Elder Care '" Financial Planning with an Aging Parent

America is getting older. People over age sixty-five represented 12.9% of the U.S. population in 2009 according to the Administration on Aging, and that number is expected to increase dramatically. Seniors will make up nineteen percent of the population by 2030. While these dramatic changes are coming, they don't tell the whole story. An increase in the senior portion of our population affects the lives of many. At some point in their lives, most adults will need to care for an elderly member of their family. Planning ahead is becoming even more important as people live longer and the rates of Alzheimer's and Dementia go up. Although it is a difficult topic to broach, what to do when parents aren't able to make important health, financial, or day-to-day decisions for themselves is a topic that every adult should consider.

The New York Times recently published an article about financial problems caused by Alzheimer's. According to the article, one of the first things that a senior with a progressing case of Alzheimer's can lose control over is managing financial affairs. As a result, an Alzheimer's patient can face financial ruin due to simple mismanagement of financial affairs, or even worse, be victimized by a con artist who takes their hard-earned money and runs. The adult child may live in another city or state, further complicating matters. In addition, it makes take some time before the parent's mental decline is uncovered from the initial onset of the disease. Many of these negative scenarios can be avoided if the senior has a trusted advisor to consult with.

The key is to get involved as early as possible. Even if your parent has always been an expert at financial planning, diseases like Alzheimer's and Dementia can quickly change things. Here are some tips on preventing a bad situation:

1. Talk to your parent(s). Find out if any plans have been made for how to manage their affairs if they become disabled or mentally incompetent. If not, help them set up a plan (see items #2 and #3 below).

2. Ask your parent(s) to prepare the legal documents required to communicate their end of life wishes. First of all, each parent should have a will. A will helps survivors distribute the parent's assets after death. In addition, each parent should have a living will, which specifies end of life health care wishes. Getting these directions in writing allows a parent to communicate and detail their preferences which can reduce the stress of decision making for family members.

3. Discuss who can help with the creation of a power of attorney and financial decision making. A power of attorney is a document where the principal (the aging parent) authorizes an agent (another person) to act on their behalf in a variety of financial situations. A power of attorney document will remain in effect even if the agent becomes incompetent if it is made durable. Make certain that the appointed agent is trustworthy and has the parent's best interests at heart. If the agent is not trustworthy, it's like "a license to steal" according to Mark Lachs, MD (from his article about cognitive problems and elder abuse).

4. Of critical importance, stay in touch with your parents. You should treat them like children, but if their general well-being and financial health are important to you, stay involved so you can assist if things start to go wrong. The sooner you know about an issue, the sooner you can help fix it.

5. You can create legal documents for your parents, such as a living will or power of attorney, online at companies like Rocket Lawyer. The sooner you create important estate planning documents for your loved ones, the better.