I previously wrote about this back in June 2021. We received more questions and follow ups about this topic than any other (although property was a close second).
So, I have taken the most asked questions about Aged Care and Estate Planning and expanded on them to hopefully provide more help and understanding around this tough area of conversation with your elderly parents.
Who should be involved when having ‘The Conversation’
‘The Conversation’ is something that ideally you and any siblings will have together with your parents. It should happen when everyone is in a good state of mind, and obviously while everyone – especially the older generation – have the mental capacity to be discussing serious matters.
Try not to spring it on your parents. Flag it ahead of time and arrange a suitable time and location. Ideally this won’t be the parents’ home, where emotional attachment might make the idea of leaving unbearable (and/or it is too easy for Mum to distract herself making tea). Perhaps make an occasion of it – a nice lunch at a quiet restaurant?
Another idea for approaching ‘The Conversation’ is to start with the estate planning topics – for instance, checking that your parents’ Wills exist and are current, and that you all know where the documents are located and who the executors are.
In some cases, either you, your siblings or your parents may be uncomfortable with the idea of having this conversation. There can be numerous reasons for this, including the parent-child relationship being reversed or the fear of facing their own mortality.
If this is the case, you could organise a third person to be involved, such as a financial or legal adviser, or simply someone known and trusted by the family of a similar age who will not be a beneficiary of the estate.
And it might take several conversations over several months or even years. The important thing is to start ‘The Conversation’, to bring talking about the future planning of your parents/parents-in-law care into the present. Decisions don’t have to be made straight away. In fact, early conversations are more about empowering the older generation to have their say about their future.
If you think getting control over your own finances is a challenge, just think about the shift you’re asking older people to make and help them through this.
What to talk about in ‘The Conversation’
The overall aim of the conversation is for everyone to understand the older generation’s preferences, both in the best case and the worst case.
We can summarise the main ‘agenda’ under two main headings: estate planning and aged care. My suggestion is to start with the estate planning side of things and leave the aged care discussion, which can be more emotional, until the end.
Estate planning is fundamentally about managing the transfer of wealth from one generation to the next. There is the legal side of this, in terms of documentation, and there is the financial side. As long as your parents have current Wills, at a minimum, this should be a fairly straightforward discussion.
It’s surprising how many people don’t have a Will, or at least a current one as having a current Will when you die can save your family thousands of dollars in legal fees, let alone the associated heartache – and they don’t need to cost a lot of money.
Other documents though that are equally important are Enduring Powers of Attorney/Guardianship as once they can’t make decisions for themselves, you can step in and act on their behalf. Lastly something more practical as where are important documents kept, passwords, and who would need to be contacted if they pass away, as you may not know all the people they speak to (and some especially the elderly get very upset if they have been left off being told when someone has passed away).
Ideally, the conversation should extend to who has been given what powers, such as executor of the Will, etc., to ensure that everyone involved is comfortable with what’s in place. This conversation makes sense and is usually quite straightforward, with few issues. If everyone is comfortable, you may like to move into the specifics of your parents’ plans for their assets.
An example of how ‘The Conversation’ for Joanna didn’t quite go as expected
Joanna, 60, had two siblings, William and Chris, who were both in their 50s. Their mother, Gwen, now in her 80s, still lived in her own at home and, until very recently, had stayed healthy for her age – ‘As strong as an ox’ she always said. She had never shown any interest in discussing her future with her offspring, and the siblings had never felt the need to raise the topic either.
Now, however, Joanna had organised for the four of them to get together at her home. Gwen had slipped over at home recently and, while she didn’t break her hip, as many do at her age, the fall did scare her. This time she had sounded quite keen to have a meeting. From various casual conversations, Joanna was aware that her mother’s Will and other estate paperwork was up to date. And there had been that one conversation when Gwen had mentioned, almost in passing, a certain aged care facility that she liked the look of, which was near a beach and had a good cafe nearby.
Now, with the three siblings and Gwen in the room together, they were able to make sure everyone shared Gwen’s point of view. Gwen then raised the topic of the family home, saying her preference was for it to be sold after her death and the funds split three ways. Or even sold beforehand if some of the funds were needed to pay for her aged care.
What surprised everyone was William’s reaction to this part of the conversation. He objected to the idea of selling the house, saying he never wanted to see the home he was raised in being sold off to some other family. He had never even considered it a possibility. In fact, he had always assumed that he and his family would eventually move into the home, as he was the youngest and felt he deserved it for some reason.
William agreed that he could not stop his mother if she decided to sell the home before she died, but he made it clear that he would fight his siblings if they ever tried to sell the place after Gwen’s death.
This was the last thing Joanna had expected. She had only ever worried about her mother’s wishes. The reality is that issues coming out of left field like this happen all the time, which is why it is so important to have this conversation with all members of the family.
In this situation the solicitor, financial adviser and mortgage broker were able to work out a plan by which William could buy the other two siblings out after their mother’s passing, or beforehand if the funds were needed for aged care. The situation was brought under control in plenty of time. It would have been far more problematic if they had never had this conversation and given William the chance to share his thinking.
There may be some sensitivities around this topic, as I mentioned, but if circumstances come up that require one or both parents to go into care, would they not prefer to have some say in the matter, while they still can? This can be a challenging part of the conversation, but it does need to happen and the sooner the better. There are two parts to this topic:
For the parents, what, if any, preferences do they have? Notwithstanding that the facility chosen might be dictated in part by the older person’s health (for instance, some facilities specialise in dementia care) or savings available, would they prefer a location close to where they live now? Or would they prefer to be closer to the grandchildren? Or out of the city, near a beach …? None of this requires choosing a specific facility right now, but it would make choosing one at short notice a lot easier.
What is to be done with the family home? Given the home is often a couple’s biggest asset and something to which they hold a strong emotional attachment, this is another important topic to raise.
The question is this: if there comes a point where neither parent can live in the home any longer, are they happy for the home to be sold? In particular, are they happy for it to be sold to free up funds to support the costs of aged care, such as to cover an upfront deposit, the cost of the property and/or ongoing care costs? Many people will resist selling their home; some would prefer to lease their house than sell it.
It can be a more emotional question than you might think, which is all the more reason to have this discussion before it becomes critical. Of course, there may be occasions where you have no choice but to sell the house, where there are simply no other funds available to pay for aged care, for instance. But at least if you know your parents’ wishes you and your siblings will be in a better position to make this decision.
There are aged care consultants (along with some websites and apps) who could help you find an appropriate facility and/or assist with the financial aspects of this, but the clearer your parents’ preferences are, the easier the task will be for everyone. You never know: this conversation might prompt your parents to visit a few facilities to check them out. At the very least, all of you will have a better understanding of what’s in and what’s out.
You can see why it is so important to understand your parent’s wishes when it comes to aged care or their estate. Finding out now by having ‘The Conversation’ can save unnecessary heartache at a later date for you, your parents and your siblings. If you would like to know more, we have case studies and other practical help and strategies in my book The Money Sandwich to help you and your family with The Conversation.
Article by Marc Bineham – Money coach, speaker and award-winning author of The Money Sandwich