Parents age. While there are times when parents outlive their children, most people will find themselves in a position where they have to plan for their parents’ futures. There are numerous ways that you can help protect your aging parent – many you may not have considered.
1. Overlook Their Estate Planning
No one wants to think about their death, and this has led to many people dying without even giving estate planning a thought. An estate plan doesn’t need to be complex – although it can be when high-value estates are involved.
A few of the things you’ll want to do is:
- Ensure your parents’ wills are updated.
- Have your parents update any benefactor plans.
And if your parents are having trouble figuring out how to retire, ensure that they look deeper into Social Security benefits. There are even calculators that will help your parents determine how they can retire the way they want.
2. Create a Trust for Your Parents
Your parents may be aging, but you can die in a split second, too. A quick car accident or even a heart attack can kill people of all ages. If you take care of your parents or want to ensure that they’re able to be cared for after your demise, you can create a trust on their behalf.
A trust can be used to keep money saved away for your parents’ needs.
For example, if your parents need new medical equipment, funds this may be added into your trust.
You can dictate how the trust’s money is to be used.
This is to say that you can require that the trust’s assets be used for:
- Medical expenses
- Medical equipment
- Living costs
The trustee of the trust will need to follow your wishes and directions for all assets that have been put into the trust.
3. Life Insurance Policies
There’s a good chance that one of your parents will die before the other. It’s rare for both parents to die at the same time. The remaining parent will not only be dealing with the loss of his/her life partner, but also trying to find a way to pay bills, pay funeral costs and move on with life.
Life insurance policies are complex, but they can help in this aspect.
You’ll need to consider everything:
- Funeral costs
- Living costs
There are two main types of insurance: term and permanent. A term policy will last for 1 – 20 years in most cases, and the moment you stop making payments, the policy ends.
Permanent insurance is the better option because they will last for as long as you pay the premiums. These policies will also build a cash value in many cases.
An analysis of your parents’ needs will need to be done to determine how much coverage a life insurance policy should have. A 30-year-old making a $100,000 salary that dies would need a life insurance policy of $2.2 million to cover their lifetime earned income.
Both parents should have an insurance policy on the behalf of their spouse. This money will be the deceased’s last way of ensuring that their spouse can persist without them when they die.