A Financial Planning Failure

Trouble surfaced almost immediately.

The pre-existing issues between Harry and Fred were exacerbated by having them live under one roof.

Fred and his wife both work at demanding jobs. They underestimated the amount of time and care Harry required, especially as his condition deteriorated.

They also underestimated the level of hospice care, which is covered by Medicare. At most, hospice visits the home once or twice a week. At other times, Fred scrambles to find help for Harry.

Healthcare workers, even those without significant training, are almost impossible to hire. Fred offered double and then triple the going rate, with limited success.

Harry has now deteriorated to a point where he needs 24-hour skilled nursing care. Fred was “shocked” to learn that Medicare does not cover the cost of end-of-life care at a nursing home. It will only continue to pay for hospice services.

While Harry’s short-term prognosis is poor, hospice believes he could linger in a nursing facility for months at a cost of $15,000 per month.

Fred is now scurrying to set up a plan for his dad, while also trying to sell his dad’s home to fund nursing home expenses.

He told me this experience has been an “emotional roller coaster,” as he navigated unknown waters during a time when he was dealing with the stress of being a father, holding a demanding job and experiencing the anxiety of coping with Harry’s illness.

I asked him this question: “Knowing what you have experienced, what would you have done differently?”

Without hesitation, he said he would have placed his dad in an assisted living facility much earlier, with the resources to cope with his condition as it deteriorated, rather than insist he move in with them. He would have sold his dad’s home sooner to fund this cost. He also would have insisted Harry take out a long term care policy.

As he put it: “Neither my wife nor I are trained healthcare professionals. We had no idea of the physical emotional and financial demands that would be placed on us. My dad would have been much better cared for in an assisted living facility near our home, where we could have visited frequently.”

Issues to consider

I know you ask your clients about their estate plan. Do you also ask to review the estate plan of any surviving parents?

If you believe the parents may need to qualify for Medicaid, do you inquire whether they have placed their assets in an irrevocable trust while they are healthy?

If so, do you review the terms of the trust agreement?

Do you consider the impact of Medicaid’s five-year “look back” period when reviewing the financial planning of the parents?

Do you do a “fire drill,” where you assume one or both parents will need assistance with their daily living and inquire how your clients will handle that situation?

Do you question the assumption that being cared for by children when parents can no longer live on their own is always the best option?

Do you review the financial ramifications of having to fund assisted living and end of life care?

Your financial planning is “comprehensive” if it addresses these issues.

Dan trains executives and employees in the lessons based on the research on his latest book, Ask: How to Relate to Anyone. His online course, Ask: Increase Your Sales. Deepen Your Relationships, is currently available. It’s being used for sales training by TAMPS, advisory firms and many others.

Read more articles by Dan Solin