Your parents worked hard to get to this point.
They socked money away each month, lived within their means, and are now ready to enjoy retirement.
But that assumes everything goes according to plan. And if you’re old enough to have parents who have reached retirement age, you know that not everything goes according to plan.
Take the phenomenon of mental cognitive impairment (MCI). It can make older people forgetful when it comes to their finances, or a target for fraud.
It’s not as serious a condition as dementia but is “much more scary in terms of the likelihood that you’ll be still be behind the wheel of your financial life,” David Laibson, a Harvard economics professor, told USA Today in 2013.
Fortunately, there are steps you can take to provide asset protection for elderly parents.
How can I tell if my parents are having trouble managing their finances?
Look for some of these signs:
- Forgetting to pay bills
- Gas or electric or cable service is suddenly suspended
- Sudden trouble balancing checkbooks or organizing documents
- Falling prey to scams
- They show concern about “missing” money in their accounts
- Their bank contacts them about problems with an account
Asset protection for elderly parents
One place to start is by helping them simplify their investments.
“A very complicated portfolio, with all sorts of individual stocks, non-publicly traded investments, related partnerships, is not good for an 85-year-old person to be running,” Laibson said.
The USA Today story suggests seniors streamline their investments by:
- Giving control of those assets to a trusted adviser
- Switching their portfolio to less-complex investments
- Consider an annuity, which – while costly – offers a steady income source
Make sure your parents are on the national Do Not Call registry to keep telemarketers away. Remind them that their number won’t expire once it’s registered. A recent email scam tells people their registration is about to run out.
Other ways to offer asset protection for elderly parents include:
- Set up a spending plan, either on your own or by working with a financial planner. According to Market Watch, many seniors are choosing a “daily money management” plan, in which a professional will sit down with a senior citizen and help them pay bills, balance their checkbooks and file medical claims.
- Sign up for free annual credit reports and credit monitoring, which can help your parents keep track of their accounts.
- Consider a power of attorney, which will allow your parents to designate someone to make financial decisions for them if they become incapacitated.
Protecting your assets and Medicaid planning
There may come a time when one of your parents can no longer care for themselves and has to enter a nursing home.
Paying for that care doesn’t have to wipe out their assets. There are ways to qualify for Medicaid and still leave something behind for their children or a spouse who is still at home.
People can only qualify for Medicaid if their financial resources are less than $2,400 (this includes cash, stocks, retirement accounts and real estate other than your primary residence).
When you apply for Medicaid, the government looks at all your financial transactions within the previous five years.
Let’s say your dad needed to move into full time nursing care. He has $200,000 in the bank, and wants to protect some of his assets, but still pay for his care.
If your dad just gave you his $200,000, Medicaid would penalize him, making him ineligible for the program for about 20 months. (Medicaid’s “penalty divisor” for Pennsylvania in 2018 is $330 per day.)
But if your dad gave half the money to you or your siblings, the penalty phase would be cut in half. He could use the remainder to buy an annuity to help pay for the nursing home while still being able to leave something for his children.
We would recommend consulting with an attorney who specializes in elder law before making any of the transfers we’ve described here.
Let Pennsylvania Stair Lifts help your parents enjoy retirement
At Pennsylvania Stair Lifts, we believe that your parents’ golden years should be as safe and worry-free as possible.
And while we can’t help them manage their money, we can make their lives – and yours – less stressful by providing equipment such as stair lifts to let them navigate their homes more safely. Contact us today to learn more about our stair lifts for rent or sale. We look forward to helping you and your family.