There are two important discussions most parents and children would like to avoid. To everyone’s relief, one of them can be delegated to our children’s health class teacher. So let’s talk about the other one: The financial independence discussion that parents and children should have as parents age and become concerned about things like custodial care, competency, and control.
This is a difficult and emotional discussion at many levels. My parents were first generation German immigrants. Being stoic was a way of life and money was private. Discussing their finances with children (at any age) broke with cultural norms. It was an admission that we might be vulnerable and no longer in control. However, for all of us, it is an inevitable reality.
It’s no mystery that as we age, we increase the possibility of suffering an episode of incapacity. It may be for a specific time period followed by recovery or it may involve the steady decline of our ability to act in our own best interests and manage our finances. There may also be significant costs associated with required medical or custodial care. Costs that may rapidly consume our assets or put at risk the retirement income of a spouse.
The benefits of an Elder Care financial planning discussion can be quite significant. Many good outcomes are possible if families engage in proactive, intergenerational planning. The earlier the conversation begins, the more options will be available.
But there are obstacles of course. First, the discussion will include topics that can be complicated and often require input and expertise across a wide array of Elder Care topics. There are legal, tax, and insurance implications as well as the intersection of Medicare, Medicaid, and Social Security. The input and coordination of multiple professional advisors may be required.
Then there is the issue of trust. Sadly, in some situations parents must confront the hard reality that some or all of their children will not do what is in their best interest. There are solutions for this, but the reality may cause parents to avoid the confrontation and put off the necessary planning.
In many cases, it can be helpful to engage a financial planner with expertise in Elder Care issues and experience in facilitating the discussion and bringing all the players to the table.
Winfred G. Jacob, CFP®
