The Rising Costs of Dementia Care

Studies reveal that the cost of dementia care is rising. Moreover, it is expected to double again by 2040. Comparatively, the cost of caring for an elderly citizen with dementia is similar to or higher than that of caring for an individual with heart disease or cancer. Making the situation worse, the number of individuals suffering from dementia will continue to grow over the coming years.

The RAND Corporation recently published a study indicating that the average annual cost to care for a single dementia patient is $41,000 to $56,000. Included in this cost is medical spending, family care, lost productivity, and long-term care. The largest portion of this cost is long-term care, which accounts for 84% of the total care costs for individual suffering with dementia. Alarmingly, this per-person rate is set to double within the next 30 years.

It is important to create a financial plan to provide for these costs. You may already have assets or policies – such as insurance, employee benefits, retirement benefits, and personal assets – that will assist you in providing for these costs. In addition to these assets and policies, you may also receive Medicare coverage. For individuals aged 65 and older, Medicare is the single largest source of health care coverage. However, some individuals require dementia care before reaching age 65.

Another solution may be long-term care insurance. This type of insurance provides payouts to assist with the cost of long-term care in a nursing home or other facility. However, if you did not purchase a long-term care insurance policy prior to your diagnosis, it may be difficult to secure. Moreover, if you are able to secure a policy later in your life, the premiums may be quite high.

How to Protect Yourself From Lawsuits

These strategies can help keep your assets safe if you wind up in court.

By Matthew T. McClintock, J.D.
Vice President, Education, WealthCounsel

These days, lawsuits can happen to anyone, at anytime. In the United States alone, roughly 15 million civil cases are filed each year.

For those who work in fields where lawsuits are common—doctors, lawyers, architects, business owners—getting sued seems inevitable. A study published in the New England Journal of Medicine found that 99 percent of physicians in high-risk specialties will deal with at least one malpractice suit before retirement age.

Fortunately, asset protection tools can be used to shield your property and possessions—your financial accounts as well as your home and business—from future litigation and would-be creditors. The following steps can help make you a less attractive target to someone who’s eager to sue and—if you are sued—can increase the likelihood of a favorable settlement:

Buy enough insurance

Adequate insurance—for your business as well as yourself—is the first line of defense when it comes to protecting assets. Work with a professional to ensure you have sufficient coverage for your home, cars and other belongings. If you own a business, your commercial general liability coverage should be checked and updated regularly, and it may be appropriate to also purchase professional liability insurance and employment practices insurance. Though it may seem tedious, you should also read the fine print on all of these policies.

Rethink marital property

Creditors may be able to force couples to liquidate jointly held assets to collect the debtor’s share, so in some states it can make sense to protect assets by signing them over to your spouse. However, there are significant limitations and drawbacks to this approach. If you wind up divorcing, the divided property could become the subject of disputes. Additionally, the assets must actually become the spouse’s property. Creditors can go after assets that are held in the spouse’s name if the debtor still controls them—like, writing checks from a bank account, for example. And this approach may not work in states with community property laws, where a married couple jointly owns almost everything acquired during the marriage, no matter whom holds the title. Work with a professional to find the best approach for your situation.

Set up a business entity…or several

When you own everything under your own name or under the name of one company, a single lawsuit can result in a catastrophic loss. It’s better to hold your most valuable assets—real estate, equipment, receivables—in separate entities. That may require multiple limited liability companies (LLCs), other business entities, or various trusts. This way, only the assets owned by the entity involved in the lawsuit are at risk. A professional can help you set up the right entities and advise you on best practices concerning their use.

Consider a domestic asset protection trust (DAPT)

An increasing number of states allow individuals to establish very protective trusts that insulate assets from creditors’ claims. Holding assets inside a DAPT can provide an additional layer of protection from creditors in some states, but not all. Additionally, adding a spendthrift clause to a DAPT can—again, in some states—protect the assets you pass down to an heir from that heir’s creditors. The level and quality of protection varies widely from state to state, so it’s essential to work with a knowledgeable attorney to select the best jurisdiction and establish the trust accordingly.

Consider sending assets offshore

A foreign asset protection trust (FAPT) is a trust held in another country, placing some of your assets out of the reach of U.S. courts. Lawsuits targeting assets held in offshore trusts are litigated in foreign jurisdictions, subject to foreign laws and justice systems. This aspect alone can be enough to dissuade someone from filing a suit. FAPTs are generally expensive to establish and maintain, and they’re subject to heightened scrutiny and accounting requirements. But for many clients these trusts make a lot of sense.

Not all of these asset protection strategies are necessary or appropriate for everyone, but just one or two can dramatically decrease the losses you’ll risk in the event of a lawsuit..

Three Estate Planning Items Everyone Needs

Three Estate Planning Items Everyone Needs

By Matthew T. McClintock, J.D.
Vice President, Education, WealthCounsel

Many people mistakenly believe that estate planning is only necessary for the wealthy. In reality, a basic estate plan is essential for everyone, regardless of income or net worth, because we all want to minimize confusion, unnecessary costs, and stress for loved ones after a death.

As discussed in a recent Yahoo! Finance article featuring WealthCounsel, estate planning can be a difficult topic for many families to address, but it’s a necessary one. Without proper preparation and documentation, assets—like houses, retirement plans and savings accounts—can end up in limbo for years, sometimes requiring expensive legal assistance to straighten matters out.

At a minimum, everyone should have the following three items in place:

An up-to-date will or trust

Wills are easy to create, but they require the distribution of assets to go through probate. Probate is a legal process that involves:

  • Validating a deceased person’s will;
  • Identifying, inventorying, and appraising the deceased person’s property
  • Paying debts and taxes;
  • And ultimately distributing the remaining property as the will directs.
The probate process often requires a lot of technical paperwork and court appearances, and the resulting legal and court fees are paid from estate property—reducing the amount that’s passed on to heirs.

A trust can be more expensive to set up and requires professional assistance, but it provides benefits that a will cannot. First, when they’re structured properly, trusts will help avoid guardianship or conservatorship if you become incapacitated. A will only works after you’ve died; a trust, by contrast, works all the time, including periods of incapacity before death.

Trusts usually avoid probate, which helps beneficiaries gain access to assets more quickly as well as save time and court fees. Depending on how it’s structured, a trust may also reduce estate taxes owed and can protect an estate from heirs’ creditors.

A durable power of attorney

A power of attorney is a written authorization that allows someone else to make financial and legal decisions for a person if that person should become hospitalized, disabled or otherwise incapacitated.

Not all powers of attorney are created equal. Some are put in place for short periods of time only—while a person is vacationing overseas but dealing with legal matters at home, for example. That’s why it’s important to have a durable power of attorney in place, which simply means that the agreement is not for a temporary period of time. It may be valid immediately when it’s signed, or it may go into effect at a later point. But what makes it “durable” is the fact that it will survive your later incapacity. (If a power of attorney is not durable, it is revoked when you become incapacitated – the very moment when you need it most.)

Powers of attorney for property should only be given to trusted individuals, ideally those who are good with financial and legal matters. Medical powers of attorney can be separated and given to someone else, if desired.

Updated beneficiary designation forms

Beneficiary designation forms on life insurance policies, 401(k) accounts and other assets will generally override any conflicting provisions within a will or trust. It’s essential to make sure all forms are checked and updated regularly, ideally on an annual basis.