Introduction
My most read and commented article was my Lessons I Learned From Being The Estate Executor For My Parents, written almost two years ago. That should have read “named”, as I am still operating as their POA. At age 92, both are definitely slowing down, both physically and mentally, and those factors account for most of the updates reported here. I put them in what seems to be logical topic flow.
“Final” housing move
After my father fell last year, the decision to move out of their independent living cottage and into an Assisted Living apartment was made. Staying on top of the process was critical, as the complex dropped the ball in getting this done properly (they ended up in a smaller unit) and timely. It was only completed when my youngest sister got actively involved.
They are in a Continuous Care Community, or CCC, which provides housing and care at whatever stage of life you transition to once admitted. Hospice is also done onsite. If my dad dies first, mom will most likely move into the Skilled Nursing wing, where dementia patients are taken care of.
Driving no more
My dad’s fall and return of cancer increased his need for pain medicines. He was also recognizing his slower reflexes, so my RN sister convinced him to stop driving; my mom gave up driving years ago when her dementia started. The complex provides driving and the four of us cover most of the non-routine trips. Add in online ordering and delivery, the car isn’t really missed.
Funeral planning progress
My dad and I recently visited the funeral home to nail down the times and other arrangements the home needed. While the casket and burial arrangements had been made, they haven’t been paid for out of choice. We discussed pre-paying while there, but decided not to after discussing where such costs are going. Both burial plots are paid for, though.
I have been pushing my folks to work on the details outside control of the funeral home, such as the actual services layout (scriptures/music), and whom to invite/notify to the funeral services. My sisters are handling the photo displays and my brother-in-law, a pastor, will handle that part.
Health/life insurance policies
Both folks have a Medicare Gap policy that covers 100% of their medical expenses after their deductible. They chose the high deductible/low premium version of Plan “F”, which is no longer available. My father lost most of his term of life when his employer canceled every retiree’s policy last year. He still has the minimal Veterans policy, enough to cover his burial cost. They also carry a umbrella policy, as I do, just in case they get sued. With no more driving, one possible cause resulting in a lawsuit has been removed. I highly recommend incurring the $300 or so cost if your estate is over $1,000,000 in size. Additional coverage is much less per $1m.
As mentioned above, they live in CCC that required a nice size entrance fee. In return, if you happen to outlive your assets, you are not evicted. In a sense, that fee was like buying long-term care insurance but only better.
Drug coverage change
Both have a Part D drug plan from Humana. State law controls how this is handled when in an Assisted Living facility. While they kept the same Part D policy, it is now managed under the PCM the facility picked. All drugs have to stored in a locked cabinet in their apartment, with the nursing staff administering each dose. Even non-prescription drugs must be handled that way (think aspirin/cough medicine). The upside are payments are now on autopay, and it’s one last daily detail my folks have to manage.
The Trust is in place
With a majority of the assets now at Fidelity, the Trust is all set when it becomes “active” with my dad’s death. As executor, I plan to continue using his trust lawyer and the CPA my folks have doing their taxes. My understanding is the Trust will be taxed for dividends received until the stocks are passed on and any price gains if stocks are sold before being transferred. They both have wills, but little except personal processions will flow thru them.
Beach House change
Ownership of the beach house is now the Trust. The plan is to sell it and that will provide cash payments to the beneficiaries, maybe saving them the need to sell other Trust assets they receive. The beach house is only rented two weeks each summer to meet all the IRS income and residency rules. The lot’s location is worth more than the small house, which we feel will be replaced by one twice the size. Any increase in value incurred before it’s sold again becomes taxable to the Trust and saves the paperwork and cost of subdividing it among nine beneficiaries!
Investments update
Both parents have an IRA, which naturally requires RMDs, though most are met using QCDs. Both IRAs are 100% in equity mutual funds from Fidelity. My dad still has funds in his former employer’s 401k, all of which is in the Stable Value Fund. None of those accounts are in the Trust, as they don’t need to be.
The Trust does hold all the taxable investments, which are almost 100% in equities, using a mixture of Fidelity mutual funds and large dividend paying stocks. I help track if any fund/stock moves to a loss as selling to capture that loss which would be lost upon my dad’s death needs to be considered. There are no plans on selling the winners, as all those potential capital gains go away upon his death.
Since I also use Fidelity, my folks granted me full access and trading rights. This also allows me to view all their accounts when I log into my accounts. I also get alerts to any activity in their accounts. With so much elder scams, that is vital to keep an eye on.
Dividend reinvestment status
My dad is still sharp enough to use the Fidelity site and manages all his accounts there. Currently, he has all the mutual funds in reinvestment mode, plus three common stocks. At quick glance, this is about 30-35% of his taxable dividend income.
Banking change
My father recently tasked me with handling their bill paying, which I have to do under my POA since their bank doesn’t permit three signees on their checking account; they did on the Safe Deposit account though (go figure). My father gets a weekly email on the balance, and I showed him how to move funds from the Trust over when it dips to near $10,000. I get an email whenever any movement occurs in the bank account, no matter how small.
Cash flow/finances report
My parents, thanks to both collecting Social Security, my dad’s pension, and their investments, they have a positive cash flow. With most expenses fairly constant, subject to inflation, I do not see this reversing. If it does, turning off all the dividend reinvestments should solve that issue. Having a Medicare Gap policy that covers everything basic Medicare doesn’t pay eliminates medical surprises; Part D not so much, but that changes with a $2000 annual cap starting in 2025, assuming every drug they take is covered by Medicare.
Beneficiaries/charities plan
The Trust lists who gets those assets. They are designed to handle the situation if a married primary passes first. Charities will receive 100% of what any IRA balances exist when my last parent dies. To simplify that process, the funds will flow into my Charitable Gift Fund. This allows for quick closing of the remaining IRA and removes the need to list all the charities, for which I have a long list with amounts. Any remaining funds will flow into the family endowed scholarship fund at Africa University, which is part of the United Methodist Church.
Since they still itemized on their taxes, they have used QCDs in limited amounts, but that would change that if the IRMMA limits jump enough where they could drop below one of the breakpoints as QCDs reduces what flows onto the 1040 form.
Final thoughts
Having siblings to help manage the non-estate parts of our parents lives allows me to focus on the financial side, which is my educational background. Exchanging emails and at least monthly visits (when I get lunch at the local Chick-fil-a) makes sure all the “Is” are dotted and the “Ts” crossed. In an upcoming visit, I will discuss the idea of stopping all the dividend reinvestments in the Trust and increasing their annual gifts to the extended family. While his offspring are financially set for the most part, the grandchildren could use a monetary boost, and my folks don’t need the funds to survive.
Keeping up with retirement and tax law changes is ongoing. While recent changes effected my strategy, so far none effect my folks. If the IRAs weren’t going to charity, the 10-year rule would. Every now and then, the Democrats talk about limiting or ending the “step-up” IRS code, that revalues past investments to the average price on the date of death of the owner. That would be very costly to my parents estate, but would eliminate the reason we might not sell an asset now.
All the beneficiaries have accounts at Fidelity, though some will need to establish a taxable brokerage account. That will greatly simplify the stock transfers once, as Executor, I start to liquidate the Trust. It also self-documents each move, an important step when acting as an Executor!
As with last time, I and other readers look forward to comments on what I covered (or missed) and what their experiences have been. Those comments are a vital to making any Seeking Alpha article the most useful it can be. Thanks in advance!
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