Bill Van Sant, senior vice president and managing director of Univest Investments, a division of Univest Wealth Management at Univest Corporation, was featured on ThinkAdvisor.com
June 29, 2017
By: David LaMartina, ThinkAdvisor.com
Sound decisions aren’t made in a vacuum. Whether clients are planning their investments, living arrangements or spending strategies, they should always consider a variety of factors and extenuating circumstances.
Never is this truer than when making late-life health care decisions. How will clients protect their assets as they receive care? Who will care for them when their spouses die? How can they prevent their heirs from fighting over what remains? To answer these questions, you need input from those who will help them carry out their wishes.
While many of these issues also require legal counsel advisors are in a great position to help. Whether planning ahead or responding to a crisis, clients need advice from those who have helped them build their wealth – how to protect it, how to best use it for health care costs and how to ensure what’s left ends up in the right hands.
Assets and inheritance
Earlier planning is ideal, but health care crises spur many people to take last-minute actions with assets. And while some clients prefer privacy, the best way to ensure wishes are carried out is to involve heirs and executors.
“I’d start with the basics, making sure clients have their legal documents in place,” says Meg Muldoon, assistant vice president of Advanced Sales at Penn Mutual. “A health care proxy and financial power of attorney allow a person to make medical and financial decisions on the client’s behalf.”
Those powers may not be given to the same person, but for many clients, children are the best people to handle the responsibility.
Wills and trusts are just as critical. Wills spell out where the assets in the client’s name will go after they die, while trusts transfer specific assets from the client to a beneficiary via a trustee. Wills rarely supersede other beneficiary designations, so it’s even more important for clients to make their wishes known to their family. With clear communication and thorough power of attorney (POA) documents, they can avoid most disputes.
Things can still get ugly, though, especially when clients neglect to tell their children about certain assets.
“I advocate partnering with an impartial executor, so there’s an orderly distribution of assets when a person passes,” says Bill van Sant, senior vice president and managing director of Univest Wealth Management.
Planning for care
Of course, a client may not have any assets left to allocate if their nursing care costs an arm and a leg.
“Most people don’t realize how quickly assets get gobbled up, especially when they’re in full-scale care at over $10,000 per month,” says van Sant. Fortunately, family members can help clients make cost-effective decisions, even when they’re incapacitated.
The health care POA in particular designates an agent to make medical decisions on the client’s behalf. Nursing home selections, hospital care and even nutrition are all included. Still, they must abide by the principal’s wishes, so the earlier your clients and their kids discuss – and the more they put in writing – the better.
When it comes to reducing the costs of care, the financial power of attorney may be even more important. The health care agent might decide to place their parent in a nursing home, for example, but the financial agent would need to work with the advisor, accountant and lawyer to move and retitle assets for Medicaid purposes. Ultimately, communication among all parties involved – usually clients and their kids – may mean the difference between asset preservation and depletion.
Care from family members is either a client preference or a last resort – unfortunately, often the latter.
“I find, more often than not, that it’s a fire drill,” says van Sant. “If you don’t plan ahead, it becomes more a conversation of how to preserve money rather than providing the best care.”
Even if clients prefer their kids’ or loved ones’ homes to nursing facilities, it can be tough to hash out the last-minute specifics. Which child will provide housing and care, and how will it affect their families and working lives? Will a remodel or home addition be necessary? Who will cover food, in-home care and other costs? Clients and their families will need your help to figure out which contributions they can afford.
Family caregiving can also have a major impact on inheritances.
“There are almost always one or two children who live close by and provide most of the care, and they might think they should get more” says Muldoon. “Assets are often titled jointly with that person, but that’s not advisable.”
An easier, less tenuous way to handle things is to create a personal care agreement, which lays out the caregiving child’s responsibilities and compensation.
“It becomes taxable income to the caregiver and keeps things at a business level,” adds Muldoon.
Starting the conversation
Bringing family members in for a meeting or phone consult isn’t always easy, but it’s well worth the effort for all parties involved.
“There are hurdles sometimes, but clients don’t want to leave things in shambles,” says van Sant. “Don’t get stuck in a box managing assets and returns; help clients figure out their life plans.”
By helping clients through these trying times, you’ll add value and ultimately pave the way for future business.
“The most successful advisors I’ve worked with had family meetings where they explained everything,” says Muldoon. “Make yourself a trusted advisor by giving them the comfort that they’ve put everything in place.”
View the original article at: http://www.thinkadvisor.com/2017/06/29/involving-clients-families-can-contribute-to-the-l?page_all=1&slreturn=1500911998
Securities and insurance products are offered through Univest Investments, Inc., member FINRA/SIPC and a licensed insurance agency. Investment advisory services are offered through Girard Partners, a Univest Wealth Management Firm. These affiliated companies are licensed subsidiaries of Univest Corporation of Pennsylvania. Products and services offered are not FDIC insured, are not a deposit of or bank guaranteed, and are subject to risks, including possible loss of any principal amount invested.