Planning for Long-Term Care During Your Peak Earning Years
Serving Families and Individuals throughout Prince George’s, Montgomery, Howard, and Anne Arundel Counties
Are you between age 40 and 55? If yes, then congratulations. Research has shown that you are in your peak earning years. And that is a very good thing. However, with this new stage of life comes new estate planning considerations. How does estate planning during your peak earning years change? Should you start thinking about your long-term care planning?
Chances are good that you have some expensive life events going on right now, unlike when you were among the Married Couples without children. Do you have children who are college-bound or already there? Do you have a wedding scheduled (or one or more down the road)? Perhaps you are beginning to help aging parents with personal, health care and financial responsibilities.
Can you say Sandwich Generation?
I know you may be busy and are likely tired, very tired. Nevertheless, this would be a good time to create (or revisit) your estate plan and to start thinking about long-term care.
Unfortunately, many married couples mistakenly believe that they can make personal, health care and financial decisions for one another should either spouse become legally incapacitated due to a serious injury or illness. Nothing could be further from reality!
Without proper estate planning in advance to appoint your spouse as the incapacity decision-maker, he or she will not have legal authority to make even fundamental decisions for you (or affecting both of you). For example, medical privacy laws will bar access to your medical records and the ability to consult with your attending physician, financial laws limit control over your finances, and IRS regulations will prohibit filing a “legal” joint income tax return … for starters.
Unless you legally appoint the decision-maker of your own selection in advance of an incapacity, through a Property Power of Attorney (and possibly a Living Trust), then a judge may be required to select a guardian for you. The guardianship process to accomplish this is expensive (it employs at least two attorneys), discloses your private personal and financial information to the public record and is a real hassle for your loved ones. Without a Last Will and Testament (and possibly Living Trust), you give up the right to decide who will stand in your shoes to handle your affairs when you die.
Did you know that in the absence of proper estate planning, your assets may be distributed after death based on “one-size-fits-all” state laws written for people who do not have their own estate plan? Of course, this impersonal estate plan written by state lawmakers may not reflect your own unique circumstances and objectives for your spouse and assets.
In fact, depending on how you titled your assets and how your beneficiary designations are arranged, you may disinherit your own spouse and force your spouse to sue your estate!
When it comes to your children, great care should be given to protect any inheritance both for them and from them. For starters, wealth representing a lifetime of your hard work and thrift can be squandered in very short order. Dollars earned just spend differently than dollars inherited. In addition to good, old-fashioned squandering, an inheritance can quickly vanish through divorces, lawsuits and bankruptcies.
Fortunately, with proper (and very careful) estate planning, you can provide an inheritance that is protected for and even from your own children. Remember, two things you cannot choose in life are your own folks and the spouses of your children.
Are your parents already in or considering a transition to some form of long-term care? If yes, have you noticed how expensive the continuum of care is? From in-home assistance to assisted living to skilled nursing the expenses can destroy savings and investments created over a lifetime of hard work and thrift.
Your peak earning years are the perfect time to lock-in a long-term care insurance policy while you are still able to qualify physically and mentally. Some versions of coverage only pay if you need long-term care assistance, but others can now do double-duty and turn into life insurance if you do not need such assistance. That is a popular alternative to traditional long-term care insurance.
There is a 70% risk of needing long-term care once you reach age 65. Curiously, 70% of people think they will not be among those 70% needing care (i.e., denial) and 70% of people think Medicare will pay for it (i.e., ignorance)! You do not want to be in that 70% who are in denial, ignorant or both.
If you need assistance with the activities of daily living (e.g., eating, bathing, dressing, toileting, and transferring), then you may want to hire a professional to take care of them instead of your children.
When you are ready for help with your long-term care planning through appropriate insurance, then we can help you find that, as well.
Fortunately, we can help you avoid probate and replace that impersonal, state-written, one-size-fits-all estate plan with one we design together for your unique circumstances and objectives. We even help you coordinate the beneficiary designations on your life insurance and retirement plans with your estate plan to avoid unpleasant, unintended consequences.