As a founding member of the Idaho Care Planning Council we enjoy sharing articles from the National Care Planning Council's website from time to time. Last year about this time they discussed reasons Elder Americans were giving for preserving their assets through legal processes. You can find the entire artilce here.
Reasons for Preserving Assets
Provide Assets and Income for a Surviving Spouse
Though tragic, when a spouse of a couple dies, income is usually reduced through loss of Social Security income or reduction of retirement pension. This can be especially hard for the surviving spouse having to learn to live on less and prepare for following years.
Protect Assets and Income from Deterioration or Loss of Property
Unexpected property loss may result in a drain on available cash assets. You might have damage to a vehicle or even to the home. Lack of regular maintenance or damage may result in expensive repairs. There are estate preservation strategies which strive to recognize these losses and to provide potential solution to avoid these losses with adequate insurance coverage. In additional, help may be sought through grants, tax credits, and other programs that provide maintenance or savings on utility bills.
Maintain Assets to Pay for Medical Care and End-Of-Life
Paying for Medicare supplement policies, medical co-pays and the cost of prescription drugs not covered by insurance can reduce available assets. Costs associated with dying can drain the estate. Strategies are designed to identify these costs and to deal with them while assets are still in place to provide protection.
Maintain Assets to Pay for Long Term Care
The need for long term care often occurs at the end of life. Unfortunately, this is the time when assets are already being stretched thin. The cost of home care or assisted living ornursing home care can be very expensive. Assets that have taken a lifetime to accumulate can be wiped out in a matter of months. Strategies are designed to take advantage of government programs to cut down on the burn rate of assets when the need for care occurs.
Compensate Children or Grandchildren for Their Sacrifice
It is very common for children or grandchildren to put their own lives on hold and to sacrifice their time and their income to care for loved ones in their final years of life. It is only fitting that any assets remaining should go towards helping family members get back on their feet after the sacrifice of months or years providing care.
Provide an Inheritance for Children or Grandchildren
Many seniors have worked hard their whole lives to accumulate cash savings, investments and a fully owned personal residence. It does not sit well with these people to have to put out money at the end of their lives for such things as health care, long term care or maintenance. They prefer to have their children have the money. Many aging seniors will actually forego medical care or long term care or maintenance on their property to leave more money to their children.
Estate Planning & End-Of-Life Issues
A key deficiency in the process of preserving or transferring assets occurs when seniors fail to provide for orderly distribution of assets at death or fail to let their family know what to do when the senior can no longer handle his or her own affairs.
Estate planning from a qualified estate planning attorney, a financial adviser who specializes in estate planning or a CPA planner is the design and creation of documents to provide the orderly transfer of assets and property to the next generation. Wills, living trusts and a myriad of other trust documents or business arrangements to avoid estate taxes, income tax and real estate capital gains are some of the principal documents used. Estate planning also concerns issues of business succession or disability of a business owner.
Many estate planners are also adding final directive or end-of-life documents such as living wills, powers of attorney and special medical directives. But often these are considered secondary to the process of transferring assets or property. Unfortunately, these documents are much more important to family caregivers dealing with the needs of elderly loved ones.
Estate planners also need to become more involved in the planning process for long term care by helping in the production of a written long term care plan. This should also include meetings with potential family caregivers and instructions or checklists for these people. This important aspect of planning is often overlooked.
Elders or their families who are assisting them should insist on more careful planning for long term care issues when doing an estate plan.