With the launch of my redesigned website for my estate planning, life care planning, and probate and trust administration practice, I will be posting, on a semi-regular basis, information that can help you and/or your loved one navigate the waters of the aging. My first post starts at the beginning for many of us: talking to our own parents about their estate planning and care issues.
Here’s how it often goes: you don’t think you have to worry about Mom and Dad and their money situation. But you never know, says Mic in a recent article, “You can’t afford to procrastinate on this one key money move,” if or when a financially crippling health issue might arise. What would happen if one of your parents was diagnosed with Alzheimer’s? Are you and your siblings ready to take on the responsibility that comes with caring for a parent? Even if we just limit our discussion to the time that you will have to take out of your life to devote to care-giving, do you and your other family members have the ability to meet your own financial and other obligations if you are spending hours and hours dealing with your parent’s care?
Many of these issues stem from failing to have an important conversation. Follow these tips to have “the talk” while your parents are still healthy and can help make a financial plan for the future.
It’s uncomfortable to talk to your folks about money, and both you and your parents may feel that it’s none of your business. However, your parents’ finances can have a major impact on your future. You can try to raise the issue by expanding a conversation your parents initiate, such as if your parents bring up some money issue like buying a new car or using a credit card. Use this opening to talk about their bigger financial picture. You can also begin with your own situation, such as any discussions you have had with an attorney about estate planning. Ask if your parents have a plan in place. You can also bring up new stories about how seniors are being targeted for scams, in order to broach the subject of how your parents are managing their money.
If none of these more direct approaches work, try talking to them about their views on avoiding nursing homes, and end of life issues. No one wants to end up in a nursing home or to spend the last six months of their life tethered to life support in an intensive care unit. However, whether one can avoid nursing home care often depends on whether the senior can afford the costs of care at home – costs that exceed $200,000 a year for 24/7 care in Los Angeles and Ventura Counties and elsewhere in California. So if your parents say they do not want to end up in a nursing home, ask them whether they will be able to afford the costs of care given their financial resources. If they say they expect you and your siblings to care for them – an expectation you may share – you may want to tell them whether you can afford to stop working and/or caring for your own children in order to care for them.
You also should suggest that your parents visit a professional who can offer advice, such as an experienced estate planning and elder law attorney. He or she can address questions about nursing home care costs, less costly alternatives to nursing homes, and can help parents make a legacy plan. The costs of care is a critical issue to discuss, because 70% of people who reach age 65 will need long-term care for at least three years at a cost of thousands of dollars every month. While most folks believe that that Medicare covers the costs of medical care of seniors, it typically doesn’t cover long-term care costs. Medi-Cal is a primary payor of nursing home care IF the senior can qualify since Medi-Cal is a means-tested (i.e. poverty) program. With appropriate legal advice form an elder law attorney, it is surprising how much of a person’s assets they can protect and still qualify for Medi-Cal. However, Medi-Cal typically covers only a semi-private room in a skilled nursing facility that accepts Medi-Cal, and many seniors (along with their children) hope that, if they must move out of their home, they will end up in a nicer facility than the ones which accept Medi-Cal.
Furthermore, when a parent who receives Medi-Cal dies, it’s not uncommon for Medi-Cal to put claim on that person’s estate – called “recovery” – to seek to recover for the taxpayers the money that Medi-Cal has spent to care for the now deceased person. It is important to plan for the recovery process since planning can help preserve assets for the family. Thankfully, I have not had clients who have done their estate and asset protection planning with me face a recovery claim since we can plan for that in appropriate circumstances. However, where I did represent a non-client decedent’s estate in a recovery claim, I learned that if the State initiates recovery proceedings, it will “settle” those claims for one-hundred cents on the dollar (as the State calculates what is owed) plus interest – which is why I put the term “settle” in quotation marks – and not a penny less.
Be sure to focus your parents on how they will benefit from having a conversation about money and planning for the future. If they don’t have a will, trust or other important estate planning documents in place, offer to help them identify an estate planning attorney who they will be comfortable with. If you have had your estate plan done recently, see if they’d be comfortable setting up an appointment with your attorney – but ask if they would prefer to meet with someone other than your attorney since they may worry (even if they don’t tell you) that you will take control their estate plan and life if they use your estate planning attorney. Try to keep the conversation loving and kind, and understand that it may take more than one discussion, and different approaches, until your parents feel comfortable enough to talk about these sensitive topics.
Reference: Mic (July 5, 2017) “You can’t afford to procrastinate on this one key money move”