Most financially savvy individuals begin planning their estate when they’re in peak mental shape. The idea that this might change at some point in the distant future is an unpleasant one, and they would rather go about their Estate Planning as if they’ll be as sharp as a tack late into their golden years. Unfortunately, this common approach of ignoring a potential problem and hoping it simply won’t happen can leave a giant hole in your Estate Plan. This common hole can be more easily filled than you might think.
Expect the best, but plan for the worst
The reality is that an individual’s chances of experiencing some form of cognitive impairment rise with age. While it’s never certain whether cognitive impairment will occur, smart Estate Planning means factoring it in as a very real possibility.
As the huge baby boomer generation transitions from the workforce and begins to make their way into retirement, cases of Alzheimer’s are expected to spike from the current 5.1 million to 13.2 million as soon as 2050. Alzheimer’s is just one of several cognitive impairment conditions along with dementia and the much more common mild cognitive impairment, or MCI, which is often a precursor to those more serious ailments.
As U.S. life expectancies increase, the chances of living with cognitive impairment increase as well — with at least 9.5 percent of Americans over 70 experiencing it in one form or another.1
No matter your age or family history, cognitive impairment can affect anyone although it’s widely accepted to affect mostly older adults. As you implement or revise your Estate Plan, it is well worth the effort to plan for this potential. Luckily, Estate Planning attorneys have developed good solutions to handle this circumstance and can help guide you on the best way to protect yourself and your family.
An easily-avoidable Estate Planning mistake
Consider Claire’s story. . . A successful real estate agent with a stellar career in her hometown of Orland Park, IL. Claire begins planning her estate in her mid-thirties.
She partners with an Estate Planning attorney, and together they draft a revocable living trust with Claire’s preferred beneficiaries and charities in mind, figure out guardianship for her two sons in case she and her husband pass suddenly, and settle on an appropriate beneficiary for her life insurance policy. Now that she knows where her assets will go after her death, Claire rests easy assuming there’s nothing more that needs doing in her Estate Plan.
Save your family from obstacles and conundrums
But forty years down the road, Claire’s children realize her mild cognative impairment is developing into Alzheimer’s. Although she’s occasionally visited with her attorney to make adjustments to her plan, she, like many, never added any provisions for how she wanted her children and other guardians to handle a situation like this. Here’s where things get complicated.
Claire did not work with her Estate Planning attorney to put disability provisions into her trust and never worked with an insurance professional to purchase adequate income insurance or long-term care insurance. The care she requires to live her best life possible with cognitive impairment doesn’t come cheap. Those mounting care costs will likely quickly erode Claire’s estate. As a result, her Estate Plan may no longer work as intended, since it no longer lines up with her actual asset portfolio.
But since Claire does not have the ability to rework her Estate Plan in her current mental state, her family is left with the burden of figuring out what to do while navigating a complex and bureaucratic legal system in the guardianship or conservatorship court. No one in the family really knows what Claire’s wishes are regarding both serious medical decisions and financial changes. All Claire’s family wants is to see her enjoying her remaining years in peace and security, but they are now tasked with using guesswork to make difficult choices on her behalf while a guardianship or conservatorship court watches every move.
A little effort now can go a long way later
Factoring the potential for cognitive impairment into your Estate Plan doesn’t have to be a headache. In fact, a little effort now by legally designating who you want to be in charge and what you want them to do can have a wonderful impact on you and your family later on. We can work together to ensure your Estate Plan is ready for whatever life throws your way. We are here to guide you through this process. It is just a call to me at 708.448.5169.
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- The Journals of Gerontology: Series B, Volume 58, Issue 3, May 2003, Pages S179–S186, https://doi.org/10.1093/geronb/58.3.S179
