Many people are concerned about planning for long-term medical care, focusing particularly on financial concerns. Services such as home health care or assisted living can be quite expensive. These are important matters and should be a topic of discussion with your legal and financial advisors. However, the first step in this process is to ensure that you have a solid foundation of estate planning documents.
There are several reasons a solid foundation is important. The first is that a strong foundational estate plan will allow your family to plan for your long term care expenses if you are unable to do so. When it comes to long-term care planning, we often do not plan until we have a need, and at that point we are usually no longer able to do the planning ourselves!
Another important reason to have a solid foundation of estate planning documents, is that we are all going to use these documents at some point in our lives (sorry to break the news, but at the very least, we will all die). Having estate planning documents will always lead to a more efficient and less costly administration of our personal affairs. In other words, planning now will save your loved ones lots of time and money later.
Let’s look at this scenario using a tale of two clients. Client 1 did not do any estate planning. She did not sign a Will, nor had she ever executed a Durable Power of Attorney. Client 1 suddenly suffered a stroke and was incapacitated (losing her ability to sign legal documents). She now requires around the clock care.
At that point her family is in a difficult position. They are frantic about the future, and more importantly how they are go to pay for the over $200 a day nursing home care that may be required. Furthermore, they are not sure about what assets she even has in her name. When they go to the bank to access the accounts, they are told that they do not have authority. They realize that their only option to begin caring for their loved one is to petition a court to become a guardian and conservator. This process will take time and thousands of dollars.
Client 2 is different. She signed a Will, Durable Power of Attorney and Advance Health Care Directive. When she unfortunately suffered a stroke, her family contacted her attorney. The attorney provided the family with copies of her legal documents, which allowed them to access her bank account and to even begin writing checks from her account to pay for her care. Client 2’s family also had the authority and access to begin structuring Client 2’s assets to help alleviate the financial burden of her long-term care expenses.
Having a foundational estate plan is like having a strong foundation in one’s home. When the storms of life come (and they invariably come), the home can withstand most of them and come through with little or no damage.