Should you name your parents as beneficiaries?
For most people, this idea might seem unusual. After all, in the general scheme of things, parents will die first.
For individuals with minor children, this should not be a strong consideration as the primary focus of your estate plan is to provide for your children in the event that you are no longer here to care for them.
For people whose children have grown, or for individuals without children, this issue may deserve a stronger consideration depending on family dynamics and economics.
If your parents are individuals without significant assets and are “getting by” on their social security and a small savings, they may run out of assets in the event of a lengthy medical event. Additionally, while those without assets can apply for Medicaid for Nursing Home costs, that doesn’t hold true if an elderly parent needs assisted living.
If the time comes that your parents can no longer live independently at home, but are not eligible or appropriate for a skilled nursing home care, they may require assisted living. The problem is that this is a pay as you go system. What if they do not have the resources to afford assisted living?
If all of their children are alive and doing well, the children may decide to assist their parents financially by each contributing a monthly amount, thereby permitting the parents to live in assisted living. What happens, however, if you are contributing to your parents’ assisted living costs and your predecease them? Or perhaps, they are not yet at the point of needing assisted living, but could very well require it in the future. If you die first, they will not have the support they may need when the time comes.
This could be a good reason to include your parents as beneficiaries in your trust. The money could be structured so that it would include assisted living expenses during their lifetimes; however, the money if not used during their lifetimes would then flow to other beneficiaries.
This is a concept which should be discussed at a family meeting of all the siblings. The key is that with proper planning, your parents’ needs will be met while you are also addressing the needs of your own family.