Wealth Insights - June 2016

Wealth Insights

June 2016

Helping Aging Parents: Why it's Smart to Plan Ahead

Don't wait for a crisis to strike

Your parents. They watched you take your first steps and guided you with a steady hand. The irony? Some day they'll be the ones needing your help.

It's an awkward role reversal. Odds are you'll underestimate the commitment involved, physically, emotionally, perhaps even financially. That's why it's wise to prepare now, before declining health or a crisis limits their options or forces you into difficult decisions.

Challenges you can expect

It's a mistake to assume your parents will approach you when they need assistance. Denial or fear can get in the way. On the other hand, they may simply be reluctant to burden you with their troubles.

Talking about money is often a sticking point. Some people will see their child's interest as an intrusion. For aging parents, money can act as a security blanket and a symbol of independence. Many will be hesitant to delegate control. That said, a person who's losing their cognitive ability, for example, will find it difficult or impossible to carry out tasks like banking, investing, or buying and selling property without help.

When it comes to care, don't expect the public health system to pick up the tab for everything your parents need or want. It provides only a basic level of service. Whether your loved ones reach the point of needing attention around-the-clock – which can run as high as $10,000 a month in a private facility in BC – or can get by with a little help at home, money will affect the choices you have available1.

Remember, if your parents don't have adequate funds, it can fall to you or other family to make up the difference – at the same time you're paying down a mortgage and saving for your retirement.

Planning ahead gives your parents the best opportunity to maintain their comfort and stay in the driver's seat as they age, while preserving your lifestyle and peace of mind.

When to step in

If your parents won't come to you, how do you decide when to get involved? By learning to recognize the signs.

Sometimes change will be sudden and obvious, such as after a major event like a stroke or heart attack. At other times their struggles will emerge gradually. Investigate further if you witness new, unusual behaviour like:

  • Missing appointments or forgetting to pay bills
  • Neglecting housekeeping and personal hygiene
  • Trouble preparing meals or poor eating habits
  • Mobility difficulties
  • Confusion and memory loss
  • Personality changes (e.g. penny-pincher who starts buying expensive items)

Consider approaching a family doctor or the local health authority (in Metro Vancouver, either Coastal Health or Fraser Health depending on city of residence) to arrange an assessment for services. The assessment will advise your parents how to further support themselves at home by accessing either public health care, private-pay services, or a combination of the two. Alternatively, it can point out why someone requiring help might do better in an assisted living facility or long term care.

What to talk about

What if your parents aren't experiencing difficulty yet? Is there a right time to begin the dialogue?

Experts recommend observing the '40/70 rule', which says care planning should start when adult children reach age 40 or parents turn 70.

Whether it's about moving, money or end-of-life care, breaking the ice on sensitive subjects with your loved ones as they get older isn't always easy. So, get the conversation going gently, respecting your parents' dignity, autonomy and privacy. They shouldn't feel cornered by your inquiries. Be patient. It may take some time to build a connection through which open communication can flow.

At a minimum, ensure the following issues are on the table:

Discuss your parents' wishes. Be their partner, not their parent. You shouldn't try to take over your loved ones' lives and dictate what's best. Your opinions may matter, but in the end it's your parents' happiness and welfare that's important.

Determine their preferences around key issues like living arrangements, receiving outside help and medical treatment.

Urge them to create or update their wills, powers of attorney and representation agreements to allow you or another trusted party to make financial and medical decisions on their behalf, when they no longer can. Otherwise, you could face a lengthy and expensive court process to take over their affairs.

Don't forget to review joint ownership of bank accounts and other assets, as well as beneficiary designations on registered plans and life insurance policies. These arrangements can affect control over property and how title is eventually transferred.

Putting an adult child on title to parental assets is a tactic commonly used by families to share ownership in the present and avoid probate in the future, but it's not always prudent. Among the risks, it can have unintended tax consequences or leave the parents' property exposed to the child's creditors. If you're considering this option consult your financial planner first to help avoid the pitfalls.

Identify and locate key documents and contacts. Find out where your loved ones bank and invest, and where insurance policies and other essential documents are kept. Make a list of their professional contacts, such as their doctor, lawyer, accountant and other advisors. Assure your parents that by sharing information, they're helping you help them. Should the unexpected happen, you want to be able to act quickly and minimize any hassle.

Assess their financial picture. Care planning has to fit into the broader reality of your parents' financial picture – their income, expenses, assets and debts. The bottom line is they will need enough money to cover their care costs.

Calculate how much income is coming in every month from pensions, RRIFs and other investments. Do they have long term care insurance to help carry the financial load, or will they need to sell their house or other property to free up capital? Reviewing the situation early on gives you time to create an income strategy that's sustainable.

Concerned about the cost of care? Long term care insurance can be the answer.

Whether due to chronic illness, cognitive impairment or disability, for someone who's unable to manage activities of daily living without help, a long term care insurance policy offers financial protection. The benefits don't only apply to services delivered in a care facility. They can also cover care expenses at home. In general, there are two types of policies: those that reimburse costs incurred, and income-style plans that pay a regular benefit.

Policy premiums are based in part on age and health status, so your parents will generally find it cheaper to obtain coverage while they're still relatively young and in good health. Ask your Westminster Savings Financial Planner to explain all the benefits.

Taking care of yourself

While you're doing your best for Mom and Dad, there's a good chance you'll be caring for your own family and juggling career responsibilities. If not handled properly, you can pay a steep price for this kind of double-duty, like frequently missing work to run your parents to appointments, losing valuable time with your spouse and children, or neglecting duties at home. What you want is to avoid burning the candle at both ends.

Whether it's financial support or a time commitment that's required, aim to share the responsibility of looking after your parents with other family members: siblings, your adult children or other relatives. Be open to offers from close friends wanting to help out.

Educate yourself on the wide range of public and private support services available. Home care, adult day programs, medical alert systems, meal delivery – they're all there to make life better for your parents and take the pressure off you. United Way of the Lower Mainland's Caregivers Handbook and the Province of British Columbia's Home & Community Care website are detailed resources that outline how elder care works in BC and explain your options.

Get the right advice

Don’t wait for a crisis to strike, start preparing now. It helps to team up with a partner who has the knowledge and expertise to give you the right guidance. Your Westminster Savings financial planner has answers to turn the complicated decisions into a practical plan that can make a difference down the line.

Call us at 604-517-0100 or send us your question online and we'll respond to you within one business day.