What Estate Planning Documents Do My Elderly Parents Need?

As young and middle-aged individuals and couples plan their estates, they frequently wonder whether their elderly parents have done the same. In too many cases, their parents may not have completed their estate plan or may have completed it long enough ago that it is badly in need of an update. In either case, the best thing these adult children can do is guide their parents to a well-respected estate planning attorney.

Essential Estate Planning Documents and Why Your Parents Should Have Them

1. Last Will and Testament

As older individuals, your parents will not likely be in a position in which they have to name a guardian for dependents. Nonetheless, a Last Will and Testament will allow them to name a personal representative and to name beneficiaries. If they die without a will in place (intestate) the state will decide how their assets are distributed according to the laws of intestate succession.

2. Revocable (Living)Trust and/or Irrevocable Trusts

Although not all older parents will require trusts, your parents may want to establish one or more for a number of possible reasons. A revocable trust avoids the costs and delays associated with probate. An irrevocable trust can minimize estate taxes, protect heir’s eligibility for government benefits, or protect assets from predatory creditors, ex-spouses, or liability lawsuits. One of the primary advantages of most trusts is that they allow your parent to specify who will receive the trust funds, and under what circumstances, when they (the grantor) dies.

3. Durable Power of Attorney (DPOA)

This document allows your parent to appoint an agent to take over legal and financial duties if they become incapacitated and incapable of managing their own affairs. The DPOA designation is extremely important because it provides the agent with the ability to write checks or disburse funds to family members who may depend on them for living expenses, and also to take legal steps on their behalf if such steps become necessary.The DPOA allows for the designated person to make legal and financial decisions on behalf of the incapacitated. Examples where this may be necessary include real estate transactions, the ability to access retirement RMDs (required minimum distributions) or other individually owned accounts.  

2. HealthCare Proxy

A healthcare proxy gives a person chosen by your parent the ability to make healthcare decisions on their behalf if they become unable to do so. The chosen proxy should be someone who understands the principal’s mindset and concerns about medical care and will follow their wishes.

3. HIPAA Release

A HIPAA release form is also an essential document since it gives doctors and other healthcare providers the written authority to share your parent’s healthcare information with those named. Without a HIPAA release, healthcare providers would be violating privacy laws by sharing medical data related to the patient’s condition. Signing the form guarantees that your parent’s loved ones will have the knowledge they need to make informed decisions about their healthcare. It also can be helpful in communicating with insurance providers or pharmacies on their behalf.

4. Advance Directive (Living Will)

In an advance directive, your parents will be able to state clearly what their wishes are relative to their own healthcare if they should become incapacitated, as in an end-of-life situation. A living will tells healthcare professionals which life-extending measure your parent wants taken or not taken to preserve their life, such as intubation or insertion of a feeding tube. Although not all states consider an advance directive legally binding, it is helpful for healthcare providers and family members to have the patient’s own views on record when making difficult, often gut-wrenching decisions about their treatment.

Reasons Your Elderly Parents May Have to Revise Estate Planning Documents

Much may have changed since your parents last signed foundational estate planning documents, for example:

• Grandchildren may have been born
• Their chosen personal representative may have died or become incapacitated
• They may have changed their mind about how they want their assets distributed
• They may feel differently about their end-of-life healthcare wishes than they once did
• One of their beneficiaries may have developed an addiction
• One of their children may have divorced
• They may have remarried after being widowed or divorced
• Their living or financial situation may have changed considerably
• They may have received a diagnosis, had cognitive decline or have had other medical issues develop

The Takeaway

Once your elderly parents become aware of the importance of creating or updating an estate plan that contains all necessary estate planning documents, they will probably be eager to get their affairs in order. Having the appropriate, properly executed estate planning documents in place will benefit their beneficiaries and provide them with the peace of mind they deserve.