Here’s a real dilemma for a wealthy 87 year old woman whose situation is secure but it is causing family conflict. She needs full time care long term.
Her financial advisor, together with the bank trustee managing her assets used calculation tools to figure out how to make her assets last for her lifetime. Somehow, they failed to anticipate the actual cost of caring for an elder with physical conditions and illnesses that require 24/7 care. This is a woman with advanced cardiac disease who had open heart surgery. Her daughter, who is a professional, left her self-employment to care for her mother full time.
The caregiving daughter wants some compensation from mom’s millions. She indeed deserves it.
Further, the life expectancy the trustee and advisor chose as a basis for determining how long her assets would have to last was 100 years of age. Given her medical issues, no doctor treating her would agree with that estimate. Far from it. She may have another two years or so but it is very unlikely that she could live to be 100. Her heart is simply wearing out.
While cash is being drawn down monthly for her essential expenses for care at her daughter’s home, no one calculated the cost to her daughter, who is losing a six-figure income in providing the needed care. Being with her daughter is the mother’s preference. And her daughter is taking excellent care of her.
The brother, who is eager to get his “share” of an inheritance is hovering around the trustee, demanding to know how much is being spent to care for mom and why the caregiving sister should get compensation to make up for her losses, even partially. He resents his sister for asking for compensation for caregiving.
What could you, as an advisor do to prevent or mitigate family conflict like this when planning for an aging client’s future? Here are some tips:
- When using tools to calculate life expectancy, take into consideration your client’s medical condition. Get real data from your client or from involved family. And update your information and calculations as age takes its toll. Health generally declines in old age.
- Take into consideration that about 70% of people today will need long term care at some point. In the client’s case described above, the minimum cost of care for her is $12,000 a month. That does not include bookkeeping, a driver, nor medication management. That figure covers a full time, 24/7 non-medical home care worker only.
- Assume that if your client has adult children willing to provide care, a wealthy client can and should compensate the caregiving adult child. What is “fair” should be based on market rates for service provided and the cost of what the adult child has to give up, such as quitting a job.
Calculation models may be inadequate to build in these details. The smart advisor will use good sense and knowledge of your client’s needs and preferences to adjust planned drawdowns to meet those needs.
When dementia or other brain disease is involved, the picture gets even more complex. If you want to learn more about what to do when your client develops dementia, get your online course, Best Practices With Aging Clients and start increasing your expertise today!
Here’s the Cost of a Million Dollar Life Insurance Policy
How the Financial Services Industry Is Successfully Reaching Women
The Easiest Mass-Market Entry Point for CBD May Be Topical Creams
Is Diversifying into Real Estate Right for You?
A Buyable Trough in Semiconductor Orders?
5 Signs That You Need to Adjust Your Management Style
Know Your Weaknesses To Boost Your Success
Were You Fired? 8 Rules to Keep in Mind When Answering This Question
6 Tips To Enhance Your Presentation Skills
Harness the Potent Power of Business Storytelling
Development9 hours ago
4 Things Make It Easy for Prospects to Say YES
Marketing10 hours ago
10 Things to Remember When Meeting with Potential Investors
Development10 hours ago
A Best-of-All-Worlds Model: Full-Service Independence with Equity Upside
Equities23 hours ago
The Economics of Happiness
Development1 day ago
The 5 Top Reasons Advisors Should Pick a Niche
Research1 day ago
What Americans Really Think About Cryptocurrency
Advisor3 days ago
Financial Planning Needs to Be Ongoing Instead of Episodic
Research3 days ago
What the Fed Said to Spook the Markets