Many people believe that estate planning is simply about creating a will to distribute your assets after you pass away. While asset distribution is an important part of estate planning, there are also other risks and issues to consider.
Estate planning is really about creating the legacy you will leave for your loved ones after you are gone. Your legacy includes not only the assets you will leave behind but also the financial issues that you may leave for your family to deal with. You likely want to minimize these types of risks so that your family won’t have to deal with financial challenges during this time.
However, you may be unknowingly exposing your family to a sizable financial risk. It’s long-term care, or more precisely, the costs for any care you may require in the final months or years of your life.
The U.S. Department of Health and Human Services estimates that 70 percent of all retirees will need long-term care at some point in their lives.1 Long-term care is extended assistance with basic living activities like eating, bathing and moving. It can cost thousands of dollars per month, and it is often required for many months or even multiple years.
If you don’t have a plan to pay for long-term care, it could erode your assets in the final years of your life. Or your family may have to pay debt related to long-term care out of your estate after you pass away. Because of long-term care costs, you may not have an estate to distribute.
Fortunately, there are steps you can take to protect your estate against this risk. Below are a few tips to consider as you start the planning process:
Consider long-term care insurance.
One effective strategy may be to purchase long-term care insurance. This is a type of insurance in which you pay premiums today so that an insurance company will pay some or all of your long-term care costs in the future.
Most long-term care policies will cover care that is provided either in a facility or in your home. Some will even cover needed home modifications, such as the installation of wheelchair ramps or a stair-lift.
Long-term care insurance policies have many different features and options, so it’s important to consider your needs and your budget before you purchase a policy. In most policies you can adjust many of these features to get the premium amount and the benefit amount that best suit your goals.
Keep in mind that long-term care insurance requires underwriting, and your eligibility and your premiums are based in part on your age and health. It may be wise to consider long-term care insurance sooner rather than later.
Create advance directives.
What if you were unable to make or communicate your own decisions? That’s an unfortunate reality for many seniors. Conditions like Alzheimer’s, Parkinson’s and other cognitive-related diseases have the potential to leave you incapacitated. That means you are unable to communicate your wishes.
If that were to happen, your loved ones and health care providers may be forced to make decisions for you. It’s possible that they may make decisions regarding your finances and your health care that you wouldn’t have made for yourself. If a loved one doesn’t have your best interests at heart, they may even act unethically with your assets.
You can minimize this risk by creating advanced directive documents, such as a living will, powers of attorney or even a living trust. These documents allow you to express your goals and wishes so your loved ones and your health care providers have some guidance and instruction should you become incapacitated. An estate planning professional should be able to help you create these documents.
Talk to your family.
It may not be pleasant to think about being in an assisted living facility or even about your own death. However, it’s important to consider these possibilities so you can plan ahead. It may be even more important for you to discuss these scenarios with your spouse, children or other relevant loved ones.
By talking about these issues, you and your family can develop a plan. For example, through conversation you may determine that one child could help with providing long-term care in your home. Or you may determine that a child or other family member would be a good choice to serve as your power of attorney. While these conversations may be uncomfortable, they are important to have as you work through the estate planning process.
Ready to protect your estate against long-term care costs? Let’s talk about it. Contact us at Coventry Financial Group. We can help you analyze your risks and develop a strategy. Let’s connect soon and start the conversation.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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