Estate planning is largely concerned with anticipating and arranging the distribution of your assets after you die. However, a comprehensive estate plan should also include preparing for the possibility of a long-term disability.
Research confirms that most Americans will face some type of disability during their lifetime and that for many, the disabilities will be long-term. The Centers for Disease Control and Prevention (CDC) estimates that more than 61 million adults in the U.S. live with a disability — 26 percent of the country’s total adult population.
A major goal of disability planning is providing sufficient funds to pay for the high cost of long-term care, such as in a nursing home or assisted living facility. The cost of long-term care averages $3,628 per month in an assisted living facility or $7,698 per month in a nursing home. By some estimates, those rates could exhaust the personal savings of most residents within as little as 90 days.
Long-term disability insurance should be a central part of any plan. It should include coverage for all types and levels of care, including home health aides. Some policies also provide for replacing income lost due to disabilities. The broader the coverage, the higher the premiums, but good estate planning can ensure investment earnings sufficient to make up for the added cost.
Another aspect of disability planning is making sure that your assets, financial affairs and health care will be managed according to your wishes should injury ,illness or the infirmities of old age leave you incapable of making your own decisions. Without a plan in place, these decisions may have to be made by a relative or, in contested cases, by a judge or a court-appointed officer.
Your estate plan can make use of any or all of the following documents to carry out your objectives:
- Power of attorney — This legal document gives an agent you appoint the legal authority to make decisions and carry out actions for you in the event you become disabled. Powers of attorney can be addressed to financial affair or to health care matters.
- Revocable trust — A revocable trust that you manage during your lifetime can include a clause for appointing a substitute trustee to take charge of the assets in the event you become disabled. That person may also be your successor trustee if you die.
- Health care directive — Also called a living will, a health care directive is a document explaining your wishes regarding your medical care. This directive goes into effect if you have a terminal condition or are in a permanent unconscious condition and unable to communicate.
For advice on preparing for long-term disability, we invite you to reach out to Bottimore & Associates, P.L.L.C., in Tacoma. Our team of experienced estate planning lawyers can discuss the best -planning tools for your unique financial and health situation. To schedule a free consultation, please call 253-272-5653 or contact us online.