Knowing Their Wishes

Take the time to talk to your parents about the legacy they'd like to leave—as well as their expectations for their end-of-life care. It might seem tempting to assume that they have everything covered, but it will be better for all of you to have the conversation now. That way you can discuss their wishes and plan ahead together.

Planning ahead.

Your parents' estate plan should outline how and to whom they want their assets distributed. But making financial wishes clear is only part of preplanning at this time of life. A will or trust only goes into effect at death. It doesn't make any provisions for your parents if they become unable to make decisions for themselves. There are a number of important questions to ask—and preparations to make—to ensure that your parents are protected and well cared for during their lifetime.

Do they have the necessary powers of attorney?

A power of attorney authorizes an individual to conduct broad financial and legal affairs on someone else's behalf. There are two important powers of attorney that should be a part of every estate plan:

• Durable power of attorney for finances—Authorization to pay bills, manage investments, collect government benefits, file taxes, and conduct other financial transactions.
   
• Durable power of attorney for health care—Authorization to make health care decisions if a patient becomes incapacitated.
   
• Advanced health care directive—A document that states a person's wishes about receiving life-sustaining medical treatment if they become terminally ill. Also known as a "directive to physicians," it's frequently incorporated into a durable power of attorney for health care.

Make sure that your parents have prepared these documents, and that you know where they are and can easily access them. If the documents are locked in a safe deposit box, make sure that you have a key.

What if they need special care or alternate living arrangements?

While everyone wants to remain independent, that's not always possible. It's a good idea to discuss care options with your parents ahead of time. These can include:

• Adult day care—Centers and their offerings vary. Some provide meals, activities, and certain health-related services; some provide intensive health and therapeutic services; and some specialize in caring for people with Alzheimer's and other forms of dementia.
   
• Assisted living—This can range from an apartment with meals and limited medical facilities to full-time health care facilities.
   
• Nursing homes—These offer 24-hour care to people who don't need to be in a hospital but can't care for themselves.

How will you cover the cost if they need some form of elder care?

The cost of elder care varies by facility, but any form of care can be a significant financial burden. If your parents don't have (and even if they do), it's wise to address these potential costs before you're faced with paying them. Things to consider:

• What is and isn't covered by Medicare or other insurance?
   
• Have your parents set aside specific assets to cover these costs?
   
• Would they consider selling their home to pay for alternate living arrangements?

Take time to research and compare assisted living and elder care facilities. There are a number of social services available to help you locate the right kind of care and provide information on managing the cost. AARP.org is a good place to start your research.