Michigan Estate Planning Blog

Should I Ask Mom and Pop about Their Finances?

 

Adult children should know about their parents’ finances in case of any emergency. They should also know critical information in case of death. NASDAQ’s recent article entitled “9 Questions to Ask Aging Parents About Their Finances” acknowledges that speaking to aging parents about their finances isn’t easy. However, to start this process, the article gives us nine important topics you may want to discuss with your parents:
Do You Have a Financial Plan (and is it enough)? See if your parents have a financial plan. Some parents will have a solid financial plan that will let them to live comfortably into their 80s or 90s. On the other hand, you may discover they’re living on a fixed budget and money is tight. If you see that you’ll need to help them financially now or in the future, start planning ASAP. Any decision to provide them with financial support will likely have an effect on your own financial plan.
Do You Have an Accessible List of All Your Accounts? Ask your parents to draft a list of their financial assets and those named as beneficiaries of those accounts and keep it in a safe place. They should also put together important contacts, such as clergy, CPA, estate planning attorney, physician, etc.
Where’s Your Will, and Who’s the Executor? See where your parents keep their wills and estate documents. Some estate planning attorneys retain an original copy. If your parents don’t have a will, encourage them to see an estate attorney. An item that’s not commonly listed in the will, that you may want to ask about, is if your parents have prepaid for a burial plot or memorial arrangements.
Do You Have Life Insurance Policies that I Should Know About? See if your parents have any active life insurance policies. Get the details of the policies and the policy numbers. If your parents are still working, they may also have life insurance through an employer.
Are There Any Special Bequests to Family and Friends? Family heirlooms and special personal property may be a part of your parents’ estate plan. A sibling may have claimed your dad’s coin collection. Knowing your parents’ intentions and wishes for their keepsakes will make things much easier when they pass. Moreover, having conversations about family heirlooms now can help prevent any hard feelings later. Some people make up a list for their personal bequests and reference it in their wills.
Who Have You Named as Your Financial Power of Attorney? This document lets your parents name a primary and secondary person to make financial decisions on their behalf, if they become incapacitated. If you’re the one named as the person to make financial decisions, find out where all of your parents’ financial assets are held. You should also get information about their Medicare policy, any pensions and their Social Security benefits. It even helps to know their utility companies in case you need to pay these bills and must prove power of attorney.

Do You Have a Living Will? They should each have an advance health care directive or living will and health care power of attorney. These documents designate who has authority to make medical decisions on their behalf, if they became incapacitated or terminally ill. This also includes your parents’ preferences for life-sustaining treatment, including a “Do Not Resuscitate” clause, as well as their preferences on organ donation.
Have You Had Trouble Balancing Your Checkbook Lately or Forgotten to Pay Bills? Have a discussion about key financial decisions with your parents while they are in good health. This will let you make a plan, if they show signs of memory loss. The signs of memory loss include forgetting appointments, making occasional errors while managing household finances, or getting confused about the day of the week.
Do You Have a Long-Term Care Policy? To claim benefits of long-term care insurance, a person typically needs to be unable to perform two out of six common “activities of daily living” (bathing, dressing, toileting, eating, transferring and continence) or have a severe cognitive disorder. If your parents have a policy, access it and review its core benefits, in case you need to help them file a claim.
Discussing your parents’ financial and estate plans isn’t fun, but it will help give both you and your parents some peace of mind to know that they will be provided for, and things will be taken care of in their absence.
Reference: NASDAQ (Aug. 27, 2021) “9 Questions to Ask Aging Parents About Their Finances”

Long-Term Care Lapse Logistics

Do your elderly loved ones have a long-term care insurance policy or something similar? If yes, then they likely are relying on it to cover the potentially catastrophic financial risk that is long-term care. If yes, then what happens if they forget to pay the premiums? Do I have your attention now? If yes, then you will want to read a recent horror story in The New York Times - The New Old Age Blog titled “The Policy Lapsed, but No One Knew.” Generally speaking, any form of “insurance” exists to help minimize various financial risk exposures to the insured. In essence, you pay a premium you can afford (and the insurance company will accept) to cover a risk you cannot afford. Once insured, you really only need to think about the much easier task of remaining insured, which usually means making timely premium payments. Unfortunately for some families, remaining insured can sometimes present a few challenges uniquely associated with old age itself. What happens when the loved one begins to develop dementia and simply stops making the premium payments on the policy? Dementia is rather subtle before it becomes fairly dramatic. Accordingly, you may need to implement some financial safety precautions. The terrible lesson coming out of the original article is how the caregiver/son was diligent, but a mistake by his father at the bank snowballed into missed payments and a lapsed policy. The worst part of the horror story is that the cancellation notice from the insurer was never received - and the family was unaware of the policy lapse until they went to claim its benefits. Ultimately, the burden of proof was not on the insurer regarding whether the premium notice had been sent and received. Will there be a legislative reaction to stories like these? It seems this case will not go anywhere soon, but there may be more like it across the country.

