A Letter to Mom and Dad

Dear Mom and Dad,

Talking about aging, money and health can be difficult, even in the closest of families. None of us wants to think about your becoming sick or incapacitated, much less dying. But failing to communicate and plan for the future could create problems, confusion and unnecessary expense later, for you and for the people who love you. That’s why The Times came up with this checklist of questions to help us get started in talking about these important matters.

Money issues are particularly sensitive. You’re under no obligation to share all the details of your finances. But it may help to talk about these matters, if only in general terms, because the more we know about one another’s financial situation and expectations, the better we can plan.

(Note: If you are getting this letter from your parents, that means they want to discuss these issues with you. You may feel some resistance to talking about these subjects; you may find it unpleasant to deal with the topic of your parents’ aging or death, or you may fear giving your parents the impression that you’re greedy or care more about money than you do about them. By giving you this checklist, your parents are giving you permission to ask questions, find answers and help secure the future welfare of your family.)

Health Care

* Do you have adequate health insurance? Are you familiar with what is and is not covered? Would you be willing to have an insurance professional, a financial planner or an elder-care attorney review your coverage to be sure it’s sufficient?

* Have you purchased or considered a “medigap” policy to help cover expenses not covered by Medicare? (Medicare is the government-provided health-care program for the elderly.)

* Have you thought about whether you have enough savings to cover a major medical expense?

* Who should make health decisions for you should you become incapacitated? Do you have a durable power of attorney for health care that names a child or friend to make these decisions?

Long-Term Care

* What are your plans should you need long-term health care at home or in a nursing home? (Medicare does not cover most custodial care, whether in a nursing home or in your own home.)

* Do you have long-term care insurance or have you considered buying such a policy? Would you expect to tap your savings to pay for long-term care?

* Are you comfortable spending virtually all your assets to qualify for state-provided benefits through Medicaid? (Medicaid, known as Medi-Cal in California, is a health program designed for the poor.)

* Would you expect your children to provide some or all of your care in a health crisis? For how long?

* Do you expect to eventually move in with one or more of your children? Have you discussed this with them?

Income and Assets

* Is your retirement income adequate, or do you worry that your income isn’t enough to maintain your lifestyle?

* Do you understand the basics of proper asset allocation, and are you comfortable with the mix of investments and savings accounts you have right now?

* Are you comfortable with the rate at which you are spending your retirement funds?

* Have you had a professional’s help in organizing your finances and investments, or would you like such help?

* Are you taking out loans or incurring any debt?

Estate Planning

* Do you have a will? Has it been updated to reflect your current wishes?

* Have you considered or do you have a living trust to avoid probate and possible court conservatorship proceedings, should you become incapacitated?

* If your estate is big enough to be potentially taxable (over $650,000 as of this year, rising incrementally to $1 million in 2006), have you considered or set up bypass trusts or other tax-saving trusts to avoid or reduce estate taxes?

* If your estate is large, have you considered making gifts to reduce the size of your estate and avoid potential estate taxes? (Gifts to charity can offer an immediate tax deduction; you also can give gifts of up to $10,000 per person per year and not be subject to gift-tax rules. You should not give away money you may need later, however.)

* Have you created a durable power of attorney for your finances, naming one of your children or a trusted friend to take over for you?

* Have you considered adding a child or trusted friend as a second signature on one of your bank accounts?

In an Emergency

* Does one of your children or a trusted friend have a complete list of your emergency contacts, including the names and phone numbers of doctors, financial advisors, attorneys, pharmacists, relatives and close friends?

* Does one of your children or a trusted friend have duplicate keys for your home, cars and safe-deposit box?

* How would bills be paid and financial matters handled should you suddenly become incapacitated? (Creating a durable power of attorney for your finances, and adding someone as a second signature on your financial accounts, can help others take over for you if necessary.)

* Have you made up a list of your important papers and where they are located?