Traditionally, estate planning has focused primarily on what happens when die and how you would want your estate distributed. Wills and Trusts would be used to tackle issues of avoiding probate, reducing taxes, and distributing your estate to your intended heirs. And while that it still important for us to address, these days, those can be easier issues for us to solve.
As life expectancies have grown over the past few decades, more and more aging-relating issues started to arise. More and more seniors are needing caregiving assistance in their later years. At the same time, our culture and economic circumstances have shifted. In years past, the senior might have moved in with their son or daughter. But many households are now dual income and can’t afford for one spouse to stay home to care for an aging parent. Add to this the rising incidents of Alzheimer’s, dementia, and similar that can require an extraordinary level of caregiving needs.
As a result, the past couple of decades have seen a drastic increase in the number of nursing homes and assisting living facilities to try and fill this need for caregiving.
Traditional Elder Law
With the increase in nursing homes and nursing home care, many families were caught unprepared for the cost of such care. Families were facing new aging-related issues such as figuring out how to pay for nursing home care, issues of nursing home neglect, and similar.
Elder Law started to emerge as its own practice area of the law. Elder Law attorneys were those that helped clients with aging-related issues. The most common being how to pay for nursing home care.
Traditional Elder Law has been crisis-oriented and is generally focused on impoverishment. In a typical scenario, a need for nursing home care arises, whether due to a sudden health event or due to a health decline over time, and the family decides that it’s time to seek assistance. That’s when they realize that they have no financial plan for how to pay for nursing home care. With nursing home care costing $7,500-10,000 or more per month, most families cannot afford to pay for such care for any length of time.
So elder law attorneys help clients develop a “spend-down” plan to qualify for government assistance from Medicaid or veterans benefits to help pay for nursing home care. Generally, these government assistance programs require you to be impoverished before they will start helping pay for care. But like the tax code, the programs do have certain safe harbors and provisions. Kind of like you might use tax planning to try to minimize your tax bill, Elder Law attorneys help clients navigate the rules to protect as much assets as possible and qualify for financial assistance as quickly as possible.
Our office regularly assists clients with “crisis” planning. If you or a loved one potentially needs long-term care within the next 30 days, then I strongly encourage you to call our office at 919-443-3035 to discuss planning options and the best place to get started.
The Looming Threat of Long-Term Care
But crisis planning and traditional Elder Law planning have some significant shortcomings:
- Traditional Elder Law planning focuses primarily on planning for government assistance programs such as Medicaid, Special Assistance, and Veterans benefits.
- Government assistance for in-home care or assisted living care is very limited. Medicaid is the primary government assistance program that people turn to it and it is primarily for nursing home level care, not in-home care or assisted living care.
- Most people want to avoid nursing home care and wish to remain in their home as long as possible, yet traditional Elder Law planning is focused primarily on nursing home planning.
- Long-term care needs are trending towards longer stays in assisting living care environments vs. nursing home care.
- For those that are currently in their 50s, 60s, or 70s, there is no guarantee that the Government programs will work the same way by the time you might need long-term care. With the so-called “silver tsunami” of aging Baby Boomers, it is expected that these government programs will have to change significantly because the current system cannot support the number of seniors expected to need care in the coming years.
Some Eye-Opening Statistics
While it might be tempting to ignore the looming threat, it has become a critical part of estate planning. In our opinion, long-term care is potentially the biggest financial threat that most individuals will face during retirement.
- A U.S. Government study found that 70% of individuals age 65+ will require long-term care during their lifetime.
- 20% of those individuals will need long-term care for 5 years or older.
- 40% of individuals age 65+ will enter a nursing home at some point during their lives.
- The Wall Street Journal reported that 80% of all couples over the age of 65 will have one spouse who needs nursing home care.
- By 2030, the number of people with Alzheimer’s disease is expected to double.
- Dementia, including Alzheimer’s disease, requires an average of 8 years of care with some needing care for as long as 20 years.
- 26% of adult children caregivers wind up spending their own retirement assets paying for their parent’s long-term care.
- According to the Alzheimer’s Association, the estimated lifetime cost of care for an individual living with dementia is $341,840. Note that this is the current cost. If you’re currently in your 50s, 60s, or 70s, be sure to adjust this figure for inflation if you’re trying to project future potential long-term care costs.
- A 2011 MetLife study found that the total financial impact to a family caregiver is $303,880 between lost wages, lost social security and pension benefits due to the lost wages, and out-of-pocket expenses.
Long-Term Care Planning
Unfortunately, many traditional elder law attorneys, estate planning attorneys, and financial advisors are failing their clients when it comes to addressing these looming long-term care issues. Our office is dedicated to helping people explore a combination of legal, financial, and health care options to help people find realistic, workable solutions to develop a long-term care plan.
The available planning options will vary significantly from one individual to another depending upon a variety of factors such as:
- Your current age and health
- Your long-term care preferences
- Your current income and assets
- Whether you have other dependent family members such as a spouse or dependent children
- The degree of importance of leaving an inheritance for other family members
- The amount of overall protection that you wish to have.
In addition to being knowledgeable about legal planning issues, our team is also well-versed on various financial and insurance options for long-term care planning. We work with vetted professionals to explore all potential options to create a comprehensive long-term care plan that explores legal, financial, and insurance options to build the best plan for your particular goals and circumstances.
For some clients, this still might include pre-planning for future eligibility for government benefits such as Medicaid, Special Assistance, or Veterans Aid & Attendance benefits.
For others, it might be exploring the use of other tools such as different forms of long-term care insurance, life insurance, annuities, reverse mortgages, or other tools that can be used for long-term care planning purposes.
For many, a well-designed long-term care plan will include a combination of long-term care planning strategies to maximize your protection.
Founding attorney and planning strategist, Jackie Bedard, is not only an estate planning and elder law attorney, but she is insurance-licensed specifically so she can help clients address these important issues and help people understand how to combine these various tools for maximum protection.
As an attorney, Jackie owes a fiduciary duty to act in her client’s best interests and recommend the tools that she feels will best help them accomplish their estate and long-term care planning goals. She firmly believes that there is not a “one-size-fits-all” solution when it comes to long-term care planning. Instead, the best planning often involves building the right combination of legal and financial tools. When needed, we also work with other financial professionals that we have vetted, including verifying that they also hold the appropriate credentials that require a fiduciary standard to their clients.
We Can Help You Develop a Long-Term Care Plan
Having assisted many Wake County clients with long-term care planning, our team at Carolina Family Estate Planning understands that developing a long-term care plan is about not just protecting your own independence and dignity, but also protecting those you love from the physical, emotional, and financial toll that caring for a loved one can take.
We’ve helped many clients take an interdisciplinary approach to their long-term care planning by exploring both legal and financial options. Usually, a well-rounded long-term care plan will involve a combination of legal, health care, and financial tools to meet your goals and maximize your protection. To get started, register an upcoming seminar to learn more or call our office at 919-443-3035.