Financial Considerations When Caring for Elderly Parents
investing-my-money | Read Time: 3 minutes
By David Stork | Published: May 2023
It may be difficult to think about your parents passing, so discussing their estate plan is often avoided. However, ensuring their wishes are met can provide peace of mind. Your parents’ last will and testament is just one document that dictates the distribution from an estate, but there are others such as revocable trusts, asset titling, beneficiary designations (people you designate to benefit from your estate) to consider, and more.
- Inventory their estate, making a list of assets: This list should include real estate, banking accounts (checking, savings, money markets, CDs, etc.), investment accounts, traditional and Roth IRAs, 401(k)s, or family businesses. Be sure that the titling of those assets syncs with their estate plan. Often, an estate plan is drafted but the titling of the assets may not pass under the will as intended. For example, items that pass by beneficiary designation will not likely pass under the terms of a will.
- Ensure their estate plan is up to date: Too often people put off updating their estate plan and when it is eventually reviewed it is not what they currently want. A will is the most common estate document that appoints an executor, the person who will be responsible for administering the deceased’s estate. The will also distributes the deceased’s probate estate, that is, the assets held in the deceased’s name alone or those that do not pass by beneficiary designation, such as life insurance or retirement accounts. Working with an estate planning attorney will help ensure a smooth transition of your parent's wealth.
- Ensure beneficiaries are up to date: Some assets do not pass per an individual’s will. Life insurance, IRAs, and 401(k)s to name a few, pass per a beneficiary designation. Making sure that these beneficiary designations are up-to-date and align with your parents’ overall estate plan wishes is critical.
- Consider a living trust, power of attorney, health care directive, etc.: While a will is necessary to dispose of assets that are titled in the deceased’s name, a revocable living trust is useful to avoid probate, which is a legal review of wills, for assets titled to it. A will is only effective at death, but with a revocable living trust, a person funds the trust during their lifetime, and at their death, the trust passes the assets out per its terms. The trust is revocable during its lifetime and the assets titled avoid the probate process which can be costly. It is often best to have both a will and a revocable living trust as part of an estate plan.
Additionally, consider having a power of attorney that permits one to appoint an agent who can make certain personal, financial, and medical decisions for them. A power of attorney is effective during a lifetime but ceases at death.
Also, an advance directive for health care permits one to make end-of-life decisions in the event one becomes in a state of permanent unconsciousness.
- Consider a plan for assisted living or long-term care: According to the Pennsylvania Health Care Association, an estimated 70% of people currently turning 65 will need long-term care at some point for an average of three years[i]. The average annual cost in Pennsylvania in 2021 was $133,882[ii]. A long-term care policy can help offset these costs. However, if purchasing a long-term care policy is not possible, work with an elder law attorney to help plan for long-term care such as Medicaid.
Assuming financial caregiving responsibilities is a serious role. At Bryn Mawr Trust, we can provide sound financial advice tailored to you and your loved one’s specific situation that supports your family’s needs.
[i] Long-Term Care Trends and Statistics | PHCA.
[ii] Long Term Care Insurance Pennsylvania - All Companies 2023 (ltcinsuranceconsultants.com).
About the Author – David Stork
David Stork is a Wealth Director with Bryn Mawr Trust serving the Central Pennsylvania team based in Hershey. David leads an advice-driven cross-functional group of wealth advisors, investment advisors, and relationship managers to deliver extraordinary client experiences. David’s career in the financial services industry spans more than 20 years. He has a high level of technical experience in estate, tax, and financial planning issues. He is a resident of Lancaster, PA.
This communication is provided by Bryn Mawr Trust for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. No portion of this commentary is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax, or legal advice. Certain information contained in this report is derived from sources that Bryn Mawr Trust believes to be reliable; however, Bryn Mawr Trust does not guarantee the accuracy or timeliness of such information and assumes no liability for any resulting damages.
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