How to take care of aging parents in California? What are the biggest Elder Care mistakes I need to avoid? When do I need to make sure my parents’ Estate Plan is in order? What about Powers of Attorney in California? Are my aging parents ready to give up control? How do I know if it’s time to talk to parents about end-of-life issues?
Each year at my firm, we deal with hundreds of clients who make serious mistakes when trying to get their aging parents’ affairs in order. Those mistakes range from setting up problematic joint bank accounts to letting elderly parents keep driving much longer than they should. Unfortunately, a large part of our business is helping people remedy those mistakes and deal with the fallout of mismanaging decisions for their senior parents.
Far too few people seek early professional help when their parents become less capable of handling their own affairs. And far too many let the management of elder care issues overwhelm their own lives.
There comes a point for most of us when our parents need to be taken care of, just as they once took care of us. The parent becomes the child, and the child becomes the parent. If you’re not at this point in your life cycle already, you’re probably worried about what you’ll do when the time comes. And if you’re not worried, you should be, because it’s almost never easy.
Beyond my work as an estate attorney, I’ve been through these issues personally, most recently before my mother-in-law passed and my father-in-law moved into assisted living. In this article, I want to point out the most common mistakes I see adult children make when managing aging parents’ affairs, including finances, investments, healthcare benefits, and more—as well as how to avoid or alleviate these challenging elder care problems.
Mistake #1: Not Checking Up on Parents’ Affairs
Let me start by saying that most people simply wait too long to get involved in their parents’ affairs. Yes, I know it’s emotionally difficult for both children and parents to take that step, and yes parents are usually resistant, but if your parents are aging, here are some of the questions you should be asking right away—before they become critical issues. I’ll delve further into these topics, but here’s a brief checklist of what to ask your aging parents to help get their affairs in order:
- Are your parents declining in mental sharpness? Any signs of dementia? Are they likely to make a significant mistake with money, taxes, insurance, or be victims of a scam?
- What’s the driver’s license situation? Maybe they shouldn’t be driving.
- Are their Estate Plan, Living Trust, and Will all up to date? Have their appropriate assets been properly moved into a Living Trust?
- Do you have updated Power of Attorney documents so you can step in on their behalf if your senior parents become incapacitated?
- Are your parents in debt? And do they have assets in danger? This applies to people at all economic levels—find out the facts.
- Do they have an option for long-term care? How would that be financed if needed? Do they have long-term care insurance, and if so what kind? Note that Medicare pays for extremely limited “long-term care” of just a hundred days annually, and only following hospitalization.
- Are they current on their taxes? Or have they forgotten one or more important deadlines? We regularly have to deal with aging parents who have not filed in four or five years—and the adult children did not know.
- Finally, and perhaps most importantly: Who will manage your parents’ health, finances, and legal matters if or when they become incapacitated? Would that be you? Do you have an understanding with your siblings on this? And do you understand the immense responsibility and potential personal liability that managing an aging parents’ affairs will entail? Really think long and hard about these responsibilities—and make an early decision on getting professionals involved.
The bottom line: Please don’t assume your parents will just continue paying bills and taxes, staying on top of all the aspects of their lives, forever. Eventually, the cows will come home on these issues.
Mistake #2: Waiting to Have “The Conversation” with Aging Parents Until They Can’t Have “The Conversation”
The right time to have the conversation with your parents about what will happen when they become incapacitated (and about 80% will become incapacitated before death) is before it happens. When they can still make decisions properly, sign documents, and express their desires.
“The conversation” needs to be handled with the utmost respect and care. Yes, it will be challenging, and possibly painful, because it can feel like you’re invading your parents’ privacy, their independence, and even dignity. It may be one of the most difficult conversations you ever have, but it is your job to have it.
Consider becoming involved at the first moment you realize your parents are declining in mental sharpness. Try to get a handle on your aging parents’ affairs before a horrible event—a fall,a hospitalization or a car accident—forces that intervention upon you. By then, it may be too late to avoid certain mistakes—and you’re going to have to figure it all out eventually, one way or another.
Let me just tell you some of the consequences of waiting too long:
- If you don’t establish a Power of Attorney for an elderly parent before their incapacity, you or a sibling may have to go to court to appoint a Conservator, also known as a Guardian. That’s an expensive and painful process. Just the legal fees are often more than $10,000, and it’s a relationship fraught with legal peril.
- If your parents’ estate plan is not up to date, or appropriate assets have not been moved into their Living Trust, you will likely end up having to go to Probate Court after they die—with massive delays, costs, and hassle. Probate in California typically runs at least 16 months. No kidding.
