A Job for Two Generations
Why should those whose parents are well and happy in their 60s and 70s have “the talk” now?
While it may seem unnecessary to delve into your parents’ financial and medical plans for the future when they are still completely self-sufficient, this is precisely the right time to bring up matters of financial planning. For one thing, the time to have a rational conversation about an emotional topic is when all concerned are calm and feeling well. For another, none of the parties involved are getting younger and mortality, most frequently preceded by illness, must be confronted by all of us. Planning for contingencies is the best any of us can do.
It is estimated that by the year 2050, one of every five Americans will be over the age of 65, with individuals over the age of 85 will be the fastest growing segment of the population. While health issues almost always feature in the lives of older people, chronic diseases are now much more manageable than they used to be. As a matter of fact, 92 percent of seniors presently live with at least one chronic disease and 77 percent live with two or more, but a high proportion of these seniors are leading happy, productive lives in spite of their ailments.
What the Statistics Mean
Just because people are living longer and remaining stronger into their later years doesn’t mean that they won’t experience some cognitive changes that make them easier targets for fraud and financial abuse. This is one reason that middle-aged children should help to guide their parents or older friends or relatives to seek the guidance of reputable estate planning attorneys.
What Complicates the Situation?
Deciding what has to be done is not just a matter of wills and trusts — though, of course, these can be complex. There are other issues to be considered when estate planning, even though they may seem unlikely. It is possible, for example, that either member of a couple may become impaired or incapacitated to some degree, or that there may be a divorce. Frequently, one member of a couple leaves their health care or financial decisions in the hands of his or her partner, but when the time comes, the partner is no longer physically or mentally prepared to handle the matters in question.
Divorce may seem implausible in cases where couples have been together for many years, but you should note that between 1990 and 2010, the divorce rate for people over the age of 50 doubled, and more than doubled for those over 65. Also, even when both partners are still highly functional in some areas, one or both may become incapable of particular everyday functions, such as paying bills or cooking. This may happen due not only due to decreased cognition — it may simply be the result of severe arthritis. Clearly, it is essential that a trusted person be legally designated to make sure finances and personal safety are ensured.
Forbes recommends that the intergenerational conversation include answers to the following questions:
- Who will make your investment decisions when you are unable to do so?
- Who will help you simplify your finances?
- How is aging likely to impact your financial decisions?
- What steps can we take now to prevent future elder fraud and abuse?
Because memory problems and other cognitive impairment can sneak up on any of us, it is best for you to decide on a trustworthy back-up with whom you can double check with before finalizing any major decisions. Typically an adult child or other younger relative is chosen, but remember that the back-up person should live in close proximity to you. A trusted professional, such as an attorney or an accountant may be the right person to choose, but the person should be younger than you are. It doesn’t make sense to put your important decisions in the hands of someone who has any likelihood of predeceasing you.
The “talk” should include making some transitional plans, such as sharing your present situation and future wishes with the party you’ve chosen as your assistant. This includes letting your agent in on what bills you pay routinely, what charities you donate to regularly, whom you trust with your financial investments, etc. After a preliminary discussion with relatives, it is a good idea for all of you to sit down with a knowledgeable estate planning attorney to make sure you have considered all the issues and to make sure all the proper documentation is prepared.
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