The need for Long-Term Care (LTC) is not some unforeseen or chance event.  So, when a family's assets are drained because of that need, it's not just the aging parent who suffers—it's their children, their legacy, and everything they and their children expected would pass on.  Advisors, planners, and other professionals often think they've done their job once the financial plan is in place, the tax return is filed, or the estate plan documents are signed. 

But what happens when a client becomes unable to perform the Activities of Daily Living or develops Alzheimer's?  Then, the family is forced to use assets – their inheritance – because no one in an advisory role prepared Mom and Dad for the reality of an extended care need.   Who is responsible, and more importantly, what will they tell the client's adult children (accompanied by their attorney) when they come looking for answers about the failure to implement LTC Planning?

Ignoring Long-Term Care Until It's Too Late

Despite the growing awareness of the risks of aging and costs associated with Healthcare In Retirement, LTC is a topic most in the advisory community see as optional when it's not, or waived off as "that's not my job," when actually it is their job.    The stark reality is that millions of Americans – including your clients – will need some form of LTC during their lifetime…..and without appropriate planning, the self-funding default means every penny for care will come out of the client's pockets.   When that happens, advisors, planners, attorneys, etc., who failed to provide guidance could face tough questions: "What did you do to help our mom/dad/parents address their future LTC needs," and "Where is my/our inheritance?"

Who is Accountable?

In our hypothetical case, the mother passes away, and soon after, the father develops Alzheimer's.  Without appropriate planning, the family spends $1.25 million on care; assets meant to provide retirement income, or their inheritance.  Now, the children are left wondering why their parents' advisors didn't do anything to protect that legacy.  And which professionals could or should be held legally accountable?

Financial Advisors (CFPs, RIAs):   These financial advisors are typically bound by fiduciary duty, and their failure to address LTC, or at least memorialize planning decisions, as part of a comprehensive financial strategy, could put them at risk of breaching that duty.  Ignoring or dismissing the inherent risks associated with LTC could open the door to legal repercussions.

Estate Planning & Elder Law Attorneys:  Attorneys are responsible for creating necessary estate plans for affluent and high-net-worth clients, and that includes consideration of the potential impact of healthcare costs or the need for LTC.  If the planning fails to protect the family from the erosion of their estate due to healthcare or LTC costs, the attorney could be deemed negligent—and responsible for the $1.25 million loss…..

Tax Professionals and CPAs:  Tax professionals who regularly use the term tax-deductible, tax-advantaged, tax-deferred, or tax-free, except when those apply to LTC Planning, may also be at risk.  Did they explore ways to leverage the tax code to plan for LTC?  Did they recommend collaborating with others in the advisory community to integrate LTC into the family's broader strategy?  If not, they could be responsible for the tax inefficiency of spending down the inheritance.

Insurance & Risk Management Professionals: Insurance professionals are often in a unique position to recommend insurance-based options to mitigate the risk of needed LTC, and failing to do so could be accused of neglecting the most fundamental form of risk management for aging clients.

The Cost of Ignorance

Someone will be held accountable when $1.25 million in assets was spent on care that could have been planned for, as the fiduciary, advisor, planner, etc., had a duty to go beyond traditional or "basic" planning for clients and recognize that LTC planning is essential to protecting client assets and their loved ones. 

The excuse of "my clients are self-funding" won't hold up when that default approach devastates a family and its finances, as it merely pertains to paying for care and not planning for it.  Or, the mistaken belief that LTC planning isn't their professional responsibility won't hold either when clients put their trust in someone who is literally being paid to understand and articulate the risks associated with the need for extended care.

What's The Excuse?

The Silver Tsunami is a demographic certainty that will dramatically affect the delivery and availability of healthcare for aging Americans and their families.  So, the next time you're in front of a client, ask yourself the rhetorical question:  What would I say to their children if they don't have a long-term care plan?  It's time for the advisory community to step up because comprehensive financial, estate, investment, tax, and risk management planning must address Healthcare In Retirement and Long-Term Care.  Those failing to do so will have adult children sitting in the lobby, and the only excuse will be that someone didn't do their job.

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