Ideally, we all plan with plenty of time ahead of us:
But that’s not always the case. What happens when a loved one experiences a decline requiring care in a relatively short period? The need for longer-term care (such as in a nursing home) often arrives without warning, such as following a fall, a stroke, or a sudden decline that leaves families searching for help and looking for answers and assistance within days, not years.
Crisis planning exists for exactly this situation. One of the biggest concerns in these situations is “How are we going to pay for this?” We often hear about the high cost of college tuition on the news, but the higher cost of long-term care can sneak up on us (a private room is about $120,000/yr; even the most expensive college in the U.S. doesn’t come close). This unfortunate pairing (the relative surprise of a partner’s sudden illness or decline + the worry of paying for it while still caring for the “well” spouse) can seem daunting at best.
Crisis planning in a nutshell
Typically, it pays to start preparing for long-term care and asset protection years ahead of time. Some tools (like Medicaid Asset Protection Trusts, or “MAPT"s) have strict “look-back” requirements, which, if they’re not met, can actually penalize applicants, barring access for months or years.
Setting up a MAPT isn’t for everyone; they’re expensive, require careful planning with a five-year forecast, and the necessary funds to both fund the trust and to hold aside for living expenses in the meantime. That being said, just getting started with a traditional (but flexible) estate-plan can make a huge difference.
Strategies beyond MAPTs can help obtain the necessary care and support while retaining family assets and avoiding the five-year lookback. Which tools we use depends upon the individual circumstances of each family, but they generally help move funds or recategorize assets to access additional ways to pay for care. Some have tax implications and others simply don’t fit. Getting a full picture of each spouse’s background, current neads, and resources on hand can help create a workable plan.
Traditional estate-planning documents, such as a power of attorney and advance directives, can also be a huge help in a crisis situation, though this ultimately depends upon whether they contain the relevant information and provisions. Most standard powers of attorney contain limitations that may impede employing some of the strategies we’d use to get help in a crisis situation; this isn’t bad, per se, but this should certainly be considered when planning at later stages of life. Similarly, advance directives don’t always address the care one would like to receive, should they ever face a condition like dementia.
So what should you do?
It depends. As I mentioned, individual situations greatly affect which strategies will work best for your family. Set up a complimentary 15-minute discovery call by clicking below, and we’ll discuss where you are and the best way to move forward.
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