- If they have failed to pay taxes, failed to pay bills, failed to make mortgage payments, and so forth, and you end up being Trustee of their estate, you could end up having to untangle an unmanageable mess, and any mistakes on your part could create family conflict and personal liability.
- If they have no plan for long-term care, the bills can become astronomical, and your family may well end up arguing about their care.
- If they have no advance health care directive, someone will face agonizing decisions, and the chance of conflict with siblings about those decisions will skyrocket.
To repeat: Have the conversation while your aging parents still have the capacity to address these issues clearly.
Mistake #3: Avoiding the Driver’s License Conversation with Elders
You may ask yourself, how do I get my aging parents to give up their drivers’ licenses?
What is a driver’s license to an aging parent? It represents independence. The ability to make one’s own decisions—not just where or when to go places, but in many ways, being the driver of one’s own life, so to speak.
Lots of folks have parents who didn’t own a car growing up, or perhaps cars were just harder to come by. For the current aging generation, a car often has deep meaning about their identity, perhaps similar to a cell phone for a younger person today.
We knew my mother-in-law’s driving days were over when she let the car stall out on the road one Sunday afternoon after church. She thought something was wrong with the car, but it turned out not to be so. She had simply lost the mental connection between pressing the gas and the car going. I don’t like to think about what would have happened had she been alone on a busy freeway at the time.
You need to be sensitive and understanding about these issues, but do not avoid the driver’s license conversation!
Mistake #4: Not Paying Attention to Elderly Parents’ Vulnerability to Scams
Once your aging parents begin to decline in mental sharpness, they can become extremely vulnerable to tricks and scams through phone calls, websites, mail, and email. One important and simple act of kindness you can do—or may have to do—for your elder is to simply go through their mail and throw out the junk and the scams.
My father-in-law was in assisted living and then fell and broke his hip. When he went to the board and care facility, we changed his mail to our house. I can tell you that just about every other piece of mail that comes in for him is some type of scam. It may be as simple as demanding money for a service, or more elaborately trying to get personal details—they’re always changing up the strategy.
Something to understand about these scam artists who defraud elders: they trade information with one another.
If your aging parent is the target or victim of financial fraud or abuse, very often their information is sold to other scammers, who then come up with yet another fraud.
This may sound odd coming from a lawyer, but I can’t believe this is even legal!
Scams often leave elders unable to pay for their basic needs—food, clothing, and shelter. Don’t let it happen to your parents.
Mistake #5: Failure to Plan Housing for an Elder
Most people want to live independently. If that’s an option, and it seems like the right road to take, it probably is, for a while. But more often than not, that road eventually ends. People get older, and usually, they get to a point where they cannot live in the home without some help.
Be sure that when they can’t take care of themselves anymore, your parents have somewhere to live. That takes planning. It takes conversations with them and with your siblings.
And it takes money. Often a lot of money. Plan for that expense, and know what will happen on the day your parent can no longer take care of themselves.
Carefully consider long-term care insurance, not just for your parents, but for yourself as well. It may or may not be the right answer for your family. In our case, I can tell you that when my wife dealt with her parents’ issues, she told me we needed to get long-term care insurance pronto—because she didn’t want to put our kids through what we went through with her folks. I suggest getting professional assistance on the question of whether to get long-term care insurance, or what kind.
Read up on our Elder Care Practice Area including Long-term care insurance issues for more information on possible aging parent housing solutions. We also have a terrific webinar on navigating long-term care insurance issues.
Mistake #6: Forgetting to Consider Location, Distance, and Nearby Services
As parents begin to lose capacity, distance begins to matter a lot.
All too often, an intervention by the kids is precipitated by a sudden event where something really bad happens. Boom, everything changes, the parents can’t live at home anymore; and they are just so far away! Somebody has to pack up their lives and move to them, or move the sick or injured parent to them. A lot of stress, effort, money, and time gets spent on this mistake.
Along with your own distance, you should ask yourself, what if my aging parents don’t have quick and easy access to services like healthcare or other assistance? Let’s say mom and dad live in a cozy cabin in Northern California. It’s a beautiful place with a great view. It’s also in a remote area where the response time for emergency vehicles is 45 minutes…
Yeah. You might want to rethink that.
As you make plans to secure appropriate housing, consider all possible options. If you want to know how to find the right housing option to care for aging parents—it requires a lot of thought and research. Perhaps you should move closer to your parents. Perhaps you want to move them closer to you, or even build out a cottage in the backyard, well in advance. What will be the role of other siblings?
