'Sandwich generation' should plan to look after parents

Much has been written about the sandwich generation those people who, while still caring for their own children, are also forced to assume responsibilities, financial and otherwise, for their aging parents.

Anyone who is a potential sandwich member has some serious issues to consider. But she can make it easier for everyone involved if she does her planning early.

Dealing with one's parents on financial and lifestyle issues can be quite emotional; it's therefore best to keep emotion out of the decision making. It's not easy, but it can be done.

People in the sandwich generation may want to start planning by discussing the following topics with their parents:

Durable power of attorney

By obtaining durable power of attorney from the parents, should they become incapacitated the caregiver will be able to use their assets to pay medical and hospital expenses.

Power of attorney also lets one make a variety of legal and financial decisions.

And some broader power of attorney arrangements even permit setting up trusts.

Even in the best relationships, asking for power of attorney is a sensitive issue. Parents may tell children they will never need them to take these powers.

And they may be right: the parents' physical health and mental capabilities may always be strong enough for them to manage their own affairs.

Nonetheless, children should stress to parents that power of attorney will permit taking care of parents only if they need it.

Before seeking power of attorney, the caregiver should consult her own legal adviser to make sure she fully understands her rights and obligations.

Health care directives

By establishing a health care power of attorney also called a medical power of attorney parents can designate someone to make health care decisions for them if they become incapacitated.

The health care power of attorney documents typically contain an individual's preferences regarding specific medical decisions.

Another health care-related document is a living will.

Living wills have been recognized by law in most states, but they are less flexible than a health care power of attorney.

Living wills are usually limited to decisions about life-sustaining procedures.

Long-term care insurance

The average cost for a nursing home stay is $40,000 per year and it can easily cost twice that amount in major metropolitan areas.

Medicare picks up very little of these costs, so individuals have to come up with the money out-of-pocket.

These costs can wipe out parents' life savings and the children's, too. By purchasing a long-term care policy, children can make sure that parents maintain their financial independence and that the child's own financial goals are not jeopardized.

The sooner the caregiver starts talking to parents about long-term care, the better. The younger they are when they purchase coverage, the lower their premiums will be.

Try discussing all these arrangements with parents as soon as possible. It might not be the most comfortable thing one's ever done, but it will be doing a service for everyone involved.

(Betty J. Neal, CFP, is an investment representative with Edward Jones in Springfield.)