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So, you’re approaching retirement. You’ve spent years getting your financial plan in place. You’re looking at your nest egg and wondering if it is enough. You’re scrutinizing the optimal retirement date and when to apply for social security. You’re thinking about relocating and/or downsizing your home. Most importantly, you are exploring ideas of what to do with an increase in free time. Surprise! Many “Boomers” are part of the sandwich generation: you’ve just finished raising your kids and are now confronted with the dilemma of how to provide for your parents. Your parents may have lived through the “Great Depression” and WWII, and likely worked several jobs with many sacrifices to give their children a better life. Now it is your turn to reciprocate.

It is important to delicately inquire of your parents as to the status of their health and financial affairs. Problems can best be resolved by having all the facts and current information. We all love our privacy, but there comes a time when it is appropriate to pry. The tenor of the question and approach will depend upon the age of your parents and your perception of their capabilities. If they are generally doing well, then perhaps a rough overview is sufficient. If their needs are greater, then the questions need a more detailed response. At a minimum, inquire as to whether they have prepared a Will, Trust, Power of Attorney, and Living Will. Although such documents are helpful, they only scratch the surface of the issues. Evaluate their cognition. Do they have the requisite mental capacity to prepare or update these documents? If not, and there are unmet medical or financial needs, you may need to consider a Conservatorship to manage their medical and financial affairs under the scrutiny of the probate court.

You will need a good understanding of your parents’ health history, medical issues, and list of doctors and current prescription medications. If they have not been keeping records, you should start. We've created this free downloadable Emergency Information Sheet to get you started. Evaluate their “ADLs” (Activities of Daily Living) for possible deficiencies, including eating, bathing, toileting, mobility, and hygiene. Try to assess whether they may need assistance, either now or in the near future.  Have they been having problems? Pay particular attention upon the death of one parent, as to the health and living arrangements of the surviving parent. What used to work when both were alive may now require additional assistance.

Assess if their current housing situation is appropriate. Do they still live in the house where you grew up? What is the condition of the property? Are they current with bills, repairs, and possible modifications required by seniors? Do they live alone? Is that safe? Does someone regularly check on their status? Are there siblings that will help? Perhaps downsizing to a smaller place makes sense, especially one where maintenance is provided. But consider the possible need for an extra bedroom should they require live-in assistance. There are a variety of senior housing options; carefully review and evaluate your options now, prior to a moment of crisis. Seek their assistance in putting together a plan. A simple apartment might be appropriate, perhaps in a senior housing complex where some residential and social services are provided. There are other residential facilities that can provide medical services. Review the cost, which can vary widely. Do they have sufficient resources to afford the residential housing option that appears best suited to their needs? Should they come live with you? Or should you move in with them? Be wary of such long-term commitments; it will likely impact your relationship. Sometimes, when their health and cognition issues are severe, there may be no other option than a skilled nursing facility.

Obtain a complete understanding of their finances. Ideally, you will want to have current financial statements for all bank, investment, and retirement accounts. If there are too many, discuss consolidation. Obtain copies of life insurance and annuity policies. Review primary and contingent beneficiary designations. Locate copies of deeds and titles to vehicles. Help them organize and keep such records current. Obtain and review the copies of the past several years’ income tax returns. Meet with their financial advisor and accountant. Provide the institutions and advisors with copies of the power of attorney to be sure you have the power to access and assist your parents as needed. Help your parents put together a yearly budget; list all sources of income and all regular bills. Are they saving money annually or eroding their investments? Modify the budget to reflect the possible outside cost of caregivers or other services. Does it still work? Will they run out of money?

Review their medical insurance. What type of Medicare do they have?  Do they have a supplement? Is it provided as a retirement benefit without cost from a former employer? Confirm whether they have long-term care (LTC) insurance. This is different from Medicare or supplemental medical insurance. Medical insurance typically has minimal benefits for custodial care or residential services. Review the long-term care policy to confirm and understand benefits, and deficiencies in ADLs to warrant a claim for benefits. Confirm the cost of the LTC insurance, review the premium history, and evaluate the cost/benefit of continued coverage. Explore reduced benefit options to control costs.

Consider planning for future Medicaid (government) financial assistance. If LTC insurance is not available, or insufficient to cover anticipated future custodial care cost, applying for Medicaid may be necessary. There are strict eligibility rules. Be careful to avoid financial changes that impact eligibility. If both parents are alive, and only one is impaired, it may be possible to restructure ownership of their assets among them, to improve and accelerate Medicaid eligibility. Irrevocable annuities may be an option. Proper analysis of how best to spend down funds toward eligibility should be analyzed. Gifting is common, but seek proper advice prior to any transfers. Gifts within five years of applying for Medicaid impact eligibility. A gift of the residence to a caretaker child who has provided homecare for two years may be appropriate to avoid the normal five-year lookback rules. Adding another person to joint accounts may impact eligibility and alter their estate plan. Outright gifts to other family members are easy but can create issues if there is a later need to return those gifts, and some recipients cannot or will not. Perhaps a gift into an Irrevocable Trust designed to receive and manage gifts with the best possible income and gift tax implications is appropriate. Be careful about having your parents pay you for helping them. Funds passing to family members are considered gifts unless documentation exists to prove otherwise. Perhaps a Caregiver Agreement for personal services is appropriate. Consider the applicability of payroll tax obligations for caregiver services provided by family or others in the home, as well as workers compensation or liability insurance. 

Bottom line, the complexity of legal, medical, and financial issues confronting your aging parents is daunting, particularly at a time in their lives when they are least capable of making a thorough analysis and proper decisions. They may need help. They may need you. If you need help, please contact us for assistance. We have a team of lawyers and paralegals in our Vernon, CT office, who are knowledgeable and experienced with these matters. We are happy to assist. Contact our Estate Planning & Probate Department Coordinator, Eva Holmes, at 860-812-1749. Learn more about estate planning and elder law topics on our YouTube channel.