5 Reasons Estate Planning is Vital for Caregivers

While most Americans plan for retirement, many neglect another crucial aspect of financial planning – end of life or estate planning. Although about 6 in 10 Americans have a retirement account (Census Bureau, 2020), only 1 in 3 have an estate plan according to Caring.com’s 2023 Wills and Estate Planning Study. Estate planning is one of the most important, yet often overlooked aspects of caregiving.

When someone becomes a caregiver for a loved one, their focus is primarily on providing physical and emotional support. However, considering and addressing the future financial and legal needs through estate planning is equally critical. Here's why:

1. Decision-Making Authority: Caregivers may need to make important healthcare and financial decisions on behalf of their loved one. Without proper estate planning, the care provider may not have the legal authority to make these decisions. By establishing powers of attorney for healthcare and finances, the caregiver has the authority to act on their care recipient’s behalf, ensuring that their wishes are honored even if they become incapacitated.
2. Asset Protection: Many caregivers are responsible for managing their loved one's financial affairs. Through estate planning tools like wills, trusts, and advanced directives, the caregiver can ensure that assets are protected, managed, and distributed according to their loved one's wishes. This can help safeguard their assets from mismanagement, exploitation, or depletion, providing financial security for their care and future needs.
3. Medicaid Planning: Long-term care, such as nursing home expenses or in-home care, can be financially overwhelming. Estate planning can help in navigating Medicaid eligibility requirements and creating strategies to protect assets while qualifying for government assistance. By planning ahead, caregivers can help their loved ones access the care they need without depleting their life savings.
4. Guardianship for Dependent Loved Ones: Some caregivers may be caring for dependent children or adults with disabilities who require ongoing support. Through estate planning, individuals can establish guardianship arrangements to ensure the continued care and well-being of their loved one after he/she is no longer able to fulfill that role. This can provide peace of mind knowing that the care receiver’s needs will be met even when they are not around.
5. Minimizing Family Disputes: Caregiving can often bring families together, but it can also lead to conflicts and disputes, especially when it comes to financial matters. Estate planning allows caregivers to clearly outline their loved one's wishes and intentions, reducing the likelihood of disagreements among family members. This can help preserve family harmony during challenging times and avoid unnecessary legal battles in the future.

By proactively addressing estate planning matters, caregivers can provide a comprehensive and secure environment for their loved ones, both during their caregiving journey and beyond. Join OneOp on July 6, 2023for an interactive session to examine government programs designed for individuals with special needs, basic estate planning documents, first-party and third-party special needs trusts, general considerations for selecting fiduciaries, and other related but critical to your loved ones’ future well-being topics.