KNOWLEDGE CENTER: Financial Considerations in the Care of Aging Parents [Column]


It may be difficult to think about the death of your parents, so discussing their estate plan is often avoided. However, ensuring their wishes are met can provide peace of mind. Your parent\’s last will and testament is just one document dictating distribution from an estate, but there are others such as revocable trusts, title deeds, beneficiary designations (people you designate to benefit from your estate) to consider, and even more.

Inventory their assets, making a list of goods: This list should include real estate, bank accounts (checking, savings, money markets, CDs, etc.), investment accounts, traditional IRAs, and Roth, 401(k), or family businesses. Make sure the title of those assets is in sync with their estate plan. An estate plan is often drawn up but the titling of the assets may not go under the will as expected. For example, items that pass by designation of beneficiary will likely not pass under the terms of a will.

Make sure their wealth plan is up to date: Too often people put off updating their wealth plan and when it finally gets revised it\’s not what they currently want. A will is the most common inheritance document that names an executor, the person who will be responsible for administering the estate of the deceased. The will also distributes the deceased\’s estate, that is, assets held only in the name of the deceased or those that do not pass by designation of beneficiary, such as life insurance or retirement accounts. Working with an estate planning attorney will help ensure a smooth transition of your parents\’ wealth.

Make sure beneficiaries are up to date: Some goods do not pass through an individual\’s will. Life insurance, IRAs, and 401(k)s to name a few, go through a beneficiary designation. Making sure these beneficiary designations are up-to-date and in line with your parents\’ overall estate plan wishes is critical.

Consider a living trust, power of attorney, health care directive, etc: While a will is required to have assets titled in the deceased\’s name, a revocable living trust is useful for avoiding probate, which is a statutory review of wills, for assets titled to it. A will is effective only upon death, but with a revocable living trust, a person funds the trust during his lifetime, and upon his death, the trust passes on the assets on his terms. The trust is revocable during its term and the titled assets 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.

Also, consider having a power of attorney that allows you to appoint an agent who can make certain personal, financial, and medical decisions for them. The power of attorney lasts for a lifetime but ceases with death.

Additionally, advance directives for health care allow you to make end-of-life decisions if you fall into a permanent unconscious state.

Consider an assisted living or long-term care plan: According to the Pennsylvania Health Care Association, about 70 percent of people currently turning 65 will need long-term care at some point for an average of three years. The median annual cost in Pennsylvania in 2021 was $133,882. A long-term care policy can help offset these costs. However, if purchasing a long-term care policy isn\’t an option, work with a senior attorney to help plan for long-term care such as Medicaid.

David Stork is a Wealth Director with Bryn Mawr Trust serving the Central Pennsylvania team based in Hershey. Stork leads an advisory oriented cross-functional group of wealth advisers, investment advisers and relationship managers. His career in the financial services industry spans over 20 years. He has technical expertise in real estate, tax and financial planning matters.

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