Hello friends! Welcome to the third installment of the Financial Planning Vicennial – planning at age 57.

For some columns in our vicennial, they will be very specifically tied to structural, tax or investment rules dictated by that age. Other columns, like this one, will be a bit more personally influenced. When I am 57, my parents will be 85. Our financial planning considerations for a 57 year old then, is how to plan for having 85 year old parents.

We’ll look at three areas together.

1. Power of Attorney
2. Personal Directive
3. Living with Dignity

POWER OF ATTORNEY

A Power of Attorney (POA) document is the thing that grants authority to someone else (the attorney) to manage the financial affairs of the donor (the person donating the authority). A general power of attorney ends automatically if the donor becomes mentally incapable, whereas an enduring power of attorney endures through mental incapacity. The power granted by a POA can be very broad, but under no circumstances can the attorney alter the “testamentary disposition” of assets. This means where stuff goes if the donor dies. I.e., no changing beneficiaries on life insurance or investment policies.

If you are 57, the first planning item to consider is discussing with your 85 year old parents is who is their attorney according to their POA document.

What happens if it’s you?

An attorney is required to act with a fiduciary duty, which means that they must put the needs of the donor first, and the eventual beneficiaries second. Their own interests must be set aside.

As attorney, you want to ease into getting involved in their financial affairs while the donor still has capacity. Ask about (and get documents for) their investment accounts, their life insurance policies, any businesses that they’re a shareholder in, and other properties, such as real estate and bank accounts. You’ll want to meet with their financial planner, and their lawyer, to review their estate plan and their will, so that while you’re in your role as attorney you can act in balance with both their current financial needs and their estate goals.

If your parent is living independently, you can also encourage them to transition their mail to a post office box near to your physical location, so you can collect it help them review it. This is especially important for government documents as they consider a transition to assisted living, because assisted living residences can’t accommodate mail forwarding.

You’ll also be able to assist them in downsizing their assets, helping them sell items they no longer use, and gift treasures of sentimental value.

Attorneys are required by law to maintain banking and bookkeeping records, and sometimes the easiest way to do this is to add the attorney as a joint holder on a bank account. For his, note that the law assumes that the attorney holds the account in a “presumptive trust” on behalf of the donor. If the intention is to grant the attorney full ownership of the bank account on the donor’s passing, then this must be very clearly stated in writing. Otherwise, it is assumed that the joint ownership is for convenience and management only, and the entire account will be included in the donor’s estate.

PERSONAL DIRECTIVE

A Personal Directive (PD) is the sister document to a Power of Attorney. In the PD, the donor is appointing an agent to make health care and personal care decisions on their behalf, including where they live. Depending on your province, the donor may be able to register their PD with their provincial health authority, so they know who to contact in the case of emergencies.

For the PD side, we’re going to focus on personal care arrangements, and specifically housing.

There are generally five phases of housing that we experience in our lifetimes:

1. Under the shelter of your parents
2. Independent living
3. Independent downsized
4. Assisted living
5. Supportive living

My parents currently have a little orchard on the north side of Summerland, BC. I imagine at my age 57, most likely they’ll be transitioning from phase 3, independent downsized (like a condo) to phase 4, assisted living.

Assisted living residents are still mainly independent, but receive some assistance with things like meals, medication management, laundry, transportation, and potentially bathing.

When looking together at options for their new assisted living residence, here are some of the things to discuss:

• How is their current health? Is it worthwhile moving into an assisted living facility, or should they be moving directly to supportive living? A second move too soon could be stressful and upsetting.
• What opportunities are there for activities? Where my dad is shy and would do well with a variety of puzzles and his kindle, my mom is very social. I could see her enjoying a structured and diverse activity schedule.
• Is the menu specifically catered to seniors, and are there alternative options available? My dad can get indigestion (becoming vegetarian is inevitable, dad. I know you’re reading this.) so we may consider meeting directly with the kitchen staff to see if they can make accommodations.
• How secure is the living environment? If there is night staff on duty, even if they’re custodial in nature, that may give them peace of mind.
• What is the cost structure? Some facilities operate as a percentage of income with a rent cap for higher incomes, whereas others may have pricing depending on the level of care needed. Where does their desire for comfortable living meet with a lifetime of budgeting and being frugal?
• What has their living space naturally condensed to? If their domestic lives are still active beyond the bedroom, kitchen, and a living room chair, would the assisted living residence provide sufficient space? Some residences will allow you to come in and measure walls ahead of time, to see what furniture can fit. Residents are encouraged to personalize their space as much as possible, but they still really need to think about what they might want to bring.
• What storage options are there in the residence, and what items would they be comfortable storing close by? For example, could Christmas decorations be tubbed up and kept at a relative’s house?
• Are any pets allowed in for visitation?
• Do they need to keep their land line, or would they prefer just a cell? What other modern technologies (for today: facetime and ipads) should they consider as a way to connect with family?
• Would they prefer an assisted living residence where a church service available on site? While my parents both grew up in fairly strict religious households, they’ve never been judgmental of other races or religions. They would probably prefer, and quite enjoy, a diverse set of spiritual teachings. Other parents might prefer that their specific denomination was supported.

The planning goal for someone age 57 is to see if you’re the Agent listed on your parents’ Personal Directive, and to start having these conversations with them. Compatible assisted living can be a significant factor in their quality of life. And yours too. You won’t have to worry about them as much.

LIVING WITH DIGNITY

Even if you have all the legal documents in place that allow you to make decisions for them, it’s so important to encourage your parents to age with dignity and independence.

Of course, I’m going to come at this from a financial point of view. The point would be to make sure that your parents don’t have any guilt over how much of your own money it costs to care for them.

If one or both parents require an additional level of care and move into an assisted living facility, consider helping them file an ‘involuntary separation’ application for their Old Age Security, which could increase each of their monthly pensions by about $60 per month.

If you are taking time off from work to provide care for a family member who is critically ill, you can consider applying for EI caregiver benefits to help support your own income needs.

Sometimes, one sibling is more able to take care of their parents than others, due to location or availability. So consider creating a Family Financial Plan, which would look to the spreading the caregiving expenses equitably. This can include lower out-of-pocket financial costs for the sibling doing the most hands-on care, or it could include a discounted ‘rent’ amount if there is a sibling living on-site to assist with care.

And, because we have to go there, at age 57 it’s time to make sure that your personal financial plan includes instructions on who should care for you later in your life, and how you would best like to be cared for. You can consider long-term-care insurance, although options are somewhat limited in Canada, or you could make plans do live your Independent Downsized years closer to those who would be most likely to care for you. One of my clients is amazing for soundbites. He once told me (paraphrasing) “the best thing I do for my children is to maintain my own health”. So if you’re age 57, start consciously planning to age with dignity.

For more information on planning to care for your parents, or if you have questions on building a Family Financial Plan, speak to a Registered Financial Planner today.

Meagan S. Balaneski, CFP, R.F.P, CLU, CIM
Portfolio Manager
Aligned Capital Partners

The opinions expressed are those of Meagan S. Balaneski, and may not necessarily reflect the views of Aligned Capital Partners. The information contained in this blog is for general information purposes only and is the opinion of the owners and writers and does not reflect those of ACPI. This information does not provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. Please contact Meagan S. Balaneski regarding your particular circumstances.

Meagan S. Balaneski can be reached at mbalaneski@alignedcp.com