If your parent needs an assisted living facility, you need to carefully research possible options. Along with checking ratings, tour various places in your area to get an idea of where they are and what they look like. Remember that every mile from you, your siblings, and health services counts.
If you like a facility, get on the waiting list, especially if it is located in a high-population area with a lot of demand. You can always change your mind later.
Mistake #7: Being Legally Unprepared for Parents to Die or Become Incapacitated
The reason that many people don’t get their Estate Planning documents together is simply that they don’t want to think about dying. I get it. But don’t let the disaster of being legally unprepared creep up on you and your aging parents. And remember that Estate Planning isn’t just about dealing with death, it’s about dealing with incapacity, taxes, and a whole lot more.
To open a conversation with elderly parents about preparing for aging and incapacity, consider talking about your own Will, Living Trust, and other important estate planning documents. An elder care and estate planning conversation opener might be: “You know, mom, when my spouse and I did our estate and our living trust, it wasn’t that bad. It’s just something we had to do, and it really helps our family.”
What Legal Documents Can Be Found in an Estate Plan?
A prepared elder has at least the following legal documents, which are kept up-to-date as part of a complete Estate Plan, and importantly, easily available to the kids and other important stakeholders.
- Living Trust: Think about a Living Trust as a convenient and protected bucket in which to hold essential assets so they can easily be passed to others. Mom and dad hold the bucket and put their house, their stocks, their bonds, their mutual funds, their bank accounts, etc. into the bucket. While they’re Trustees, mom and dad hold onto the handle of the bucket, but if mom and dad lose their capacity, then that bucket transfers to the successor trustee. No bucket to pass? Expect enormous hassles and expenses in Probate Court—along with a greatly increased chance of conflict with siblings.
- Pour-Over Will: A special Will that leaves appropriate assets to the Trust, including almost anything that remains in the individual’s name. Let’s say a bank account falls out of the “bucket” of the living trust for whatever reason, and it’s in the individual’s name, and they pass away—you want that account to end up in the Living Trust, to avoid probate.
- Durable Power of Attorney for Property: A document that allows another person to act as the elder’s agent while they are incapacitated but still alive. A POA gives broad power to this agent which can be easily abused, so it must be drafted and handled with great care.
- Advance Health Care Directive: Lays out the parent’s wishes in extreme medical conditions and often gives permission to the family to end life support as death nears. Also designates someone to make medical decisions for the aging parent when they can no longer make decisions for themselves.
- Assignment of Personal Property: Assignment of all assets of a parent to a Living Trust, giving authority to the trustee to handle things. Assignment of personal property is a part of a complete estate plan.
Mistake #8: Not Knowing Where to Locate Financial Records
“How do I find my aging parents’ financial records?” I can’t tell you how many clients call our firm in a panic to ask this.
Please, please, if you are getting near the point where you may take over the care of an elder and their affairs—at least get some basic understanding of their financial records, okay?
As an estate planning attorney, and as someone who has been through this myself, I’m begging you here.
Way too many people know nothing about their parents’ finances or investments, and then spend months or years doing excruciating excavations for documents in drawers, boxes, and storage units—all too often never finding out about a key insurance policy or retirement account.
Banks, insurance companies, and other institutions will not go hunting for you after your parent dies. You have to know where to look and then hunt the institutions down.
Here’s a short list of the documents which you absolutely have to know how to locate:
- All the Estate Plan documents listed above.
- Deeds to properties: Make sure they’re up to date and retitled to a Living Trust!
- Financial records and statements from financial institutions: Where are the financial records of aging parents to be found? You need to know.
- Retirement Accounts: These are especially important to track, as they are usually not included in Living Trusts. Make sure that beneficiary designations are properly designated on IRAs, etc, as those will determine inheritance rights on such accounts, not the terms of a Will or Living Trust.
- Bills: You need to know where and how your aging parents’ bills arrive so that you can make sure they are getting paid, or a service is getting canceled, etc.
- Life, medical, and property insurance documents and annuities: As the child of an aging parent, you’ll need to deal with all of these at some point in the future. All too often, parents simply forget to tell their children about insurance and annuity documents.
- Tax Returns: You want to make sure your aging parents are filing if they are required to do so. Also, you need copies of prior returns: very often, you need to know what is in a prior return to accurately file a forward return.
Mistake #9: Keeping a Joint Bank Account with Aging Parents
Should you be added as a joint account holder on your aging parents bank account in an effort to handle their affairs? “Won’t that make it easy after they die?” The answer is no.
