Why is Elder Law Planning the New Estate Planning for California Seniors?
Over the past couple decades, there’s been a seismic shift in the estate tax landscape coupled with the fact that people are living considerably longer. Before 2010, California estate planning was almost always focused on reducing transfer taxes and probate avoidance, among other things. There are countless variables and complexities to this type of planning, but since over 99% of society is no longer facing death tax concerns, estate tax planning is relatively simple in comparison to the asset protection planning needs which seniors need to account for today.
In other words, the old way of setting up complicated tax focused trusts have become completely unnecessary for most people because they can now give away over $11,000,000 ($22,000,000+ for married couples) tax free. On the other hand, people are living longer with seemingly less assets and income to support their lifestyle and care. How much income and assets are needed for rising care costs as people age, you wonder? Well, skilled nursing costs now easily exceed $8,500 per month in California. As a more extreme example, a couple years ago I had a 68-year-old client who suffered a brain injury and to this day, his care costs are $1,130 per day!
Statistically, we know that over 92% of seniors want to live in their home for the rest of their lives. Most are unsuccessful in making that happen however. That’s because the average cost of care in Los Angeles is now $25/hour. If round-the-clock care is needed, that adds up to $18,000 per month! Intermediate levels of care at assisted living facilities, board and care homes, continuing care retirement communities and the like, are not much better. At these rates, it will not take long for most seniors to go broke.
Fortunately, the family of my 68-year-old client with a brain injury – as well as an increasing number of seniors nowadays – are not relying on general or old tax and probate avoidance trusts to handle these types of problems. Instead, many wise seniors are thinking about asset protection and elder law planning. With care costs continually rising, asset protection trusts are simply not a luxury for the “rich” anymore. Indeed, they are a necessity for many seniors who hope to qualify for Medi-Cal and/or Veterans Aid and Attendance Pension Benefits, in order to help pay for rising long-term care costs.
Moreover, for many families the asset protection analysis does not end with the seniors themselves. That is, once seniors realize the benefits of asset protection planning, they are usually focused on providing a similar type of protection for their loved ones. Indeed, knowing the likelihood that one (or more) of their children might wind up in trouble (e.g., getting divorced, in a horrible car accident, having a costly uncovered medical condition, or business failure/foreclosure/bankruptcy, etc.), many seniors not only choose to protect themselves from rising care costs with elder care planning, they also create a plan within their plan to protect their children too.
To ensure your estate plan provides California asset protection, please contact Randall F. Kaiden, Esq. of Kaiden Elder Law Group, PC, at 661-247-8433, or via our website at: www.kaidenelderlaw.com.
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