“Through focus groups and a national survey, planners sought to understand people’s perceptions, interests, language and emotions related to long-term care and long-term care planning,” the Journal of Financial Planning reports. The findings – most people have not seriously considered that a long-term care event might happen to them.
And it very well might, as we’re all too aware at our estate planning and elder law firm, Rebecca W. Geyer and Associates. After all, with one in six people in the United States 65 years old or older, the reality is that many are going to need some form of long-term care; planning for the possibility of incapacity needs to be part every estate plan. Our attorneys have been paying attention to the reduced number of viable long-term care insurance choices being offered to our Indiana estate planning clients, with the costs rising dramatically and benefits becoming more limited. We do not recommend any particular type of coverage, instead referring clients to insurance professionals, but we certainly urge “early action” in this important area of planning.
While high net worth clients may choose to “self-fund” the costs if and when a need for care arises in the future, that choice may turn out to have the unintended consequences of diminishing the legacy the clients want to leave their heirs or to their favorite charitable causes.
The Journal of Accountancy calls it “the long-term-care quandary”, suggesting that advisors’ discussions with clients need to offer “a calming and informed perspective”, being clear on the actual risks:
- The U.S. Department of Health and Human Services estimates that 1/3 of today’s 65-year-olds won’t need any care at all.
- For those who do need care, the average need is for three years of care.
- While Medicare does not cover long term care related to permanent condition, it may cover services related to conditions from which the client is expected to recover.
- An important consideration is the family situation – would someone be available to provide care?
For those who purchase long term care policies, the likelihood they’ll need to use them is enormously high as compared to auto and homeowner’s insurance, the American Association for Long term Care Insurance reminds those on the fence about paying long term care premiums.
Hybrid life insurance policies can be placed in an ultimate life insurance trust (ULIT), which allows an individual to leverage several financial benefits, including removing the assets from the individual’s estate. The assets will be protected from Medicaid five years after the policy is placed in trust while the policy benefits are available to pay for long term care, notes Sallen Law in Pennsylvania.
As estate planning attorneys, we understand the challenges, fears, and family dynamics that come into play with all legal issues, but most particularly when it comes to contemplating the possibility of incapacity. Yes, we understand that there is no single “one size fits all” estate planning approach, but we also know that “I haven’t really thought about it” simply isn’t going to “cut it”.
– by Cara M. Chittenden, attorney with Rebecca W. Geyer & Associates
