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| Advisors' Forum |
Future Considerations
06/01/2007
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As an
estate planning attorney, I often recommend that
high-net-worth clients consider LTCI as part of rounding out their planning. We
begin by determining current and anticipated future liquidity of all holdings.
We also consider the related tax and other possible economic consequences of
liquidating investments if needed. For example, a client with a successful
business, a large IRA, annuities, family cottage and real estate limited
partnerships may have significant net worth and the ability to pay for the cost
of care. However, having LTCI benefits available can avoid the need to liquidate
assets that would result in much greater economic expense. In this respect,
having an LTCI benefit to draw from is like retaining a purely liquid segregated
investment. It is similar to a rainy-day fund for an unexpected and very costly
long-term deluge.
It is also important to have a realistic appreciation of the
actual cost of the type of long-term care services that meet your unique needs.
We have clients who currently spend an average of $500 per day for such services
(above their basic cost of living). For couples who are both in need of care,
the costs are even higher. If the unknown and rapidly rising cost of care is a
concern, LTCI is a very good hedge that provides added peace of mind.
Many people resist doing the quality of care/quality of life
exercise, wrongly believing they will not know the difference anyway. That is a
fallacy. In our experience, most people whom LTCI actively benefits are fully
aware of their circumstances and happy to have the extra liquid funds to help
pay for the services they prefer. For some individuals, LTCI makes the
difference between receiving care in their own home and having to go into a
nursing home.
Sanford J. Mall, The Mall Malisow Firm, Farmington Hills,
Mich.
Send Us Your Questions. Are you wrestling with family
issues, business governance or succession decisions, investment or estate
planning dilemmas, problems related to philanthropic activities or foundations,
or a similar predicament? We invite you to email a question to
advisorsforum@worth.com.
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