Monday, December 19, 2011
There are now more aging parents who need care from their children. Often, this burden falls on children who live closest to the parents and they end up using a lot of their own financial resources to provide care. Children who end up being caretakers for their aging parents should take a holistic view of the situation.
Advisors recommend getting all documents in order from the parent early, especially if the parent shows signs of dementia. One good option to provide funding for this care is to set up the financial power of attorney with a revocable trust. Parents should name the child as the agent under the power of attorney and then the trustee of the revocable trust could be a corporate fiduciary to manage assets professionally and pay bills efficiently.
Children might also find it helpful to hire outside help if they can afford to do so. Another option is long-term care insurance to help pay for extended medical or personal-care needs. It is beneficial to purchase this at a lower age to lock in a low rate and to increase odds of eligibility.
Most importantly, the goal of all planning is to take all parties into account in the plan by prioritizing competing needs.
See Ben Mattlin, Caretaker Challenges, Financial Advisor Magazine, Oct. 2011.
Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.