is simply human nature to make the occasional poorly thought out, impulsive decision, particularly among younger people.
However, it is not uncommon for the adult children of an aging person to be unhappy with the decisions being made by their parent, particularly financial decisions. Sometimes this leads the children to attempt to use the legal system to control or stop the parent’s financial independence. This is where it becomes necessary to tell the difference between, on one hand, a parent who cannot make good financial choices and, on the other hand, a parent who can make good financial choices but whose choices are somewhat unusual.
For example, a person who continually buys cans of dog food that are simply stored by the case in the basement because he or she does not remember that he or she does not have a dog is not making good financial choices. On the other hand, a person who takes skydiving lessons four times a week might seem odd to you but is, on the face of it, making a good choice of how to spend his or her money.
The fact that your parent makes a decision that you do not like or agree with does not mean that your parent has lost mental capacity. It is his or her money after all. Your aging parent is free to make as many unpopular decisions as he or she wishes, as long as those decisions are not the result of poor memory, confusion, or pressure by another person.
You might notice that your mom or dad is beginning to forget things and fails to recognize people. He or she can no longer take care of familiar tasks such as cooking, driving, or gardening that he or she used to be able to do easily. The person cannot keep track of money and does not know which bills have been paid and which have not. You are pretty sure your parent is not taking his or her prescribed medications properly. You may have no choice but to conclude that your parent is beginning to lose mental capacity. You think it is time for your parent to let someone else help him or her.
Noticing that there is a possible problem with mental capacity is the easy part, and just the beginning of what might be a long, emotionally draining experience. Telling your mother or father that you think he or she is losing mental capacity and needs help is possibly the hardest conversation you will ever have. Most (but not all) parents will fight to retain independence and privacy. If you have seen the beginning of this deterioration in your parent, it can be almost impossible to raise the topic without insulting, frightening, or upsetting the person. Once the deterioration has gone past the initial stages, talking about it becomes infinitely more upsetting for everyone involved.
Alzheimer’s disease, other dementias, illnesses, and physical deterioration may all contribute to the eventual lessening of an individual’s ability to look after his or her own decisions. The pace at which changes occur is different in every individual. Sometimes this means that there is a span of several months, or even years, during which an individual is not capable of making good decisions alone and needs help from others.
As the family member of someone who is losing capacity, your goal is to assess the problem and offer the assistance that is wanted and needed. You may discover that although help is needed, it is not always wanted by your parent. It can be really difficult to persuade your parent to let you help or to allow you to find others to help. Because there is so much at stake in the parent’s view — such as independence, identity, freedom, dignity, and privacy — the discussion can become very emotional.
Just as we should all plan for our eventual passing away by preparing a will that sets out our wishes, we should all plan for the possibility that we might lose our mental faculties as we age. We need to prepare legal documents that name individuals to make decisions for us if we cannot do that for ourselves any longer.
All aging individuals should have these planning documents in place but it is a very delicate topic. Most people realize that as they lose their mental abilities, they might also be losing their independence, dignity, and privacy. This idea is disturbing and alarming to most elderly people. Nobody wants to believe it is happening to them, and when it is happening, it is disorienting and frightening. Because we do not want to upset anyone, we do not bring up the topic, leaving our elderly family members without the help they need.
1.2 Money and insurance
The problem with talking to your parents about money is that it is hard not to appear greedy, either to them or to other family members who find out you have raised the subject. Most people are more private about their finances than they are about any other aspect of their lives. You might ask your parent, “Have you got your money invested safely and properly?” and what they hear might be, “How much money do you have, and are you leaving it to me when you pass away?” Money is a touchy subject.
Part of talking about money is talking about insurance. The types of insurance that are particularly relevant to aging parents and family estate planning are life insurance, long-term care insurance, and critical illness insurance (each of which is defined below). Not everyone has or needs all of these types of policies, as everybody’s situation is different. However, if you are helping your parents with planning, it is essential that you find out and understand what your parents have in place.
Insurance can be remarkably useful in filling money gaps in estates. Your parents might find it useful to meet with an insurance representative to talk about how different kinds of insurance might be helpful in their situation. You should be aware though, that it is possible to be over-insured, so your parents should thoroughly understand what a policy is going to do for them before they buy a new one.
Life insurance pays out an agreed-upon amount of money to a named beneficiary when the insured person dies. Often, the named beneficiary is a spouse or other family member, but life insurance can be useful when the named beneficiary is the estate of the deceased person, because this creates cash flow that did not exist before the death. Life insurance is also used frequently in conjunction with privately owned businesses to buy back the shares of a business owner who passes away.
Long-term care insurance covers the costs of living in a long-term care facility, or, in some cases, the costs of receiving specialized care at home. It is intended to be used by individuals who are no longer able to deal with personal care such as bathing, toileting, or meal preparation due to the complications of aging. It is paid in the form of weekly or monthly benefits and can be used to supplement government or private sources of retirement funding.
Critical illness insurance pays out a lump sum of money to a policy owner who suffers a major illness such as cancer or a heart attack and survives.
The fact that these types of insurance are listed here does not mean that everyone reading this book should urge their parents to buy all of these policies. They are listed so that when you have a discussion with your parents or a family meeting, you will be sure to ask what is in place. You might also see how one of these types of insurance might fill a need for the future and want to raise it at your meeting. Sometimes putting insurance to good use requires the cooperation of the whole family, such as when a group of siblings pays the premiums on a long-term care insurance policy for their parents.
The most common of all of these is life insurance. When talking about a life insurance policy, you must understand the following information about the policy:
• Who is the owner of the policy?
• Whose life is insured by the policy? (Note that some policies insure more than one life, such as Joint and Last to Die policies.)
• Who is the beneficiary of the policy (i.e., who will get the money on the death of the life-insured person)?
• Is the policy whole life, term, group, etc.?
• What is the face value of the policy (i.e., how much money will be paid out on the death
