Estate Planning for Elderly Parents: Your Guide

Key Takeaways

As your parents get older, questions and concerns about their health, financial decisions and end-of-life wishes are natural. Adult children often feel responsible for their parents, even if they don't directly care for them.

Broaching estate planning topics with your parents can be awkward, and many people don't know how to start. But if you don't initiate the talk—and your parents don't create a plan—their wishes may not be carried out as they want.

Financial consultants Ryan Adams, Jimmy Merdian, Sarah Pedersen and Addison Tantillo share ideas on helping your parents with their estate plan so they (and you) can prepare for the future.

Why Estate Planning for Parents Is Critical

Knowing why an estate plan is vital for your elderly parents can motivate them (and encourage you to talk about it). Many people put off estate planning because they don't know where to start or don't understand the consequences of not having a plan.

Our consultants say an estate plan is important to an overall financial plan. The plan becomes more critical for people over a certain age as you consider the "what-ifs" of aging and the decisions you and your family may need to make. Also, think how tough those decisions may be if you don't know your parents' wishes.

The estate planning process helps your parents decide on health, future medical treatments and end-of-life choices. It also gives them a say on how they distribute the assets they worked a lifetime building. An estate plan lets them—not a probate court—decide where they want those assets to go.

No one wants to think about what will happen to their parents. But you and other family members also don't want to be left making difficult decisions if something happens or your parents can no longer make their own decisions. The last thing you want is to have to go to court to get conservatorship over your parents.

"As people get older, having an estate plan becomes more important by the day," says Addison. And while it's a topic people seldom want to discuss, the reality is life can throw us curve balls, and we never know when our last day will be or if a medical event will interrupt our lives.

Addison continues, "Establishing an estate plan while you're still healthy and capable is important. Having helped numerous clients and their loved ones, I can say that having a plan makes these situations far less stressful for everyone."

What Will Estate Planning for My Parents Look Like?

Many people only think of estate planning as the process your parents will go through to decide who receives an inheritance. But it's not just about the family inheritance; it can be a far more comprehensive plan your parents may need. Estate planning and helping your parents put their financial house in order is also about their wishes while they are still living.

Issues you and your loved ones can solve by estate planning may include:

• What are their plans for long-term care?

• Who will provide ongoing care, and how?

• Who will assume financial and medical responsibility if a parent becomes incapacitated

• Where will your parents live—in their home or an assisted living facility?

• What is their plan for end-of-life issues?

• How will their assets be distributed?

When your parents have an estate plan, it can help reduce family conflicts about responsibilities and inheritances—and eliminate the hassles of going to court.

Ryan says, "Most of my clients with an estate plan have also had to deal with relatives that did not. Losing a relative is difficult enough."

Your parents likely won't want you and your family to go through the probate process. "Getting the courts involved can be time-consuming and expensive," he continues, "So helping them understand the benefit of planning now may help."

And remember, an estate plan isn't just about the end of life. It's also about your parents choosing how they'd want to live if something happens.

Four Important Documents Your Parents May Need

How simple or complex your parents' estate plan is may depend on their financial assets, how they want them handled, and their health. At the core of the plan are a few estate planning documents that most people should consider:

1. A durable power of attorney authorizes a person of your parent's choice to act on their behalf for financial matters if they are physically or mentally impaired.

2. An advanced medical directive tells you and your family what treatments your parents want or don't want to prolong their lives.

3. A will or trust directs where your parents want their assets to go.

4. A letter of instruction expresses your parents' wishes. While a non-legal document, it gives directions in addition to a will or trust.

Start by Having the Talk About Estate Planning

The first step in helping your parents develop an estate plan is to have a conversation. Many adult children think these family money talks may be some of the hardest. Consider that it may also be a challenging topic for your parents. Our financial consultants say these five tips can help:

1. Don't Wait for an Emergency

An urgent issue often acts as the catalyst for estate planning conversations. But that's not the ideal time to have them. The best time to bring up the subject of estate planning is when people are healthy, and there are no concerns.

"People tend to bring their estate plans into view when something negative happens," says Jimmy. "But waiting until a medical diagnosis or health concern comes up can increase the difficulty of navigating these conversations and add unneeded stress to an already stressful situation."

2. Use a Conversation Starter

One classic approach to having an estate planning talk is to tell your parents you're estate planning. Then, ask, by the way, how they managed their own estate planning decisions.

You might also use stories from the news or friends to get things rolling. Did a neighbor just move to a retirement community, and she's thrilled to have new people to play bridge with? Bring it up.

3. Think About How Best to Approach Them

If multiple adult children are in your family, think about how to approach these sensitive topics. Would your parents be more receptive to one of you talking to them versus all of you? Does any of your siblings have a closer bond with them to talk about these things? Or will they react better to a discussion with everyone?

4. Don't Expect to Get It Done in One Day

A health emergency can press your timing, but remember that these conversations might take several encounters to unwind. Parents may understandably be reluctant to discuss their end-of-life wishes or their finances. It may take a few attempts to get the ball rolling.

5. Focus on What Your Parents Want

The best approach to discussing your parents' wishes is to find ways to honor them. In other words, don't surprise your parents with a list of nearby senior living communities or nursing homes. Talk to them first.

Start by asking how they feel about various topics, such as aging in place versus senior living communities. Empathy about how they think will help with the conversation and your relationship.

Sarah says the key to this conversation may be making it a partnership between you and your parents. "Starting the talk with compassion and empathy will help them feel at ease and more open to the topic. Working with them to discuss the benefits of estate planning now can lessen any confusion that could come later."

She also says that creating a road map together lets your parents see how their wants and wishes can be fulfilled.

Involve a Third Party if Necessary

If you're concerned that your parents need help or are at risk, you may want to engage a non-family member to help. For instance, if you are concerned that your father shouldn't drive anymore, discuss the topic with his doctor. He might take the news better from his family physician than from you.

Another way to enlist help is with an advisor and an estate planning professional. Our consultants can help you begin discussing how an estate plan aligns with your parents' financial plan.

Jimmy says, "Having estate planning conversations isn't always easy, but putting them off too long can create a larger burden for all of you. Having the conversations ahead of time and getting a plan in place can give your parents and you confidence that their wishes have been addressed. Then, you can spend your energy elsewhere—like enjoying one another's company."

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