A trend for estate planners in Texas and elsewhere is to include long-term care planning as one of the initial funding tasks in the estate plan. Because people are now living significantly longer than in the past, the estate planning attorney must factor long-term care provisions into the estate plan. This may impact on how much can be bequeathed in one’s will to the beneficiaries. Knowing in advance how this will be handled is better than being 80 years old, in declining health, and facing imminent nursing home care with no plans in place.
It may be that the client is capable of funding long-term care insurance. If so, that will fit easily into the plan and may be all that is needed. However, the hitch is that about one-third of all owners of such policies see them lapse prior to getting any value out of them. This may happen due to unaffordable premium increases. It may also occur due to the advancing age of the insured, which leads to some cognitive decline, and hence, a forgetfulness to pay premiums.
Paradoxically, it is those increasingly incompetent individuals who will most need the insurance that they are allowing to lapse for non payment. The solution is to put in place planning for cognitive decline in the estate planning program. In particular, the durable power of attorney is most helpful in providing for a trusted loved one to handle the person’s affairs, including the payment of insurance premiums, when incompetence sets in.
In that respect, the agent under the power of attorney must be selected with care and must receive adequate instructions prior to the occurrence of any crisis. This includes pre-written instructions on all of the bills and premiums that must be paid to keep vital coverage effective. The process of combining estate planning and long-term care preparation in Texas is, however, a complicated procedure that should not be attempted without the guidance and expertise of an estate planning attorney.
Source: nasdaq.com, “Estate Planning Errors: Assumptions Advisors Get Wrong”, April 5, 2016