Werner  17:08

And maybe there is a scenario here where at least the one that popped into my head is, dad passed away, mom is still alive. But now she's only getting one Social Security, the pension that dad had did not have a survivorship option. So maybe, maybe money is tight. So maybe that financial support has to get factored into their own plan. I don't think anyone out there is going to let their mothers kind of dangle out on her own if you know if money is a constraint. So we certainly see that scenario from time to time to where, whoever that person is. In our scenario, we're saying, you know, 50-60 year old retiree is now trying to financially support their own life now also trying to support their parent. And again, just making sure that that all does factor in and work in their own financial plan.

Benjamin Haas  18:02

So I think my mind goes then to one final point, it's kind of understanding what mom and dad's financial plan was. I guess that assumes that they had one. But oftentimes, we will get questions again, working with, we'll say, the child that is now having to care for mom and dad on, well, how should we handle these things? If they end up needing care later in life? Should we transfer the house into our name? Into the kids names? Should we start gifting money out of their estate to us. Hey, we'll hold on to it just in case they need it. But then it becomes do you have to pay taxes on that income? When are we selling their property if mom can't go back and live there, there are just a lot of things that would be a I would hope plan for thought out. But more than likely it hasn't been. And therefore I would say it's your job. And if you need us to help have these conversations, again, we will. But it's your job to bring these questions out so that mom and dad can weigh in on them if they still have the ability to, and that again, you understand the dominoes of any one decision.

Adam Werner  19:05

I agree with that wholeheartedly. It's certainly we would want to have all of those things kind of figured out on the front end for mom and dad, right and have all those conversations, make all decisions, streamline everything. And then when they need care, it's already done. Again, our experience being that probably is not the case. So even if you're beyond that, and now parents need care, and we need to now do a lot of this planning on the back end, you may lose some of your options, there may just not be as flexible of choices. But there are still things to consider. And you can still get things in the right format or the right setup. So I guess my point is, it's never too late to at least start that process. And make sure that if there are things that can be done that they get done in a timely manner.

Benjamin Haas  19:50

I think that's well said. Recap: It's difficult and it's probably uncomfortable to get into that frame of mind of what your role and responsibility truly is on trying to assist your parents or your parent, with their financial responsibilities at the end of life and making sure that things are documented. But, again, there is help for that. And certainly when it comes to even communicating or how to ask these questions or how to go through it, you know, that really is a role that we can play, as you said, going way back to the beginning, you know, it's this sandwich generation that, hey, you know, great, we're empty nesters. The kids are out of college, they're on their own. But now it's right back to maybe having to parent your parents. That can be stressful. There's a lot that goes into it. But again, we're here to help and we want to be clear about that.

Adam Werner  20:42

Yep, absolutely.

Benjamin Haas  20:44

All right. Anything else you want to add?

Adam Werner  20:46

No, sir.

Benjamin Haas  20:48

Thanks again for the time. We're here you. Hopefully if this resonates with anyone, don't be afraid to reach out. We're here to help.  Okay, everyone, Adam, and I really appreciate you tuning in. Please note that the opinions we voiced in the show are for general information only and are not intended to provide specific recommendations for any individual to determine which strategies or investments may be most appropriate for you. Consult with your attorney, your accountant and financial advisor or tax advisor prior to making any decisions or investment. Thanks for listening.

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