By Allen Ostrofe
In 2018, there will be approximately 2 million Americans living in skilled nursing facilities. The Institute on Aging tells us that in 2010, an additional 11.3 million Americans, aged 65+, lived alone! And, in the 17 years between 1992 and 2009, admissions to skilled nursing facilities increased almost threefold. Have you considered that your mom and dad might soon be living with YOU… without a plan?!
Recently Carrie and Jan, from Carefree, Arizona called concerned about the failing health of Carrie’s mother, Agnes. They felt “out in the dark” as to what they could do to help. They asked, “is there a checklist for this type of situation?”
Agnes had always been the family matriarch. She handled all financial and legal affairs, especially after dad’s death. Now, mom’s cognitive abilities were waning. She also showed signs of physical slowing. But, her spirit? Well, let’s just say mom emphatically asserted, “I’m good!”. While no two cases are the same, the following is a checklist to be a better advocate for mom’s (or dad’s!) “Golden Years”:
1. A Trusting Relationship
Establish a pattern of contact with your parents, where over time you show you care. Develop a trusting relationship regarding their well-being. Do this BEFORE problems arise. Talk openly about health and financial issues (this may not be easy if they grew up during the Depression).
2. Make a Plan
Encourage your parents to develop: a) Financial Power of Attorney, b) Directive to Physicians, and c) a Will or Trust. Once completed, encourage your parents to hold a yearly meeting with the entire family (can be a phone call, video conference, in person at Christmas or Thanksgiving, etc.) where they lay out exactly how they imagine their plan playing out among beneficiaries. Encourage parents to review their estate plan by an estate planning attorney at least every five years. Be careful of early gifting (e.g., family home) from parents or grandparents, as this can come with hefty, unexpected gift or capital gains taxes. Inheriting is often preferable to sharing your “gift” with Uncle Sam!
3. Identify Risks
Identify and mitigate mom or dad’s financial and physical risks. Complete a thorough study of any you’re your parents may have, be it mortgages, credit cards, unpaid taxes, family loans, or liens. Identify any financial risks resulting from fire or burglary, and ensure mom and dad are appropriately insured. Keep an annual list of all active insurances. Be careful of any policies which may lapse. Identify a family member to be their financial advocate, to make certain that not only all bills are paid, but that they are not the victims of financial fraud. Their financial advocate should make a point to participate in important scheduled meetings where mom and dad’s health or finances will be discussed (such as with their CFP®). Separately, identify any areas of their home which could lead to falls, electrical fires, etc. Identify areas which could be built or repaired to make their daily routine safer. In some cases, there are State and Federal programs available for financing such projects.
4. Determine Beneficiaries
Discover your parents’ interest in supporting their grandchildren or local/national charities. Discuss with your parents any assets which might now be made available. Consider creating a Charitable Remainder Trust, small foundation, educational fund, 529 Plan, donations, etc. For many parents, the ability to enjoy the gratitude from a beneficiary during their life makes that gift even more meaningful.
5. Cash Flow Analysis
With your Certified Financial Planner ®, create a “Cash Flow Analysis”, which takes into account all of your parents’ expected future income and expenses as well as inflation and market fluctuation, and creates a necessary nest egg covering full life expectancy. This is to be monitored annually.
6. Prepare for Transitions
Openly discuss with your parents the different options for living accommodations with family members or in local facilities. Ideally, before the need arises, take them to social events that local facilities offer to the public. Get mom and dad’s feedback on their likes and dislikes. This may ease and mitigate trauma in that eventual future move.
The Benefits of Planning Ahead
Does money buy happiness? Well, it certainly can create unhappiness. The above roadmap provides the tools to build mom and dad’s plan. Some argue that how you spend your money may improve life satisfaction. For many spending time on these simple points with your parents and siblings could be your ultimate life satisfaction!
The opinions voiced in this material are for general information only and are not intended to provide specific legal advice or recommendations for any individual. Please consult your legal advisor regarding your specific situation.
Allen Ostrofe, MBA, CFP®, is president of Ostrofe Financial Consultants, Inc., with clients in 31 states and is a registered Representative with, and Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Ostrofe Financial Consultants, Inc., a Registered Investment Advisor and separate entity from LPL Financial. For questions or suggestions, visit ostrofefinancial.com. Branch address: 565 Brunswick Road, Ste. 15, Grass Valley.