By: The American Academy of Estate Planning Attorneys
As you look back over your life, you realize just how much your parents’ support has meant to you. They were there as you took your first faltering baby steps, they supported you with advice and encouragement as you navigated adolescence, and, even as you ventured into adulthood, you knew your parents would be there to help you face life’s unending questions and challenges.
Years later, the roles are reversing. You watch your parents’ steps become unsteady, and you realize that they need help facing their own questions and challenges. You want to help your mom and dad age gracefully, and that means knowing how to meet their needs while helping them remain as independent as possible. It can be a tricky balance to strike, and planning ahead is essential.
If your parents have accumulated substantial assets over their lifetimes, they’ll likely need to do some tax planning. Planning ahead will enable your parents to pass on as much of their estate as possible to family, friends, and charity rather than having their wealth eaten up by estate taxes.
For those who don’t have significant wealth, Medicaid planning is a key concern. Without advance planning, nursing home care or assisted living costs could drain your parents’ savings, leaving them with a very low quality of life. Planning at least five years ahead can make all the difference. It can help your Mom and Dad qualify for Medicaid coverage and still have money to pay for a few of life’s pleasures – and maybe even allow them to leave a little behind for their children or grandchildren. Medicaid planning may even save the family home.
No matter what your parents’ financial situation is, a Revocable Living Trust can be a helpful planning strategy. Your parents can place their assets in the Trust and manage the Trust as long as they are healthy and capable. They can name you Successor Trustee so that if their health begins to decline, the framework will be in place for you to take the reins and manage their finances for them.
The beauty of this arrangement is its flexibility. If your parents only need a little help – for example, if they need you to take care of their bills for a few months while your mom recovers from surgery – the Trust lets you help out for a while and then transition control back to your parents. If, on the other hand, there’s a sudden and permanent need for you to take over, the framework is there for you to do so, immediately, and without the need for court intervention or permission.
These are just a few of the planning tools available to smooth the transition for you and your parents as they age.