posted on July 13th 2018 in Austin CFP Team Posts with 0 Comments /

Are there many important things to be done when a parent is declining in health that you don’t read about too often? Most definitely — and I’d like to share some lessons learned that might help those of you who find yourself in this situation. There is plenty of information to be had on the importance of setting up estate trust documents and wills, so that’s not the focus here. Instead, I’ll focus on some key areas many just don’t think about.

Many of us are at that age where parents and even partners are declining in health and passing away. We all have the knowledge that sooner or later we will make the ultimate life transition, but it’s usually just an occasional whisper on our consciousness. When a mental or physical decline shows itself, there is often an effort by patients to maintain the status quo (denial) and this can even occur when there is a definitive short-term terminal diagnosis. For family members, this is the time where the reality of life begins to hit home and the voice in your head begins to speak with the phrase you hoped never to hear: “Here it comes.” If you are not properly prepared physically, mentally and administratively, the event onset could be overwhelming.

I say these things from experience via friends and clients, as well as having lost my father to dementia five years ago and my mother to cancer two months ago. So let me pass on some advice, words of wisdom if you will, focused on the administrative aspects of the process. This seemingly mundane part of the journey can tremendously help your peace of mind and healing when dealing with the decline and death of a parent.

1. Hire a bookkeeper.

Have all bills go directly to the bookkeeper and have them pay them and report to the family on a periodic basis. This will help ensure continuity while your parents are alive but perhaps having lapses in their mental capacity, and will also support continuity in estate accounting once they have passed. You would not, for example, want to find out a long-term care policy was cancelled because the premium wasn’t paid or not understand what accounts are past due or need to be cancelled after they have passed away.

2. Get Logins and Website Access

Get legal web access to all financial, social media, and communication accounts and use a password application like Keeper Security to maintain usernames, passwords, security questions, and passcodes. This will allow you to keep track of things yourself or share access information with the bookkeeper and other family members if necessary. This simple tip will be of immense help, especially if you are not living with or near your parent(s).

3. Review Policies

Review their long-term care policy early on so you understand the potential benefits and qualification criteria. Interview long-term care facilities to understand costs and criteria for acceptance in case any moves have to be made quickly. Some older long-term care policies do not provide benefits for in-home care, so if your parents decide they want to spend their last days at home, you’ll have to budget for in-home care to be paid out-of-pocket.

4. Skilled Nursing vs Long-Term Care

Understand there is a difference between a skilled nursing facility and a long-term care/living facility and the interaction of hospital stays and Medicare coverage is important. Generally, a skilled nursing facility is offered to patients when their condition can be improved and the facility’s staff will set rehabilitation goals for them. If patients’ goals are met or they are not improving, they will most likely be discharged. This is different than a long-term care facility, which is designed for long-term living with support through a health decline and is usually funded with family funds or private long-term care insurance.  One of the key nuances for skilled nursing facilities is that the costs will be covered entirely by Medicare for 30 days only if the admission was immediately preceded by a three-day hospital stay. If, for example, a hospital wants to discharge your parent after a two-day stay and you think a discharge to a skilled nursing facility is the right next step, you’ll have to be a proactive advocate for your parent and press for a three-day stay at the hospital if the overall medical circumstances warrant it. There are other important criteria that can be found here: https://www.agingcare.com/articles/medicare-coverage-of-skilled-nursing-facility-153265.htm.

5. Get Durable Power of Attorney

Get durable power of attorney in place for all organizations you’ll need to interact with: typically financial institutions, insurance companies, phone/internet/utility companies, etc. These organizations will generally not speak with anyone other than the account holder without prior authorization, so it will be very frustrating for you when you’re trying to help if you don’t have prior approval. Having said that, you don’t want these organizations to waive these guidelines, as it would increase the chances of fraud and abuse.

6. Understand Hospice

Understand hospice is different from long-term care, so it’s important to interview hospice organizations to fill that role quickly and seamlessly when needed. Hospice organizations can be a huge support for patients and family, providing emotional support at home like music and basic medical equipment  such as oxygen tanks and hospital beds. They are also essential in either administering pain-relieving medications or helping caretakers and family do so for at- home end-of-life periods.

