Basic Planning Needs to Consider Now
9/28/2010 @ 4:07:PM By Maureen Lyons
These are difficult times. Consumer confidence is low, and its a long way before the economy is expected to fully recover. Many of us are concerned, wondering what planning we should do now, if any.
For the vast majority of Americans, planning is not discretionary. These individuals continue to have personal concerns that they need to address now because these concerns are unrelated to the economy. In fact, some of these issues may even be made worse by our current economic situation.
In addition, for anyone who may be subject to federal or state tax in the future, unusual circumstances have created a “perfect planning storm” that may not last long. This post addresses some of the planning needs unrelated to the economy, and discusses strategies that create the biggest planning opportunities today.
Here are the basic planning needs that are not directly related to the economy:
- Disability and retirement planning
- Special needs planning
- Beneficiary protection planning (for example, protection from divorce, creditors and/or perhaps the beneficiaries themselves)
- Second marriage and “blended family” protection
These planning needs are often more critical for those with fewer assets than for those with more wealth.
Disability Planning.
We’ve covered disability planning in a previous post. Let’s do a quick review.
According to the Family Caregiver Alliance and a recent MetLife Mature Market Study, of those Americans currently age 65 or older:
- 43% will need nursing home care
- 25% will spend more than a year in a nursing home
- 9% will spend more than 5 years in a nursing home
- the average stay in a nursing home is more than 2.5 years.
Nursing home costs are increasing much faster than the inflation rate would imply. Thus, many of us are quite appropriately worried about how we will pay for that kind of care when we need it.
Also of concern to many people is who will provide long term care and whether those caregivers will care for us in the way we desire. For many, there is a strong desire to stay at home as long as possible. For others, the companionship found in an assisted living facility makes that choice preferable. Still others need care that cannot be provided at home or only at a prohibitive cost. Not surprisingly, these goals often change over time and with changing circumstances.
In light of these challenges, it is critical that you create a trust that sets forth your current, carefully thought out “disability objectives” — to ensure that if and when the time comes you and your loved ones are prepared.
Special Needs Planning.
Special needs planning is another area unrelated to the economy. According to the 1002 U.S. census:
- 51.2 million people reported having a disability
- 13-16% of families have a child with special needs
- Autism occurs every 1 in 150 births and between 1 and 1.5 million Americans have an Autism spectrum disorder
Failure to properly plan for a person with special needs can have disastrous consequences, especially if the person is receiving government benefits. The Special Needs Trust that incorporates specific care provisions is a critical component of the planning necessary for a special needs person who needs ongoing support. Insurance on the lives of the parents or grandparents of a special needs person frequently funds the ongoing care of that special needs beneficiary.
In our next post we will talk about beneficiary, as well as blended family, planning…
Posted Under: Comprehensive Estate Planning, Estate Planning, Special Needs Trusts
Tags: , Disability, Estates, Planning