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A Guide to Financial Planning for Aging Parents Thumbnail

A Guide to Financial Planning for Aging Parents

By Bryan Lee, CFP®, MBA

It can be an uncomfortable role reversal when you start to become the caretaker for your parent(s). This new position comes with many responsibilities for which you may not be prepared. It’s no longer just helping to read the fine print or move heavy furniture around the house. As your parents approach old age, they will need assistance with more serious tasks, like managing their finances and planning their estate. No kid wants to think about one day having to care for the people they once believed to be invincible, but having a plan in place can relieve some stress, especially during an emotional time of transition. 

We hope the following 5 legal and financial considerations can be a guide to help ease the burden when planning for your aging parents’ financial legacy. 

1. Put a Will in Place 

How many times have you heard a story in the news about a celebrity who died without a will and left their relatives and business partners with a raucous legal battle? Case in point: The battle over Jimi Hendrix’s estate continues to this day (more than 50 years later!), all because he had no will.

While you may consider your family above such squabbles, it’s better not to test that assumption. You never know how large amounts of money will affect people and their behavior. Your parents need to have a will that spells out their final wishes, including who will carry out those wishes as the executor of their estate. Then, the details of the estate plan should ideally be communicated with everyone so that conversations can be had now rather than having disagreements between family members after someone passes away. 

Having and updating a will (and sometimes attorneys may recommend a revocable trust) is especially important in situations with blended families. It’s all too common for someone to neglect to update their will and leave an ex-wife or ex-husband as the sole inheritor or executor of an estate. Not only do your parents need a will, but they also need to make sure it is updated to reflect their current situation and desired legacy. 

The importance of double-checking beneficiary designations goes beyond just a will. Make sure your parents have gone through all of their accounts, including life insurance policies, retirement accounts, and other savings, and verified that their listed beneficiaries are coordinated with their will or trust.. 

2. Begin the Long-Term Care Conversation

If your parents are over 65, there’s a 70% chance they’ll need some sort of long-term care services in their lifetime. That’s a high possibility that should be taken seriously.

Ideally, the whole family should come together to develop a plan for caring for parents when the time comes. Discuss topics such as: 

  1. Who will provide care for them? 
  2. Who will pay for the care? 
  3. Does it make sense for them to purchase long-term care insurance?

All too often, the most responsible or local son or daughter ends up shouldering the entire burden. This can often lead to burnout and resentment toward the other siblings that don’t share in the day-to-day responsibilities. Save your family the trouble and proactively come up with a plan that everyone can agree on.

3. Delegate Roles and Responsibilities

Approximately one in nine people age 65 and older are living with Alzheimer’s. There’s a chance that a time will come when at least one of your parents is no longer able to make decisions for himself or herself. Who is going to make decisions for them at that point, both financial and medical?

While this can be an uncomfortable conversation, it shouldn’t be avoided. This is something you need to discuss with your parents and get the proper legal documents in place before they become incapacitated. Having simple powers of attorney written up will save you the trouble of going to court to request the right to help your parents when they need it most. And if your parents are comfortable with doing so, it can be helpful to have one or more of their kids added to a bill-paying account. This way, if an emergency situation arises, they can access cash reserves to pay bills and debt payments immediately instead of waiting for assets to be released or legal documents to be enacted.

4. Invest in Your Relationship

While it is important to have all of the proper legal documents in place and have a plan for how to take care of your parents when they can no longer take care of themselves, for most people, their biggest regret is simply that they didn’t make the most of their time with their parents.  

We all know that our time is limited, so we need to spend it investing in those we love. As you watch your parents age, it’s a visual reminder that your time with them is coming to an end. Consider creating a routine to make sure you spend time with them frequently while you still can. Can you make a standing date for breakfast on Fridays or a phone call on Sunday afternoons? Carving time out of your busy schedule for your parents is one of the very best ways to prepare for these final years of their lives.

5. Partner With a Professional

Amidst all the decisions and various family opinions to contend with, attempting to manage your parents’ financial situation in addition to your own can feel overwhelming. It’s also possible that your parents aren’t receptive to these difficult conversations and the shift of roles they find themselves in. This is when the help of an experienced financial advisor can make a world of difference for everyone involved. Someone knowledgeable and skilled in helping families make important decisions about such things as wills, retirement, and estate planning can be a great asset in these sensitive situations.  

At Strategic Financial Planning, we are dedicated to supporting, educating, and providing informed direction to every client. We use a unique client-first financial life planning approach and process to help clients get the most out of life. If you would like help planning for your parents’ future, call (972) 403-1234 or contact us online to set up a complimentary get-acquainted meeting so we can see if we are a good fit! 

About Bryan

Bryan Lee is the founder and president of Strategic Financial Planning, Inc., an independent, fee-only financial advisory firm. With more than 27 years of industry experience, Bryan uses a unique client-first financial life planning approach and process to help his clients get the most out of life. Bryan earned his Bachelor of Business Administration in finance and his MBA in international finance from the University of North Texas. He is also a CERTIFIED FINANCIAL PLANNER™ professional. 

Bryan is actively involved in his community and industry and has served on the boards of several associations and charities, including the Dallas/Fort Worth chapter of the Financial Planning Association, the National Association of Personal Financial Advisors, Family Services of Plano, the CITY House, and the Journal of Financial Planning. Bryan has been featured in local and national media, including The Wall Street Journal, Investors Business Daily, CNNfn, USA Today, SmartMoney, Kiplinger’s Personal Finance, Financial Planning Magazine, The Dallas Morning News, and Dow Jones Newswires. And, he has been recognized as a Five Star Wealth Manager and one of Dallas’s Best Financial Planners in D Magazine every year since its inception and recently as a Top Wealth Manager. To learn more about Bryan, connect with him on LinkedIn.