When creating or updating your estate plan, it’s important to address your elderly parents with both clarity and sensitivity. If you provide financial support, share housing or anticipate future caregiving responsibilities, your plan should reflect these realities.
Clearly documenting any ongoing assistance, loans or shared assets can help prevent misunderstandings among heirs later. In addition, if your parents have designated you to act on their behalf through powers of attorney or health care directives, your estate plan should align with those roles so there are no conflicting instructions or expectations.
To incorporate your parents’ needs into your own estate plan, you first must understand their financial situation and any arrangements they’ve already made. Some may require tweaking. Here are five action steps:
If you’re going to manage the financial affairs of your parents, having knowledge of their assets is vital. Compile and maintain a list of all their assets. These may include not only physical assets like their home and other real estate, vehicles, and any collectibles or artwork, but also investment holdings, retirement accounts and life insurance policies. You’ll need to know account numbers and current balances. Be sure to add in projections for Social Security benefits. When all is said and done, don’t be surprised if their net worth is higher or lower than what you (or they) initially thought. You can use this information to determine the appropriate planning techniques.
Compile the names and addresses of professionals important to your parents’ finances and medical conditions. This may include stockbrokers, financial advisors, attorneys, tax professionals, insurance agents and physicians.
Before going any further, have a discussion with your parents, as well as other family members who may be involved, such as your siblings. Make sure you understand your parents’ wishes and explain the objectives you hope to accomplish.
Assuming you can agree on next steps, develop a plan that incorporates several legal documents. If your parents have already created one or more of these documents, they may need to be revised or coordinated with new ones. Some documents commonly included in an estate plan include:
If you decide the best approach for helping your parents is to give them monetary gifts, it’s relatively easy to avoid gift tax liability. Under the gift tax annual exclusion, you can give each recipient up to $19,000 for 2026 without incurring gift tax, doubled to $38,000 per recipient if your spouse joins in the gift. If you give more, the excess may be transferred tax-free under your available lifetime gift and estate tax exemption ($15 million for 2026, less any exemption you’ve already used during your life).
Be wary, however, of giving gifts that may affect eligibility for certain government benefits. The availability of these benefits varies by state.
Your estate plan should specify how you want to assist aging parents should they outlive you. For example, consider setting aside funds for their care or naming a trusted individual to manage those resources. Thoughtful provisions can reduce stress for your family and ensure your parents are treated with dignity and respect.
These situations often involve emotional and financial complexity. Contact us to help develop a comprehensive plan that addresses your family’s needs.
