You’ve always thought about the future, so chances are, you’re a steadfast planner. However, a day might come when you’re not in the best position to make decisions. As the familiar adage goes, hope for the best but plan for the worst. When looking ahead, what questions can you ask to better plan for your future and the futures of those closest to you?
This topic was explored during our second annual Plante Moran Wealth Management Summit. I moderated the panel, “Planning for your older self,” which brought together Dr. Cynthia Taueg, vice president of community-based health services, Ascension Health; David Larner, executive committee vice chair and high-net-worth practice group senior member, Bodman PLC; and Dorothy Moon, social worker, Dorothy and Peter Brown Jewish Community Adult Day Program.
As our conversation unfolded, we noticed that our audience had many questions about the financial and health concerns of aging. Here’s an overview of the topics we discussed.
How do I formulate an estate plan without giving up control while still minimizing taxes?
Because of their flexibility and ability to circumvent income, gift, and estate taxes, grantor trusts tend to be the centerpiece of estate planning for many high-net-worth individuals. Spousal access trusts, grantor-retained annuity trusts, defective grantor trusts, and most irrevocable life insurance trusts are examples of grantor trusts.
Many effective estate planning strategies incorporate grantor trusts for their ability to circumvent income, gift, and estate taxes.
Establishing a grantor trust has many tax advantages. Basically, you create a trust and transfer assets to it via gift or sale; those assets are then exempt for federal income tax purposes because they’re considered to be excluded from your estate. You retain the right to change the trustee, designate someone who can modify the terms, and name your spouse as a beneficiary.
Risk of dementia and recognizing the signs
We all want to live as long and fully as we can. There are estimates that children born in this century have a 50 percent chance of living to 100. The challenge, though, is that the longer we live, the more likely that we — or someone we love — will develop dementia.
As we age, all of us will experience slowed reaction times or forgetfulness — that’s typical. But when it impairs your ability to function or interferes with your activities of daily living, that’s a sign you need help. Misplacing your car keys is not a concern. Having trouble speaking or remembering the day of the week should signal to someone that you might need further clinical evaluation — perhaps a PET scan.
What steps can I take to stay young in body and mind?
When it comes to thwarting declining mental health for as long as possible, there are important risk factors we can’t change, such as age, genetics, and family history. However, the good news is that there are a host of other factors we can influence. There’s no guarantee that controlling modifiable risk factors will ensure you avoid dementia, but they will decrease your risk.
Treat your heart well, for example. Because of the heart-brain connection, it’s important to talk to your doctor about your chance of developing diabetes, high blood pressure, and other heart-related conditions. Also, keep your brain healthy. A few ways to do this: eat a healthy diet, socialize with others, quit smoking, limit alcohol, and exercise the mind.
How do I, as a child of a parent with dementia, effectively communicate with them?
Because the law encourages maximum self-reliance and independence in individuals, someone with diminished capacity retains the right to make decisions about their healthcare, finances, and so on. Even if you don’t want to establish guardianship, it’s important to be engaged in your loved one’s life so that you can guide them toward sound decisions or, if need be, intervene when a problem arises.
Now is the time to talk about the important decisions your loved one wants for themselves
According to Michigan statutes, an individual “must be unable to make or communicate a decision” before you can legally intervene. Until then, respect their freedom. And leverage this opportunity to have critical conversations. Now — before dementia settles in or worsens — is the time to talk about the important decisions your loved one wants for themselves. Have they filled out a Five Wishes form? Have they designated a healthcare power of attorney? Most of us dread thinking about the declining health of our parents. We want to think it won’t happen, but it will. Be prepared. Stay engaged. Then these conversations can take a more natural turn before you face the defensiveness and paranoia that often accompany dementia.
What if my widowed parent remarries?
Elderly parents in a state of prolonged grief and/or declining mental health can be at the risk of predatory behavior by others who seek financial gain. For children of high-net-worth parents, this is a legitimate concern.
That’s why it’s so important to be as present as possible in your parents’ lives. Not only could your diligence help keep a negative influencer away, but constant contact allows you to assess your parent’s health. Loneliness. Depression. Grief. These become even bigger challenges as you age and your social network erodes. Pay attention to your loved ones.
Planning is key
You’ve spent a lifetime creating and preserving your wealth. You’ve made calculated decisions based on the best information available. Planning for retirement — and your physical and mental health — takes the same strategic approach. As a famous American once said, “There's nothing more important than our good health — that's our principal capital asset.” Take steps today to preserve your health and preserve your wealth into the future.