Attorney & Mediator
Attorney & Mediator

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.

Asking the hard questions of aging parents

You have aging parents – but they are doing great right now.  Your concern is that you have no idea how to handle things in the future – you don’t know what they want. 

You have seen your friends confronted with these issues when a crises has occurred and it has created chaos and stress within the family.

If your parents are private people, how do you start this difficult conversation?

Pick a time when you are together with your parents, when everyone is relaxed and there are not a lot of distractions. 

Explain that you don’t know what their plans are for their future and as their children, you want to know how they would want to have things handled – you want to get it right – to honor their wishes.  You may actually find that your parents are relieved because they didn’t know how to get this conversation started. It is better to have this conversation now than at a time of crises.

  • Ask about their goals for their short term and long term future.  Have they considered their finances as they move forward?  Are there any concerns?
  •  How would they like things handled for them in the future?  What are their           concerns?  Why do they feel as they do? 
  • Do they have any estate planning documents?  If so, where are they located?  If not, discuss whether this might be a good time to investigate estate planning. 
  • Who are their professional advisors?  Financial advisor, accountant, insurance agents, attorney, doctors. 
  • What are their wishes for future living arrangements? Do they have long term care insurance?  Do they have sufficient financial security to stay in their own home? 
  • What are their funeral and/or burial wishes?  Do they have a prearrangement with a funeral home?  Do they have a prepaid funeral?

Stress the fact that you cannot help them and honor their wishes if you do not know what those goals, wishes and desires are.

Remember that this first conversation will be difficult for them and for you.  It may be a time to only break the ice.  There may be a need for future discussions.