Seven Legal Steps to Consider When Caring for an Elderly Parent, Straightline

Caring for an aging parent presents many challenges. Although there is no way to predict illness or disability, advance planning can help minimize the legal and medical challenges. Proper estate planning documents and insurance ease the transitions in caring for an elderly parent’s health, finances and future wishes.

STEP #1 Prepare or Update a Will

The purpose of a will is to document an individual’s decisions and facilitate distributing his or her estate at death. Most individuals delay creating a will to avoid the discomfort of planning for death and dividing assets among loved ones. Without a will, estate distribution is determined entirely by state law, not by the deceased person’s wishes. The absence of a will may also lead to future conflict or litigation among family members. Thus, it is important to prepare a will sooner rather than later. If an elderly parent already has a will, the will should be reviewed and updated periodically as necessary to confirm that the will continues to reflect the parent’s wishes, changes in family structure and any changes in applicable laws.

STEP #2 Update Beneficiary Designations for Non-Probate Assets

Unlike probate property that passes pursuant to a will, some types of property may pass to a beneficiary by contract or operation of law. Such assets are referred to as nonprobate assets. Examples of non-probate assets include life insurance proceeds and cash accounts payable to a named beneficiary other than the decedent’s estate, retirement plans and assets held as “joint tenants with the rights of survivorship.” Such assets are not controlled by a will and therefore require individual attention. All beneficiary designations should be updated as necessary.

STEP #3 Create a Statutory Power of Attorney

A statutory power of attorney is a document whereby an individual, known as the “principal,” grants another individual, known as the “agent,” the authority to act on the principal’s behalf with respect to financial decisions. A power of attorney makes it possible for management of the principal’s financial affairs to continue without interruption due to incapacity. The power of attorney can cover all aspects of an individual’s personal and financial affairs, or may be limited to specific activities. For instance, this document may allow the agent to conduct everyday transactions for the principal related to: real property, personal property, investments, banking, insurance, litigation, governmental benefits, retirement plans and tax matters. Furthermore, this power of attorney may be drafted to take effect immediately or upon the principal’s future incapacity, as the principal desires.

Choosing a trustworthy financial agent is imperative because of the potential for abuse of power. Although it may concern the principal that this financial power of attorney gives the agent complete power over the principal’s financial matters, doing so is helpful because it may avoid guardianship proceedings if an elderly parent becomes legally unable to manage his or her own financial affairs. A judicial guardianship is burdensome and an inefficient way to manage financial matters. 

STEP #4 Choose a Healthcare Agent Through a Medical Power of Attorney

A medical power of attorney appoints an agent to act on the principal’s behalf to make medical treatment decisions if the elderly parent is unable to do so. This document may cover all health-related decisions or may be limited in scope, depending on the preferences of the elderly parent. Choosing a healthcare agent can ensure a parent’s medical wishes are consistent with his personal and religious beliefs.

It is also important to name a person who is able to obtain access to the principal’s medical records pursuant to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which protects the confidentiality of an individual’s health information. Designating a person under a HIPAA authorization allows that person to gain access to the parent’s medical records and thus be in a better position to make more informed health decisions for the elderly parent.

STEP #5 Make a Directive to Physicians

A directive to physicians, also known as a “living will,” is a legal document in which a person designates his wishes with respect to end of life decisions if at some point he is unable to make decisions for himself and is suffering from a terminal illness or permanent unconsciousness. A directive may include instructions for the use of certain life-sustaining medical treatments, as well as other instructions such as for pain management, organ donation or burial instructions. A Do Not Resuscitate (“DNR”) order alerts emergency personnel that a person does not want to receive cardiopulmonary resuscitation (CPR) or life support measures, and should only be entered into when a person has a terminal illness and has discussed whether a DNR order is appropriate with the physician. Please note that a DNR order is a different document from a directive to physicians.

In some states, such as Texas, a directive to physicians only applies when there is not a medical power of attorney agent appointed to make the medical decisions for the principal. In some states, a directive is combined with a medical power of attorney.

STEP #6 Purchase Long-Term Care Insurance Early

A solid long-term care policy can allow a parent to maintain a secure lifestyle and ensure access to needed services. Long-term care insurance provides many more care options than Medicaid, including in-home care, assisted living facilities and other adult care homes. Long-term care coverage requires early action because qualifying for coverage becomes more difficult later in life.

STEP #7 Securely Store Passwords and Account Information

Keeping track of passwords and account information will ensure that family members and loved ones have access to important online and electronic records such as emails and bank accounts. Similarly, a comprehensive list of passwords to computers, tablets, phones and other devices will prevent loss of electronic data and photographs that might otherwise become inaccessible at the time of death or disability. A few ways to securely store such sensitive information are to use a safe at home, a password storing service or an encryption method. A safe-deposit box is another option but should be used with caution as many banks delay access to the box upon the death of the primary holder. Finally, remember to update this information as passwords may change over time.

Conclusion: With advance planning, family members can develop a care program for an elderly parent and ensure that the parent’s wishes are respected. During this process, an estate-planning attorney can help identify options and provide counsel to resolve any questions. Encouraging an elderly parent to create the necessary estate planning documents early provides peace of mind for the parent and can prevent uncertainties and stress for loved ones later.