A joint account is not a replacement for a comprehensive estate plan. Many people think that they are all set for elder care and managing their affairs, paying their bills, etc. if they just add a child to their bank accounts.
These people are very wrong.
I would say that in the vast majority of cases, keeping any joint bank account with a child and aging parents is a bad idea. Not always, of course, but usually.
What can happen if someone opens a joint account with an aging parent?
Well, the joint bank account may let Johnny pay the bills, but it also lets Johnny take money out for himself—perhaps to the detriment of an estate destined to be shared with other siblings. Or if Johnny is too responsible to make that mistake, it also lets Johnny’s creditors seize all the money in the account if he incurs a big, unrelated debt. And what happens to the joint bank account if Johnny gets a divorce? Or gets sick—or even dies before the parent?
Yes, unfortunately, such things happen all the time. When people die “out of order” a joint account with an aging parent is at tremendous risk. Stop and think: what claims do others now have on that account?
A further major issue in keeping a joint bank account with aging parents is the Order of Liquidation when caregiving bills have to get paid. Let’s say you are responsible for your elderly Aunt Anne who has a bank account jointly held with her ne’er do well son Johnny of $100k, another bank account of $100k in Anne’s name, and a bank account in her Living Trust (that you are now the trustee of) with $100k in it. When Anne cannot take care of herself any longer, which pot of money should you use to pay for Anne’s care? Should you take it from the living trust, the joint account, or the elder’s sole account? Does it matter? What liability do you have for taking the money from the “wrong bucket”?
It matters. There is an order of priority, a legal “Order of Liquidation” highly dependent on the circumstances, and doing it the wrong way exposes you to 100% personal liability.
As a side note, one thing that can help mitigate these risks is a Trust Protector, who can update the terms of the elder’s trust when they’ve gone out of date, or when a mistake like a poorly chosen bank strategy was made by the parents, or an unexpected event occurs. Check out our Trust Protector article!
Mistake #10: Paying Caregivers Under the Table to Take Care of Aging Parents
Is it safe to pay caregivers cash under the table? No. Do not pay caregivers under the table. It’s that simple. Especially in California!
This may be one of the most important pieces of advice in this entire article about handling the affairs of aging parents—because I see the trouble it leads to all the time. I cover the topic more fully in my webinar on Liabilities and Risk in Hiring Caregivers for Elderly Parents in California, but let me touch on it here.
“We found a lady in the neighborhood who can help mom and she wants to be paid in cash. She does not want to pay taxes. Plus, she’s much cheaper than hiring an elder assistance service! Let’s do it!”
I hear this all the time, but under California law—and we have some of the strongest laws in the nation on this issue—anyone who gives this caregiver instruction about care of the elder is regarded as her employer in California. As an employer of this “domestic worker,” they have a whole host of legal responsibilities. And domestic workers have lots of rights!
So suddenly, Mom, who can’t take care of herself, is legally responsible for withholding income taxes, paying the unemployment, and FICA taxes for social security and Medicare for this nice lady—and don’t forget worker’s compensation, breaks, sick pay and paid time off!
Mom can’t even tie her own shoes, how is she supposed to do this? Who deals with all those legal responsibilities as an employer of the domestic worker? The kids, of course.
In California, a “Domestic Work Employer” is any person, including a kid, who directly or indirectly, or through any person, temporary service, or staffing agency, exercises control over the wages, hours, or working conditions of a domestic work employee.
What does this mean for you as the child of an aging parent? You can be deemed the employer just for telling them to come half an hour later, or how to make mom’s bologna sandwich with mayo but no mustard. You can be liable, even if you didn’t do the hiring and you never paid them directly!
Don’t take chances on huge fines and legal fallout for yourself, never mind mom. Follow the rules, or better yet consider hiring a reputable third-party elder assistance agency, expensive as it may be.
Mistake #11: Ignoring Your Own Burnout and Not Doing Self-Care When Caring for Aging Parents
“My parents’ bills are backing up. My dad’s not filing his tax returns. Mom should stop driving the car, but won’t. Meanwhile, my spouse and my three kids have their own problems they need handled. I am at the end of my rope!”
As an estate and trust lawyer, I hear this all the time. I tell people to stop and think about themselves and take their own needs seriously.
