Crucial Documents As You Age: What You Need, And When to Update Them

Few of us enjoy dealing with paperwork. As we age, however, it’s vital to have certain essential documents concerning our life and assets in place and up to date, because we never know what life has in store.

It’s equally necessary for aging parents to apprise their adult children or other key family members of their financial and medical plans. Initiating a family money discussion can be awkward or distasteful for many seniors, but keeping the “M” word off limits until a crisis looms is a mistake.

If a daughter is struggling to decide whether her mother needs to move into assisted living, or even into memory care, and has no knowledge of her mother’s resources — savings and investments, mortgage or reverse mortgage, whether her parent has a financial advisor, etc. — it can be rough sailing.

7 Documentation Discussions to Have Now

Retirement expert Ed Slott explains how to conduct drama-free discussions on these topics. He recommends asking your senior loved one the following questions:

1. Advance directive. Do you have an advance directive (also known as a living will) and durable power of attorney for healthcare? According to the National Institutes of Health, only about a third of adults have completed an advance directive for end-of-life care.
2. POA. Who is your financial power of attorney — the person who will handle your financial decisions if you are unable to make them yourself?
3. Long-term care. If you become incapacitated, what long-term care possibilities have you considered? An assisted living community that includes memory care may be an ideal solution, but you’ll need to plan for this possibility. Elder law attorney William Fralin says, “By not having advance medical directives and durable powers of attorney in place, any period of incapacity would result in the need for your family members to go to court to obtain guardianship over your person and conservatorship over your finances. In addition to being time-consuming, the cost of the proceeding can easily run into thousands of dollars.”
4. Insurance. Do you have life insurance or long-term care insurance?
5. Will or Trust. Do you have a will or a revocable living trust? Are these legal documents current?
6. Retirement accounts. Do you have current beneficiaries named on your investment accounts, life insurance policies, IRAs, and 401K accounts?
7. House. Is there a mortgage or a reverse mortgage on your home that must be paid off?

Dementia Directive

We want to emphasize the importance of having another, newer type of document in place as well: an advance directive that is specifically focused on a senior’s wishes in the event he or she develops dementia.

Without an advance directive — or even with one — someone is unlikely to be appropriately covered if they develop dementia. This is why a few organizations have created dementia directives focused on the types of care choices someone would want if they were diagnosed with Alzheimer’s or another form of cognitive decline.

You can download a dementia directive from the University of Washington here.

End of Life Choices New York offers another type of Alzheimer’s Directive here.

The point of a dementia directive, as with all advance directives, is to avoid unnecessary suffering. It must be completed well ahead of needing to be enacted because, as one geriatrician notes, “With dementia, by the time you get to the point of having to decide what you want done, you’ve largely lost the capacity to do so.”

What You Need to Know to Stay Current

• Advance directives vary by state. While they are legal and valid throughout the U.S., if a senior moves to another state, it’s wise to complete a new advance directive to ensure the senior’s wishes are met. Although an advance directive doesn’t expire, it is also a good idea to review it periodically to make sure it still reflects those wishes. If a senior decides to make changes, it’s best to start fresh, and complete a new document.
• Retirement and insurance accounts. Update beneficiary forms at least annually. This is critical, because contrary to what most people believe, in 99 percent of cases beneficiary forms override a will.

Though these forms can be a bit tedious, if a senior glosses over the particulars, the outcome could be catastrophic. One man incorrectly completed his IRA beneficiary form by writing, “To be distributed pursuant to my last will and testament,” instead of listing each heir and percentage on the form as required. The result? The court invalidated his beneficiary forms, awarding nearly half a million dollars from his retirement account to his wife of just two months, rather than to his children as he’d intended.

• Last will and testament. Wills must be kept scrupulously current. They need to be updated when any major life event takes place, e.g.: retirement, marriage or divorce, birth of a child or grandchild, death or incapacity of a spouse, relocation, buying or selling a business, change in financial status, tax law changes. It’s a good idea to hire an attorney or financial planner who specializes in estate planning, or a certified elder law attorney licensed in the state where the senior resides, who will know the laws for setting up and maintaining their estate plan.
• Bank accounts. If a senior’s bank or other financial institution changes its name or merges with another bank, have your senior loved one fill out a new beneficiary form. As described above, old forms with outdated or incorrect information may not be recognized as valid.
  Locum tenens: Consider adding a trusted person to the senior’s bank account(s) so they are able to write checks for the senior in the event they become incapacitated. This can be the same person as the POA.
• Keep hard copies of everything on file. This is especially important if you fill out forms online. Keeping a copy in your bank’s safe deposit box as well as in a secure place at home is a good idea.
• Digital estate. Many seniors are technologically savvy, and have one or more social media accounts. What will happen to your loved one’s online accounts after they die? While this is a new area and not well defined legally, you should treat it as you would any other aspect of a senior’s estate: place a trusted family member in charge of the senior’s digital assets in the event of the senior’s death or incapacity.

By 2035, for the first time in U.S. history, there will be more Americans of retirement age than children under age 18. We can begin to address this rising tide by preparing today’s seniors as completely as possible for what’s ahead.

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