Webinar recap: Estate planning and long-term care

Marriage is a commitment to another person "in sickness and in health," but if one of you requires long-term care, it could mean both of your assets are at risk of being spent down before the other needs them.

A recent BOK Financial® Mujeres y patrimonio webinar discussed the pitfalls of overlooking long-term care in an estate plan and how to put a financially protective plan in place.

Women live longer than men
Women statistically live longer than men; therefore, women who have a male or older partner will likely start using the couple's financial assets for their partner's long-term care first, potentially leaving herself without enough assets to cover her own care when the time comes.

"I've seen firsthand how this can affect literally every single person, regardless of your socioeconomic status or your gender. However, I've seen mostly how this situation can impact women the most," said Emily Collins, a trust officer at BOK Financial.

"When I'm reviewing estate plans for clients and explaining how their trust will work, I often use an example of the husband dying first. That's because, on average, in the U.S, men die five years before women," she continued.

Becky Heatherman, an estate-planning attorney at Heatherman Law, agreed. "Women need to think about not just the death of their spouse, but also what comes before that, such as incapacity and the need for in-home care, or nursing home care. One spouse might need it much earlier than the other one, so we need to think ahead for the younger, healthier spouse to protect the shared assets from being depleted by one partner's care needs and have the resources to support the younger spouse's retirement and potential care in the future."

Estate plans often don’t include long-term care planning
However, too often, estate plans don’t consider how to cover the potential cost of long-term care—and experts cautioned that these costs can be exponential.

"The reality is that in-home long-term care starts annually at $78,000. A private room in a nursing home starts at $128,000 annually," said Collins. "This means that a couple with a million dollars in savings could run out of money within one-to-five years if one spouse needs long-term care without long-term care insurance."

People often wrongly assume that after they reach age 65, Medicare will cover their health costs, but that's only minimal coverage, added Heatherman. She stressed that the best time to plan is when you don't need the plan yet. "When you're not in an emergency situation, plans get done really well. They're careful; they're considered; they're comprehensive. You've looked through everything. Then, when the need arises, at least financially, you have a plan."

The webinar’s Women & Wealth experts then went over some of the key pieces of an estate plan, including the differences and benefits of a will, a trust and powers of attorney (both medical and financial), and the importance of having them in place during your lifetime to cover the possibility that you may become incapacitated by illness or injury and need caregiving.

How to protect your assets—and what to do if you’ve waited too long
Fortunately, protections for your assets can be put in place, such as long-term care insurance and life insurance/long-term care hybrid policies.

"Long-term care can drain your retirement assets, any real estate you have or all of your life savings. Long-term care insurance policies help cover those high costs of services that aren't typically covered by health insurance, Medicare or Medicaid, especially as people age," said Collins.

However, it's important to note that insurance premiums can be high and increase with age. If you've waited too long and the cost is prohibitive, you may have to cover all the costs of long-term care out of pocket or consider Medicaid planning, which requires a significant reduction of your assets.

"That means you may have to spend all of your savings and retirement nest egg on care if you need it. The maximum countable assets you can have to qualify for Medicaid is $2,000 as an individual and $3,000 for married couples," said Sara Skipper, asesor financiero sénior en BOK Financial Advisors.

Medicaid is a joint federal-state program that covers medical and long-term care costs for people with limited resources. To avoid spending down assets, couples can set up an irrevocable trust to shelter some assets for the younger, healthier spouse, or, in a worst-case scenario, get a divorce to separate assets. For both options, experts recommended consulting an elder-law attorney to discuss the best plan for your situation.

Questions on planning
The experts then answered questions from the audience about estate planning, including how to pick the right executor for your trust, the benefits of choosing a corporate trustee, and whether to name your spouse or your trust as your beneficiary. They also let viewers know that they can get long-term care insurance at any time up until age 79, if you can afford the premiums and pass the health screening, and how to estate plan on a budget.

If you have questions or concerns about estate planning, including how to financially prepare for long-term care, reach out to a professional to request a consultation.

Puede watch the full replay of the webinar and download the checklist to start creating your long-term care plan. Subscribe to the Women & Wealth newsletter para obtener más información específica sobre las preocupaciones financieras de las mujeres.