Look for the common signs of burnout when caring for someone else:
- Exhaustion and fatigue: neglecting your own nutrition and sleep
- Neglecting other obligations in your life
- Constant high states of anxiety and stress
- Inability to relax, hopelessness, and irritability
- Getting frustrated with the one you are caring for
Remember the safety talk on airplanes? In the event of a loss in cabin pressure, masks will pop down from the ceiling: put your own mask on first, and then put the mask on your kid. Same principle applies here.
Don’t ignore self-care: helping a loved one can be exhausting and isolating. Don’t be shy to seek out help. It’s okay. This brings us to the next item…
Mistake #12: Not Seeking Help from Family or Professionals to Care for Aging Parents
When it comes to caring for an elder, one of the most important things that you can do for yourself, and your family is to ask for and find help for aging parents wherever you can.
- Ask for help with elder care from your family. Sometimes the family members are completely useless, right? But sometimes they’re not, and this is the first possibility to consider. Perhaps you can delegate household tasks to various relations, or even lay out a coordinated plan of action. Be honest with your siblings, treat them with respect, and try, try not to get angry when they let you down.
- Find a “respite care service,” perhaps for a couple of nights a week, or maybe for a week. Give yourself a break when you need it most.
- Attend a caregiver support group. One of the silver linings of COVID was everything going online, so elder care support groups are more available than ever.
- Consider hiring extra care workers… but see Mistake #12 above, as especially in California, you need to be very careful about your own liability when it comes to your parent employing a domestic home worker.
- Get help from a team of three advisors on the financial & legal side: a qualified estate planning attorney, a CPA, and a good financial advisor. Don’t think you can handle the financial/legal side of things all on your own.
Your action item here is to ask for help, and never to be embarrassed about your own needs.
Mistake #13: Doing Nothing About Handling Elderly Parents’ Issues
The mistake of simply doing nothing to handle aging parents’ affairs is one we see all too often.
Sometimes it’s because the elders hide, masking their issues. Sometimes it’s because the children are hesitant to take action around the elder’s issues. Sometimes elders don’t ask for help because they feel afraid of losing control.
Some elders resist basic estate planning, including a Living Trust or even a Will, simply because of an irrational fear that if they sign such a document, they’ll die. It’s our job to be understanding and clear about this fear.
I outline some of the potential disasters of doing nothing in Mistake #1. I could add a hundred items to that list.
Don’t wait until it’s too late.
A Mandated Reporter like an aging parent’s physician may notice a mental deficit first and need to report it to public agencies. If things get bad enough, the County may step in, and then you’re losing control—a really bad result. Believe me, you do not want your aging parents’ affairs or estate to be controlled by a public agency.
Mistake #14: Feeling Guilty About Feeling Relieved When It’s Over
Finally, let me say that it’s okay to feel relieved when your aging parent passes. I say this not so much as an Estate Planning lawyer, but as a human being who has observed many people going through the long-term care and end-of-life process.
It’s a hard thing to say or admit, but many people are relieved when the person they’re caring for passes away. Often, they feel guilty for feeling relief… and if my words can help with that, trust me, it’s okay to feel that way. Taking care of someone else’s financial, health, and long-term care matters is a truly enormous burden.
If you haven’t been responsible for a parent’s affairs before, I won’t kid you: it’s far more work than you ever imagined. But making sure that your aging parents are okay, that they are well taken care of and as happy and as comfortable as they can be, is a truly good thing to do. It’s an honorable and noble act and can bring you joy as well.
“Doing It Right” for Aging Parents: Not Easy, but Doable!
My mother-in-law and father-in-law were very sweet people all their lives and got even sweeter later in life. It was an honor for me and my wife to care for them. Frankly, it was really good for my kids to see their mom caring for her parents.
Our kids even helped out, participating in the elder care, and it was a wonderful family thing that taught us all a great deal.
My best tip for you is to get your elder’s “A-team” together well in advance. Seek out qualified experts such as a trust and estate lawyer, a CPA, a financial advisor, elder care specialist, an insurance professional, and a realtor. You will get the chance to establish a relationship with all these folks before you need them in a crisis.
Above all, talk to your aging parents, your siblings, and everyone involved in a loving, caring manner. Don’t be adversarial when managing your parents’ affairs. It’s your job to get everyone to agree on a plan to ensure you all move forward in the same direction.
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Make an appointment to meet with CunninghamLegal for California Estate Planning and Trust Administration. We have offices throughout California, and we offer in-person, phone, and Zoom appointments. Just call (866) 988-3956 or book an appointment online.
We look forward to working with you!
James Cunningham Jr., Esq.
At CunninghamLegal, we guide savvy, caring families in the protection and transfer of multi-generational wealth.