Vail Daily column: What’s your ‘aging plan’?
Editor’s note: This is the first in a two-part series detailing the importance of establishing open communication with our aging loved ones.
I am almost 50 years old. My father passed away many years ago and my mother is in her mid-70s. Speaking to loved ones about a plan for their later years is something I have done personally and something I happily share with friends and clients.
When my mother’s parents passed away, she shared with my brothers and me many of the trials and tribulations she encountered. Often, she did not have to say very much to us to let us know how her heart ached from missing them; her sadness was evident. However, there was something else there troubling her.
While she did share with me and my brothers where some of this sadness came from, it was not until many years later that I came of age enough to understand. Her sharing and explaining to me her experience had a great bearing on me finding my path to assisting my contemporaries and our aging parents.
The issues my family has encountered with the passing of my father, grandparents and others are not unique. At some time, we all will have to deal with the passing of family and loved ones. What may be different is how we prepare.
Have you spent time planning for the role you may play in your parents’ old age? Most people don’t like to consider that our parents will someday not be self-sufficient. As a result, many families are not prepared to deal with a parent’s increased dependency.
LEARN TO COMMUNICATE
Even if your 60-year-old parents are young and spry, now is the time to begin communicating about how they envision living in their old age. Our ability to understand and respect their current and future desires can only be achieved with open and honest communication. We cannot help our parents if we have no idea what their wishes are.
The process of having this conversation will be cathartic and educational to our own children, ourselves and our aging parents. Being proactive and taking the awkwardness out of discussing such topics as finances, health and safety, and living arrangements will help lay a solid foundation for any difficult times and discussions ahead.
While there are many topics to discuss, one of the most uncomfortable and eye opening may be finances. Do your parents have a retirement plan? If so, have they revisited it recently? If not, are they willing to develop one and include you in the process?
If your parents are agreeable, you may want to have them review their bank accounts, investments, various insurance coverages and loans with you. Spending the time to help evaluate their ability to pay their bills while they are retired and understanding the costs of living independently or at another location will be critical for developing a plan. As well, this process may prove to be very enlightening for your own future planning and help ensure that your financial expectations are sound.
I find it rather shocking that so many of my peers are unaware of what a family trust is and the importance of asking their parents if they have established a family trust. A family trust is not just for the country club set and the wealthy elite.
A family trust is a legally binding document that covers an individual’s assets during one’s lifetime and specifies the terms of dispersing those assets after one’s death or incapacity. The person establishing the trust (grantor) transfers all of their assets so that the trust itself is the owner, not the individual.
Some of the benefits of a family trust include:
• Helping you avoid probate (if set up correctly).
• Protecting selected assets against claims and creditors.
• Setting aside money for special reasons, such as a child or grandchild’s education.
• Meeting the Medicare and Medicaid asset limit (varies from state to state).
You are not taxed on trust assets during your lifetime. Any income derived from trust assets, however, is taxable at ordinary income tax rates
Depending on your finances, contributing income-earning assets into a family trust might kick you into a lower tax bracket, perhaps even saving you more in taxes than the amount you contribute.
There are many facets to financial preparation for retirement; a family trust is just one. Next week, I will continue with a few more important financial topics in addition to addressing some health, safety and living arrangements.
Judson Haims is the owner of Visiting Angels Home Care in Eagle County. For more information, go to http://www.visitingangels.com/comtns or call 970-328-5526.