Aging IQ is a news aggregate designed to create a location for all of your senior news from holiday meal ideas to cutting edge research. The below article was originally posted on their website by the author below.
JULIAN GRAY AND FRANK PETRICH | APR 24, 2022
Boston College’s Center for Retirement Research has estimated that more than one-third of retirees will not have the resources for even the most minimal level of long-term care needs, while only one-fifth can afford care for severe needs.
With 14 million people — growing to almost 28 million in 2050 as estimated by the Centers for Medicare and Medicaid Services — needing some form of long-term care services, how prepared are you or a loved one to deal with this probable need?
Now is as good of a time as any to step back and see where you are.
In future columns, we’ll get into more of the nitty-gritty of long-term care needs and finances and ways for which they may be paid. In this regard, in light of increasing inflation, it’s also important to check with a financial adviser to determine if your asset allocation is up to your day-to-day and possible long-term care financial needs. It’s all part of a big puzzle.
Let’s take some of these puzzle pieces, step by step.
Step one, piece one, for today, is simple: an estate planning document, the Will.
A will is simply a written document stating your wishes and directions for dealing with your estate. Our emphasis on having one has been reinforced because of the COVID pandemic, with almost 1 million deaths attributed to COVID to date. At this point, who knows what is and what will be “normal.”
A recent survey estimated that 68% of people die without a will. The consequences of dying without a will (“intestate”) can be disastrous. Property would then be distributed according to the state’s intestacy laws and go to people whom you might detest, or, at least, dislike. This is especially true if you are unmarried or in a “non-traditional” relationship. Intestacy laws generally distribute property at death to a surviving spouse or certain descendants; a forced plan that is not necessarily suitable for unmarried couples and other nontraditional families.
So, determine what your goals are. Have some early-on discussions with family members as to their own goals and needs, too. You may find out that someone you wished to favor in your will may not need, or even want, what you wish to leave them. A good example might be a family vacation home that is no longer of interest to them. Another example might be an Elon Musk child situation, where there would certainly appear to be no need to leave anything.
You might want to consider having a family meeting, perhaps orchestrated by a neutral third party, to make your potential heirs aware of what they may be getting and how those monies should be managed. The intent here would be not so much for you to try to manage from the grave, but to flesh out expectations, both yours and theirs. You might determine that some form of trust would be a better vehicle for passing on your largesse.
Have there been what we consider significant changes in your life? Has there been a major disability or illness, death of a spouse, divorce, re-marriage, job loss, retirement, new child or adoption, new grandchild, etc.? The list can go on and on. Each of these events should become a triggering device to review or create the document to help you and your loved ones plan for the near and distant future.
Finally, who do you want to handle your estate (the “executor”) once you are gone? Is that person capable of doing so (and, equally important, willing to)? Make a list (and, check it twice) of whom you think might fulfill that role. You might have to consider an entity such as a bank or trust company, assuming your assets would make it worthwhile to step into that position.
The thought process you need to go through is as daunting as doing your taxes. However, the beneficiaries of your efforts won’t be the IRS, but rather, those you love most.
Usually, our year-end columns lecture our dear readers on the necessity of having a will (along with other essential estate planning documents in place and/or reviewed). However, if you haven’t yet heeded that advice, we urge you to do so now. Don’t be one of the 68%!
So, once you’ve taken care of the first step, knowing that whatever you may have left is going where you want it to, you can now give some thought to how you can financially meet your probable long-term care needs. There is little doubt that it would be better to leave them nothing than to leave them with the entire burden of your care.