In June of 2007, researchers from the Federal Reserve, Princeton and Harvard published The Age of Reason: Financial Decisions Over the Lifecycle, a paper that suggests that financial decision-making ability declines after age 53. Yet many people avoid talking to their aging parents or other family members about money. While almost no one would disagree about the importance of discussing healthcare, finances and the other issues that accompany aging, anecdotal evidence suggests that there is a big disconnect between thinking that something is a good idea and actually doing it.
In some cases, elderly parents fear losing control of their finances and fear being victimized - a sometimes an all-too-real concern. In other cases, family members find it easier to avoid these conversations because they raise uncomfortable questions about who gets what and which of the siblings handles the estate. Stirring up family conflict and broaching the uncomfortable topic of death with an elderly person will never be easy, but talking about this topic is essential. Read on for some tips on how to approach this discussion with your parents or another elderly member of your family.
Sooner is Better than Later
While there are certainly a host of good reasons to avoid the topic, and you need to keep them all in mind, such conversations are even more difficult when held in the midst of a crisis. For that reason alone, the time to talk is now. Start the conversation in a non-threatening way. Coach it in terms that you love the person and just want to make sure that he or she is taken care of and that his or her wishes are respected. If elderly person who want to help has a financial planner or a family attorney, you may want to ask that person to join the conversation. Sometimes the voice of trusted professional helps to frame the discussion in a business-like manner rather than a personal one. Also, these professionals have had similar conversations with other families and are often quite good at it.
Topics to Talk About
Once you've figured out how to start the conversation, the topic of healthcare should be high on the list of items to consider, since failing health and increasing age often arrive together. Factor in the high cost of healthcare and the variety of complications that can occur should an elderly parent become incapacitated, and it's easy to see why everyone should plan in advance not just for medical care, but also for disability and
long-term care coverage. (To read about how to prepare, see Failing Health Could Drain Your Retirement Savings.)
To get started, you'll want to make sure that your elderly family member has medical coverage. A policy from a private insurance provider or through the government-sponsored Medicare program should cover a large portion of the medical expenses and prescription drug costs incurred by people over the age of 65. (To read additional information about Medicare's benefits, see Medicare: Defining the Lines and Getting Through The Medicare Part D Maze.)
If the person is not yet retired, disability insurance may be worth considering. While the Social Security program provides a disability benefit, it may not be enough to cover a person's monthly expenses. (See Protecting Your Income Source to help you decide if additional coverage is necessary.)
Long-term care is perhaps the most complex and potentially expensive healthcare issue. To facilitate a conversation about this topic, it will be helpful to have a solid background on the subject of long-term care and its insurance. (To find out more about the topic and to learn about what to look for in long-term care insurance policies, see Long-Term Care: More Than Just a Nursing Home, Long-Term Care Insurance: Who Needs It? and Taking The Surprise Out Of Long-Term Care.)
Once you have a plan in place to pay the medical bills, it is important to have a plan in place to see that medical care is delivered in a manner that matches your family member's wishes. In this regard, a healthcare proxy gives someone else the ability to make medical decisions on your family member's behalf. A living will is also important, as it offers exact instructions for your doctors and family regarding the continuation of your family member's life by artificial means or heroic measures in the event that they become incapacitated.
Last, but not least, comes the estate planning. Having a last will and testament prepared is a crucial step. Not only does it ensure that assets are divided as intended, but it can also minimize conflicts among family members. Similarly, power of attorney is another important topic to address. It will guarantee that your family member's wishes are followed even if he or she is unable to communicate. Power of attorney can be effective immediately or have a springing power, which will be applied only when a certain event takes place, such as incapacitation from an injury or illness. (To learn more about the value of advanced preparation of important documents, see Three Documents You Shouldn't Do Without, Getting Started On Your Estate Plan and The Importance Of Estate And Contingency Planning.)
Once the appropriate issues have been addressed and the documents prepared, someone needs to know how to follow the paper trail. A filing cabinet, safe, or a bank's safety deposit box can accommodate most of the necessary materials. Don't forget to include organized files for banking, credit card and tax records. Give a friend, family member or attorney simple, easy-to-follow instructions on how to access these important documents.
Start the Conversation
Once you have done your homework and are prepared to talk, it's time to have the conversation. Don't delay, as waiting can make it harder and more expensive as circumstances change, health declines and prices rise. Instead of focusing on the grimmer aspects of these issues, emphasize the benefits and speak with compassion. Keep in mind that, one day, your children may be having this conversation with you.