I'd appreciate the experienced perspective from anyone who's escorted their elders down this path.
My Dad's still recovering from surgery to repair his duodenal ulcer, but he's getting stronger at the rehab facility and staying happy. No morale problems. He just turned 77 and is controlling high blood pressure with medication. The tentative diagnosis is Alzheimer's, although I'm not sure whether that's been confirmed. (The alternative is vascular dementia. He's no longer capable of independent living.) He was showing symptoms at least 18 months ago and medications like Aricept may be contraindicated for ulcer survivors, so the medical plan is still being sorted out.
Dad stubbornly stuck to his independent ways as long as he could but it all fell apart in February. Now he's greatly relieved to be relieved of all the independent-living responsibilities, and his stress level is way down. He's thrilled that someone else is taking care of the cooking and the laundry. Instead of resisting the change he's actually more concerned that we take care of his few possessions and shut down his apartment.
My brother lives a few blocks away from the rehab facility, and he's filing the petition for guardianship & conservatorship. (Dad absolutely will not move to Hawaii, and for at least a few more years he'll be able to tell the difference.) My brother's plenty busy with visits & lawyers & care managers so I'm Dad's money guy.
Dad stopped using the Internet in late 2009 and I've been rebuilding his online access practically from scratch. Pension & Social Security are direct deposit to his checking account. I set up Fidelity's billpay and his bank's checking account is also linked to Fidelity so money moves OK. Snail-mail bills are getting turned into autopay or e-mails, although these bills will only last as long as it takes for us to get back to Dad's apartment and shut down everything. His 2009 & 2010 tax returns are paid and I've set him up to pay federal estimated taxes via EFTPS. State taxes use a similar website.
I've gone online with both his credit cards, too, and the CC companies don't seem to care who has the plastic as long as the bills get paid. I have e-mail alerts set up for any CC transactions. I think one of his cards expires this month, and I don't see any reason to activate the replacement. I'll probably let the other one expire too. If any of you have found any reason for a parent in a care facility to have a credit card then please let me know. I think Dad's personal spending will be mostly handled by the care facility's "house account", or by me over their website, or by my brother in person. Anyhow I doubt a CC company would want him to have their cards anymore.
In a month or two (after my brother and I shut down Dad's apartment) I'll have to submit changes of address. Luckily there aren't many, but I have to make sure that I do it correctly with Social Security and the IRS and his life insurance policies. I think I'm going to wait until we have the guardianship, and until then I can do a "temporary" mail forward. Please let me know if there are any surprises to this. I'm hoping to use my brother's snail-mail address but have all correspondence online.
Dad closed his IRA account about five years ago; he doesn't remember why. His Fidelity (taxable) brokerage account is a mishmash of 11 different funds, some of which he's had for decades and others that he bought as the dementia closed in. The cheapest expense ratio is 0.45% for their "Investment Grade" and "Mortgage Securities" intermediate bond funds. The highest is 1.09% for International Value. His Vanguard account just has a minimum balance in their S&P500 index. (He's been with Fidelity for 30+ years so I have no idea why he opened a Vanguard account. Neither does he anymore.) He also has a few shares of Hanover Insurance. I think he had an insurance policy from them (or one of their subsidiaries) and got the shares from their 1995 demutualization/IPO. Most of the funds have unrealized capital gains although Magellan is a big loser (and also sports a 0.75% ER). With Vanguard and the Hanover shares, according to Fidelity's analysis he's 85% equities, 10% bonds, and 5% cash.
I guess he felt comfortable with that asset allocation since he has more than twice as much pension/SS income as he had living expenses... for at least the last decade. Of course now in the care facility, when the Medicare B and the long-term care insurance run out, his "monthly expenses" will jump way up. I haven't had to pay a penny in medical bills (yet) so I really won't know the numbers until we figure out the long-term care insurance. It has a lifetime cap that works out to roughly three years of care. After that I think his savings will be spent down until he's eligible for Medicaid. The initial withdrawal rate is about 6%/year (including fed/state taxes) so I doubt he'll run out of assets. The savings from cutting expense ratios down to 0.2% could pay for as much as a month of long-term care expenses per year.
If John Hancock doesn't weasel out of their long-term care policy then I'll have plenty of time to work on reducing Dad's expense ratios by selling winners & losers in a tax-efficient manner. It's probably as easy as a 70/30 stock index/cash, either ETF or mutual fund, but minimal expenses. (I don't think bonds are a good idea for the next few years.) A quick screen turns up candidates like the "Spartan Extended Market Index" (FSEMX) and the "Spartan International Index" (FSIIX). Expense ratios are 0.1%-0.2%. Once the LTC runs out, and depending on the pension/SS cash flow against his care expenses, I might have to go something like 60/40 stock/cash. But even at an 8% withdrawal rate that's enough cash to bridge almost any bear market.
I could save a bit more money at Vanguard, but frankly I'm worried that they'd want a bunch of identity verification before they'd transfer the Fidelity assets. I've been with Fidelity for 25+ years and I'm comfortable with their website. I don't want to have to go through all the guardianship/conservatorship paperwork with Fidelity, let alone with Vanguard, so I'll stick to what's working (so far). I'll transfer the Vanguard assets "in kind" to Fidelity and then shut down the Vanguard account.
No family or generational/money issues that I can see. My brother and I aren't close but we get along fine. Mom died in 1987 and Dad's pretty much kept to himself the last 24 years. My brother's going to be the guardian/conservator and be the guy on the scene for the rest of Dad's life. But my brother's also plenty busy with building his business so I'm happy to take whatever other responsibilities he wants to throw my way.
I might have overlooked a few details. I'm sure there are a bunch of income-tax deductions or credits for patients in a care facility, but I'll figure that out later this year. Any other surprises I should be ready for?
