There are numerous things to think about when you are considering the impact of incapacity, even when you have substantial financial resources available for your long-term care. While it could be a disease like dementia or Alzheimer’s, it could also be a severe accident that leaves you in a coma, unable to make decisions for yourself. Any prolonged health issue may last for an indefinite number of years; therefore, it is important to plan for the worst.
We have often said, it is more complicated to live in an incapacitated state than it is to die. Who will pay your bills, write checks on your behalf, or make decisions on the type of care you should have? Do you want a “do not resuscitate” order that tells medical professionals not to perform CPR if you go into cardiac arrest? Do you want water and food, water but no food, or no food or water, provided for you? These are hard decisions for a family to make during a crisis.
It can be easier for you and your surviving family if you have made these decisions in advance. An Advance Directive for Health Care allows you to manage your future medical care. Your family would then know your wishes and would not have to deal with the burden of wondering if they made the right call. You may also want to find the HIPAA waivers for your state, to alleviate any issues you may encounter regarding protected health information.
A Financial Power of Attorney allows you to nominate someone to attend to your financial affairs in the event you cannot. It allows you to choose who will act in your place and carry out your financial plan according to your goals and concerns. It is important to talk with the person you’ve nominated in advance, as they may be unwilling to accept the responsibility.
When planning for incapacity, long-term care insurance is often discussed. However, once you have a diagnosis, often it is too late to purchase a traditional long-term care policy. The reality is, in Georgia, the median annual rate for a semi-private room at a nursing home with full time care is $72,000, growing at 4% annually. A 10-year stay could cost your estate around $584,000, while a 20-year stay could total more than $985,000. However, if you have concerns about running out of money or are concerned about leaving assets for your heirs, you may consider hybrid life insurance products or single premium annuity contracts with an income rider, as these policies do not have as stringent underwriting processes. Both of these allow you to access your money in the event you need long-term care.
If you are able to self-insure and still intend to bequest money on your deathbed to a charity, your children or grandchildren, you may consider characterizing the remaining portfolio as if it were for them with their investment time horizon. You could then manage the assets with them in mind, meaning less fixed income and more long-term holdings in stock or other growth investments.
Overall, you need to work with an attorney experienced in estate planning—not one who focuses on selling insurance. You should create your financial plan first, then use insurance products to achieve goal.
If you have questions regarding your estate plan or how hybrid insurance products may benefit you, the experts at Henssler Financial will be glad to help:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166.
Disclosures: This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