Reference: The New York Times – The New Old Age (January 31, 2014) “The Policy Lapsed, but No One Knew”

For more information, see www.jerryreiflawyer.com

Old Age Disability And The Long Goodbye Saginaw, MI

Medical science has promised a longer average lifespan. It has delivered in spades. Unfortunately, this can be a mixed blessing. Everyone wants to live longer and enjoy a high quality of life all along the way. Problem: for many Americans, this turns out to be an “either/or” proposition. Modern medical science may offer a longer life, but not necessarily a longer life without disability. This subject was taken up recently by The New York Times in an article titled “High Disability Rates Persist in Old Age.” Medical science and gerontologists have long sought a “compression of morbidity.” In other words, they hoped the average quality of life would extend well into the average length of life. Instead, it turns out that longer lives are not without cost, both in ability and, often tragically, in terms of real dollar cost. Gerontologists will continue to work on the compression of morbidity problem, or lack thereof. However, for those alive and planning today for their future tomorrow, this reality calls for a certain heightened level of awareness. Either we will experience a shortened or normal life span with decent health until the end, a lengthened life span with a long and protracted disability until the end, or something in between. Regardless, each of us needs to make proper estate and financial plans for any outcome. Long-term care insurance is one tool to consider, especially if you want to preserve your options and protect your assets should your length of life exceed your quality of life someday.

Reference: The New York Times – The New Old Age (July 8, 2013) “High Disability Rates Persist in Old Age”

For more information, see www.jerryreiflawyer.com

I Am Betting on the Wife Saginaw, MI

In a sense, buying insurance is always about playing the odds. Traditionally, when the husband was the primary breadwinner, life insurance was taken out on his life. The tables are reversed, however, when it comes to long-term care insurance. What if a married couple can only afford coverage for one spouse? ElderLawAnswers.com recently took up this topic and weighed in on this question: “Which Spouse Should Get Long-Term Care Insurance Coverage?” In brief, women tend to live longer and therefore require more care. While it is far from a sure thing, a married couple might be best served by providing long-term care insurance for the wife who also is most likely to be the surviving spouse. Granted, the facts of relative longevity are quite familiar to insurance companies these days and women often require higher premiums, so the cost-benefit analysis begins. Then again, many more companies are working to offer coverage options to work for both spouses. You can find a great deal of options, if you just look around the market. On the other hand, statistics do peak volumes.

Reference: ElderLawAnswers.com (modified June 11, 2013) “Which Spouse Should Get Long-Term Care Insurance Coverage?”

For more information, see www.jerryreiflawyer.com

 

Old Age Costs Rising

Are you planning for your old age or perhaps the old age of a loved one? If yes, then you know that such planning is all about getting a handle on healthcare. Unfortunately, the most recent study from MetLife indicates that the costs for long-term care and assisted living are rising at an even faster rate than in previous years despite the weak economy. According to the MetLife study: • The national average daily rate for a private room in a nursing home rose 4.4% from $229 in 2010 to $239 in 2011. • The national average monthly base rate in an assisted living community rose 5.6% from $3,293 in 2010 to $3,477 in 2011. • The national average daily rate for adult day services rose 4.5% from $67 in 2010 to $70 in 2011. • The national average hourly rates for home health aides ($21) and homemakers ($19) were unchanged from 2010. Businessweek offers some coverage of the development, along with the words of the director of the MetLife Mature Market Institute, Sandra Timmermann. According to Timmermann, “The state of the economy, combined with rising health-care and energy costs, are having a significant impact on long-term care rates.” Indeed, even though MetLife is the largest life insurer in the U.S., it also has discontinued its long-term care insurance policies for these very reasons. Likewise, the CLASS Act (the first public-option long-term care insurance) recently shut down. In the end, this is rather grim news for those planning for their old age or an elder loved one.

Reference:  Businessweek (October 26, 2011) “Long-Term Care Costs Rise at Faster Pace, Metlife Says”