Taking Care with Intergenerational Planning

Happy belated Mother’s Day to all the moms and mother figures out there! Our weekend was filled with gardening, making homemade pizzas, and I was surprised with breakfast in bed which happened to be a pancake in the shape of my head.  Nothing says “I love you Mom” like having your children coach you on which part of your pancake head to eat first (tip- it’s the chocolate chip eyes).

Not my pancake face, but an itty bitty baby pizza

As my sweet children “took care of me” on Mother’s Day, I reflected on what this may mean for them as my husband and I get older and the importance intergenerational planning.  When I think of intergenerational planning, I don’t just think of older generations passing wealth down to younger generations, but also children helping their parents through transitions as they age.

If you find yourself preparing to have conversations with your parents around future plans or are already in the thick of it, here are some steps to take.

Communication Around Responsibilities

This seems the most obvious, yet difficult part of the process, particularly if an aging parent has always been independent and/or may be starting to show signs of memory loss or declining health.

  • Beginning the communication earlier on about roles and responsibilities regarding personal, financial, and medical affairs between family members and expectations for those family members can make the process smoother. More than likely it is appropriate to put these agreements in writing and in legal form.  These documents include the healthcare power of attorney and durable power of attorney.
    • The Healthcare Power of Attorney allows an individual to empower another person to make decisions about their medical care in the case they are unable to communicate their wishes regarding medical care and treatment. These are also known as Medical Power of Attorney or Advance Health Care Directive.
    • Durable power of attorney authorizes someone else to handle legal, financial, and medical matters on your behalf and remains in effect if you become incapacitated. A power of attorney can be limited (limited in scope or in timeline) or general (comprehensive).

Not all parents will want to disclose every detail to their children for various reasons, but by preparing and disclosing these two particular documents, they have the peace of knowing their desires will be fulfilled. These two documents merely touch the surface of establishing responsibilities and roles in care for elder parents and a more thorough estate planning discussions should be continued.

  • Understand what type of healthcare and, if any, long-term care plans your parents have in place. Knowing what medical expenses will and will not be covered can help start the conversation with parents on how to fill the gap in coverage sooner than later and if there are expectations from children to help provide care to lower costs.
  • Part of the conversation can incorporate three important questions which Sarah Yakel wrote about here.

Help Safeguard Parents (and yourself) from Financial Fraud

As technology advances and internet use is widespread across generations, scammers are growing more prevalent and sadly more creative with the tactics they use.  Talking with your parents about the steps to protect their private information online could help prevent an unfortunate attack.

  • Help walk parents through setting up two step authentications on online accounts whether this be through voice or through text.
  • Discuss whether your parent has established a relationship with a trusted advocate (this may be you or a sibling) or a fiduciary with whom they can contact before making major financial decisions. Sometimes it is an easier conversation for parents to have with a third party rather than with a child if they feel they have been compromised and fallen prey to fraud.
  • Encourage your parents to review their credit report annually or if they are more suscept to fraud, have your parents consider freezing their credit. Doing so can help prevent new credit accounts being opened in their name.
    • This needs to be done through all 3 credit agency bureaus (Equifax, Experian, and TransUnion)

Financial Matters

If you and your parents have agreed that it is in their best interest they have assistance with financial matters, set up processes and safeguards like the ones listed above to cover bills, policies and financial information.

  • Where possible, set up auto-payment on recurring bills such as utilities, phone bills, mortgage, insurance premiums, and loans.
    • For medical bills and other non-recurring payments, ensure that the mailing address is correct and utilize the trusted agent to help ensure that bills are being received and paid.
  • Consider having a power of attorney on file with Social Security and Medicare so that the trusted agent can discuss financial issues with these organizations. Common power of attorney forms do not cover this.
  • If you and your parents decide to nominate yourself as the trusted agent within the power of attorney and they work with a financial advisor and / or CPA, discuss scheduling an introductory meeting or phone call to establish a relationship with these professionals.

From the CFP® Board website — “Aging is expensive and inevitable, but handled well, it can be a process that builds love and trust in your family.”

Meridian is here to help guide you through this process.

Chae agrees!
Categories : Financial Planning

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