Is it the eldest child? The one who is the closest geographically? Or is it someone else entirely?
"The advisory profession has to move well beyond money matters ... to a whole series of conversation about major life transitions," he insists.
Paying For Outside Help
For many families, the best option is to pay for professional caretakers. But if the member who needs care doesn't have sufficient liquid assets, the financial burden may fall on the children. "Often, there is one child in particular who can afford it," says Keator. "In those cases, we recommend the parent or whoever is receiving the financial assistance sign a note, as you would in a business transaction."
The caretaking funds become a kind of debt, at a reasonable interest rate. When the aging parent passes away, the debt is paid first, to the child or children who footed the bill, before the remaining estate gets divided among heirs. This strategy makes particular sense not only when the elder's assets are illiquid-tied up in a family home, say-but also if it's a bad market for dumping assets, as it is today.
Other Funding Options
Another option, often overlooked, is long-term-care insurance. This is separate from regular health insurance, and must be purchased when you're young and healthy enough to qualify. "It's an economical way to protect your assets," says Murray A. Gordon, CEO of MAGA LTD., a financial advisory firm in Riverwoods, Ill. "A lot of wealthy people feel they don't need it, without realizing that their assets might not be worth as much or go as far as they used to."
Some long-term-care policies cover only skilled nursing or institutional care, while others offer cash benefits with more flexibility-for example, the ability to pay a family caregiver to come into the home. In all cases, says Gordon, they are "portable and guaranteed renewable," no matter how many years of care are needed.
Once someone is covered, the benefits are triggered as soon as the recipient needs help with "at least two activities of daily living," says Gordon-such as eating, dressing, toileting, and so forth. "You don't have to be bedridden."
The catch, though, is that you have to take out the policy before you need the benefits. "If you're using a walker or wheelchair, you cannot get coverage," Gordon says. "But if you've been treatment-free for six months, even if you're diagnosed with a heart condition or some forms of cancer, you can still qualify." Moreover, most plans do not exclude pre-existing conditions.
Even for the wealthy, then, planning ahead is key to success. "People don't take the time to look at the big picture when it comes to financial planning for old age," says Fliegelman. "If you wait until you are in the stage you're planning for, you might find yourself inadequately prepared."
To be sure, for many people caregiving is a labor of love. But it is also work, sometimes grueling work, and it can go on for years or even decades. "You have to recognize both aspects-the love and the work," stresses Keator. This, he adds, means, "You have to take care of the caregiver also."