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Prepping for taking care of aging parents

2,087 Views | 11 Replies | Last: 5 yr ago by cjsag94
Duncan Idaho
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I got informed today that I am going to be the son tasked with taking care of my parent's finances as they age.

I'd really like to have the 3 of us sit down with a professional to understand the best way to go about doing this.

My mom's knees are pretty much gone, so some kind assisted living situation is going to be need.

I have tried to get them to talk to someone in the past about setting up a trust to protect their assets but they aren't interested because they "we don't have enough assets to trigger the estate tax." I don't know enough about trusts or estate planning to explain why it is a good idea (or even if it is a good idea).

Should I try to find a lawyer? An accountant? A CFP? Something else?

TXAGFAN
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AG
Good luck. My mom is only 62, but I've been assisting her with her finances since her divorce with my father about 8 years ago. It's a tough and thankless job.

Will be watching what others say on here as I know we need to start thinking about these things. Luckily she has enough assets I don't have to worry about her quality of life, just want to protect them for future generations if possible.
Duncan Idaho
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That is kind of the same situation we are in. Between their 3 retirement payments (2 teachers and army), they should be fine. I just want their estate to be protected from a long term illness or some kind of legal issue, like a car wreck since they live in el paso.
nactownag
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AG
I feel like the best is to have an estate planning attorney and a CFP and accountant all work together to create a plan.

This is a situation that calls for just that.
Ragoo
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AG
Where are they based?

To give posters here and opportunity to provide references.

Best of luck. I am glad that my parents started down this road themselves 15+ years ago in their 40s. They have the team in place watching the finance/wills/insurance/trusts/giving/etc.
JDCAG (NOT Colin)
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AG
Can't help, but just wanted to offer a thumbs up to those of you doing this. I just spent a week with my family and my mother in law visiting her dad (my wife's grandfather) and she does this for him. It's a tough job and getting tougher with as many scams and con jobs as there are. He would get dozens of scam calls a day, the channels he watches (i.e. the ones with older shows being rerun) were just ridiculous medical commercials one after the other, and the amount of paper wasted on his mail every day was insane. It's really scary, so kudos to you guys doing this.
Duncan Idaho
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El Paso.
Brush Country Ag
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AG
Due to the litigeous society we live, if they are still driving, financial protection is a big issue for me. I took out an umbrella policy to cover their savings. I will say this is a tough situation to deal with...wife and I both have had to deal with taking care of our parents. We are both in our 60s now, and have taken steps to alleviate this burden from our kids.

Our dealings with our parents have opened our eyes to what we needed to do. It's not cheap and it's not fun...but please take steps now. POAs, Medical POAs/DNRs, Wills ..get these documents done by a competent attorney.
aggiebrad94
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AG
I would start with an elder care counselor. They will be a wealth of information and will help your parents see what is involved in taking the next steps. They will have recommendations on where your folks should move based on interests and income. They will also refer you to lawyers & other advisors should more legal & financial help be needed.
Stive
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AG
Passwords and access!
Passwords and access!
Passwords and access!



And start budgeting/saving for the assisted living/home health world. It sounds like long-term care insurance is going to be out due to your mother's knees but the likelihood of having to pay for that type of care is extremely high. Build that into your expectations and assumptions beginning now! $$$$$

insulator_king
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AG
Stive said:

Passwords and access!
Passwords and access!
Passwords and access!



And start budgeting/saving for the assisted living/home health world. It sounds like long-term care insurance is going to be out due to your mother's knees but the likelihood of having to pay for that type of care is extremely high. Build that into your expectations and assumptions beginning now! $$$$$


This! A 1000x.
Horse with No Name
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I am a CFP, so I'm biased. That said, I would start with a CFP, fee-based might be the best option to start, develop the strategy there, then tell the lawyer very succinctly what needs to be done. The CFP should have an idea of what legal docs may be proposed (we aren't supposed to give legal advice, but we'd be pretty worthless if we didn't know the concepts going in). A good attorney will have a conversation about the pros and cons of each different way of accomplishing the end goal to fully flesh out the strategy laid out by the CFP.
I liken this to the CFP being the head coach, telling the Offensive coordinator attorney to run the ball. The OC then calls the specific play designed to succeed. The accountant is the guy who forwards the stats to the newspaper--he might have seen a lot of football, but I'm not trusting him to call plays.

Very, very few couples are subject to the estate tax. Almost everyone is subject to regular income taxes from IRAs, pensions, and social security payments. These tax problems often get worse at the death of the first spouse because some of the income goes away, in all cases the lower SS payment ceases, while the survivor is now filing singly.

Most of my clients that have trusts fall into one of four categories:
1. They were sold a trust based in fear of their children having to deal with probate/probate a home before they met with me. These are usually the most egregious and expensive trusts that people pay for. There are too many stories to count of elderly people who have virtually no assets that would be probated other than a home who pay thousands for a trust.
2. They are over the estate tax threshold--this is currently over $11m, so not many fit here.
3. They have special needs children who need funding for lifetime care--this is pretty rare, and requires a certain type of trust.
4. They have a blended family with specific instructions regarding splitting assets between 'yours, mine and ours' children or have significant charitable intent.

In everything financial, there is no free lunch. There are going to be tradeoffs--whether that be loss of control of the assets, tax issues now or at death, or incurring legal fees every time any change is needed.

I suggest starting with a fee-only planner, not because I think they are the only way to do business, but because lots of 'planners/advisors' are simply investment managers who really don't know much beyond investments. They get paid to manage money, so they may start by accumulating all the assets in their shop, without really addressing the problems that are most important to you. Fee-only planners know they are getting paid up front, not to manage assets, so tend to have greater breadth of knowledge--YMMV.

The final thing I'll add: You mentioned your mom's knees, so start with her primary care provider or orthopedist to find a reputable home care provider in your area. Then consult with the home care provider to decide if there are any modifications that can be made to the home to prolong its usefulness to your parents. Unless a home is too large or expensive for them to maintain, it is often the least expensive and most comfortable option for living once a few mods have been made.

Ridin' 'cross the desert. . .
cjsag94
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AG
What is the magnitude of their net worth, and how much of that is illiquid/homestead?

It's easy to give generic answers... But they may be wrong or irrelevant based on what you have to work with.

Annual gifting could also be used to potentially protect assets.. but pros and cons with that for sure.

I would, without a doubt, suggest you sit down with a financial advisor to get this right.
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