My Dad's still recovering from surgery to repair his duodenal ulcer, but he's getting stronger at the rehab facility and staying happy. No morale problems. He just turned 77 and is controlling high blood pressure with medication. The tentative diagnosis is Alzheimer's, although I'm not sure whether that's been confirmed. (The alternative is vascular dementia. He's no longer capable of independent living.) He was showing symptoms at least 18 months ago and medications like Aricept may be contraindicated for ulcer survivors, so the medical plan is still being sorted out.
Dad stubbornly stuck to his independent ways as long as he could but it all fell apart in February. Now he's greatly relieved to be relieved of all the independent-living responsibilities, and his stress level is way down. He's thrilled that someone else is taking care of the cooking and the laundry. Instead of resisting the change he's actually more concerned that we take care of his few possessions and shut down his apartment.
My brother lives a few blocks away from the rehab facility, and he's filing the petition for guardianship & conservatorship. (Dad absolutely will not move to Hawaii, and for at least a few more years he'll be able to tell the difference.) My brother's plenty busy with visits & lawyers & care managers so I'm Dad's money guy.
Dad stopped using the Internet in late 2009 and I've been rebuilding his online access practically from scratch. Pension & Social Security are direct deposit to his checking account. I set up Fidelity's billpay and his bank's checking account is also linked to Fidelity so money moves OK. Snail-mail bills are getting turned into autopay or e-mails, although these bills will only last as long as it takes for us to get back to Dad's apartment and shut down everything. His 2009 & 2010 tax returns are paid and I've set him up to pay federal estimated taxes via EFTPS. State taxes use a similar website.
I've gone online with both his credit cards, too, and the CC companies don't seem to care who has the plastic as long as the bills get paid. I have e-mail alerts set up for any CC transactions. I think one of his cards expires this month, and I don't see any reason to activate the replacement. I'll probably let the other one expire too. If any of you have found any reason for a parent in a care facility to have a credit card then please let me know. I think Dad's personal spending will be mostly handled by the care facility's "house account", or by me over their website, or by my brother in person. Anyhow I doubt a CC company would want him to have their cards anymore.
In a month or two (after my brother and I shut down Dad's apartment) I'll have to submit changes of address. Luckily there aren't many, but I have to make sure that I do it correctly with Social Security and the IRS and his life insurance policies. I think I'm going to wait until we have the guardianship, and until then I can do a "temporary" mail forward. Please let me know if there are any surprises to this. I'm hoping to use my brother's snail-mail address but have all correspondence online.
Dad closed his IRA account about five years ago; he doesn't remember why. His Fidelity (taxable) brokerage account is a mishmash of 11 different funds, some of which he's had for decades and others that he bought as the dementia closed in. The cheapest expense ratio is 0.45% for their "Investment Grade" and "Mortgage Securities" intermediate bond funds. The highest is 1.09% for International Value. His Vanguard account just has a minimum balance in their S&P500 index. (He's been with Fidelity for 30+ years so I have no idea why he opened a Vanguard account. Neither does he anymore.) He also has a few shares of Hanover Insurance. I think he had an insurance policy from them (or one of their subsidiaries) and got the shares from their 1995 demutualization/IPO. Most of the funds have unrealized capital gains although Magellan is a big loser (and also sports a 0.75% ER). With Vanguard and the Hanover shares, according to Fidelity's analysis he's 85% equities, 10% bonds, and 5% cash.
I guess he felt comfortable with that asset allocation since he has more than twice as much pension/SS income as he had living expenses... for at least the last decade. Of course now in the care facility, when the Medicare B and the long-term care insurance run out, his "monthly expenses" will jump way up. I haven't had to pay a penny in medical bills (yet) so I really won't know the numbers until we figure out the long-term care insurance. It has a lifetime cap that works out to roughly three years of care. After that I think his savings will be spent down until he's eligible for Medicaid. The initial withdrawal rate is about 6%/year (including fed/state taxes) so I doubt he'll run out of assets. The savings from cutting expense ratios down to 0.2% could pay for as much as a month of long-term care expenses per year.
If John Hancock doesn't weasel out of their long-term care policy then I'll have plenty of time to work on reducing Dad's expense ratios by selling winners & losers in a tax-efficient manner. It's probably as easy as a 70/30 stock index/cash, either ETF or mutual fund, but minimal expenses. (I don't think bonds are a good idea for the next few years.) A quick screen turns up candidates like the "Spartan Extended Market Index" (FSEMX) and the "Spartan International Index" (FSIIX). Expense ratios are 0.1%-0.2%. Once the LTC runs out, and depending on the pension/SS cash flow against his care expenses, I might have to go something like 60/40 stock/cash. But even at an 8% withdrawal rate that's enough cash to bridge almost any bear market.
I could save a bit more money at Vanguard, but frankly I'm worried that they'd want a bunch of identity verification before they'd transfer the Fidelity assets. I've been with Fidelity for 25+ years and I'm comfortable with their website. I don't want to have to go through all the guardianship/conservatorship paperwork with Fidelity, let alone with Vanguard, so I'll stick to what's working (so far). I'll transfer the Vanguard assets "in kind" to Fidelity and then shut down the Vanguard account.
No family or generational/money issues that I can see. My brother and I aren't close but we get along fine. Mom died in 1987 and Dad's pretty much kept to himself the last 24 years. My brother's going to be the guardian/conservator and be the guy on the scene for the rest of Dad's life. But my brother's also plenty busy with building his business so I'm happy to take whatever other responsibilities he wants to throw my way.
I might have overlooked a few details. I'm sure there are a bunch of income-tax deductions or credits for patients in a care facility, but I'll figure that out later this year. Any other surprises I should be ready for?