7. Gather Documents

Ensure all documents, including home deeds, estate planning documents, wills, power of attorneys, financial documents, etc., are organized in one physical location. Ideally, these documents will have also been uploaded into a digital vault that can be accessed and shared from any location.

These are just a few of the important administrative points I believe many people don’t think about. There is a universe of emotional, psychological and legal issues that arise that you’ll need to deal with personally, but that’s beyond the scope of this discussion. I can tell you you’ll get a better feeling of peace and satisfaction in honoring your parents’ life work by ensuring their affairs are settled smoothly. And, if you have personal hurdles in discussing these issues with parents, or they are providing pushback, remind yourself and them of this guiding rationale behind your efforts.

Q2 2018 Index Performance


Table disclosures and http://worthpointeinvest.com/disclaimer/) performance for periods greater than one year are annualized. Selection of funds, indices and time periods presented are chosen by the client’s advisor. Indices are not available for direct investment and performance does not reflect expenses of an actual portfolio. Past performance is not a guarantee of future results. Russell data copyright © Russell Investment Group 1995-2013, all rights reserved. The S&P data are provided by Standard & Poor’s Index Services Group. MSCI data copyright © MSCI 2013, all rights reserved. Barclays Capital data provided by Barclays Bank PLC.

Although the indicated U.S. indexes had a healthy quarter, a globally diversified equity portfolio would have been held back by emerging and international markets. You can see the best performing U.S. index was the Russell 2000, returning 7.75% for the quarter, followed by U.S. REITS at 6.41%, while Emerging Markets and International Markets were down 7.86% and 0.97%, respectively.

Often investors compare their performance in the short term with a single well-known index like the S&P 500 and find they are either lagging or exceeding it, depending on the time frame. It really takes years, decades even, for the premiums I speak about with my clients to settle and show themselves. So although short-term reporting is a good sanity check on relative portfolio characteristics, don’t read too much into the numbers, as they reflect investor tendencies to change strategies.

Overall, small caps outperformed large caps in the U.S., but underperformed in non-U.S. developed and emerging markets. The value effect was negative in the U.S. as well as in markets outside the U.S.

The U.S. Government Bond Index held up well, but the Global Aggregate Bond Index (unhedged) had a -2.78% return for the quarter. Interest rates increased in the U.S. during the second quarter. The yield on the 5-year Treasury note rose 17 basis points (bps), ending at 2.73%. The yield on the 10-year T-note rose 11 bps to 2.85%. The 30-year Treasury bond yield climbed 1 bps to 2.98%.

The 1-month Treasury bill yield rose 14 bps to 1.77%, while the 1-year Treasury bill yield increased 24 bps to 2.33%. The 2-year Treasury note yield finished at 2.52% after increasing 25 bps.

In terms of total return, short-term corporate bonds gained 0.29%, while intermediate-term corporate bonds declined 0.10%.

You are probably bombarded by negative news in the media and to be fair, there are many geo-political issues facing the economy such as the China “trade wars”; BREXIT and political tensions in the European Union; oil prices; Iranian posturing in the Middle East; trade relations with Canada; and depending on the circles you run with, concern over the administration’s policy direction. And of course, the list goes on. The important thing to remember as an investor is that throughout time, as the markets have increased and created wealth, there has ALWAYS been a very long list of concerns and risks, including wars, recessions, inflation, etc. Most investors tend to have a perception of the world based on their biases, which can be both over- exuberant or excessively pessimistic, and they start trying to change investment strategy based on what they think is logic but in actuality is emotion and a perspective that’s limited by their own lens.

There is plenty of good news in the economy right now and a lot of opportunity to be captured in the coming years and decades to follow. Historically, the best way for you to take advantage of these as-yet-revealed opportunities is to stay fully invested in a strategic, globally diversified portfolio.

about the author: Morgan H. Smith Jr. IMBA CFP®

Morgan Smith Jr. IMBA, CFPMorgan H. Smith Jr. IMBA CFP, who has been a fee-only financial planner for over 12 years, specializes in wealth management for successful families, business owners, retirement plans and institutions requiring a disciplined fiduciary process.

An Assistant Professor at the University of San Diego, Morgan has been a frequent speaker to many professional organizations and has appeared on CNBC, Fox Business New Live and is a founding member of the Strategic Trusted Advisors Roundtable.

Learn More and/or Contact Morgan

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