If your family is like most, you avoid talking about end-of-life issues. However, your elderly parents should let you know their wishes. If you wait too long, you may end up making important choices for them with no guidance from them.
Remind your parents that estate planning involves more than just writing a last will to state who inherits what. Many aspects of estate planning deal with what can happen later in your parents’ lives. Which documents are most crucial?
Though a living will sounds like it should be similar to a last will and testament, it actually serves a very different function. In their living will, your parents can express their desire for end-of-life care. If they become incapacitated, they cannot choose whether to accept or refuse life-saving measures such as feeding tubes and ventilators. The living will allows them to make those decisions now, while they are healthy. In this document, your parents can also leave instructions regarding palliative care and organ donation.
A living trust deals with assets. The trust is a legal entity that holds property. It works like this: Your parents create a trust and transfer ownership of certain assets to the trust. These assets may include real estate, vehicles, bank accounts and anything of value. As the owners of the trust, your parents manage everything in the trust.
However, they also name a trustee and leave instructions for the handling of the trust’s assets. The trustee takes over if your parents become unable to manage the assets (due to dementia or medical incapacitation, for example). Upon your parents’ death, the trustee transfers the assets to the named beneficiaries.
Powers of attorney
When you give someone power of attorney, they have the authority to act on your behalf. Your parents need a medical power of attorney to designate an agent to make health decisions for them if they become incapacitated. They also need a financial power of attorney to give someone the authority to make money decisions if they are unable to do so.