What all CPAs should know about elder planning

What all CPAs should know about elder planning

With the percentage of elderly people in the United States on the rise, someday soon we may face situations like these: 

  • A longtime client calls us in a panic. His mother has suffered a fall, and her doctor says she shouldn’t live by herself any more. Our client hasn’t given any thought to where his mom would live should she require long-term care, and he has no idea how she’ll pay for it. She leaves the hospital tomorrow, and he and his family have been anxiously calling one another all weekend trying to figure out what to do.
  • Rose used to be the ideal client. She always turned in her paperwork complete and on time and never missed an appointment. But this past year, we’ve noticed that she’s been less conscientious. She’s forgotten to make a couple of payments, and her mind seems to wander during meetings. We had to call her twice to complete her tax returns because she gave us so much incorrect information. Should we let her, or her family, know we are concerned?

As CPAs, we need to at least be conversant with eldercare issues. Over the past 10 years, the population age 65 and older increased from 38.8 million in 2008 to 52.4 million in 2018 (a 35% increase) and is projected to reach 94.7 million in 2060. By 2030, the U.S. Census Bureau predicts, more than 20% of the U.S. population will be over 65.

When problems like these arise, clients often turn to the CPAs they know and trust. And CPAs—even those who aren’t financial planners—are better equipped to help them than they might realize.

At the very least, advisers know where to send a client for more help. We have built up a network of trusted financial planners, elder law attorneys, aging life care professionals (formerly called geriatric care managers), and other local professionals to whom we can refer clients.

CPAs need to think about their client relationships and how they’re going to provide resources and be a source of information for clients as they age, to deepen those relationships, and also to bridge the relationship to the next generation.

Death and chronic illness are uncomfortable topics. Many clients are hesitant to talk to their advisers and families about what could happen should they suddenly die, become seriously ill, or develop dementia. But when families fail to discuss these issues, they can be left scrambling when a crisis does occur. If an older person becomes incapacitated without a will or a health care power of attorney in place, for example, family members can clash over what choices to make on their behalf.

Basic estate planning can gently encourage clients to develop a plan for what should happen in the event of an emergency or health crisis and to discuss it with their family members. We can help clients to complete and update their estate planning documents. In particular, they can ensure that clients’ wills are complete and correct, that they have health care directives in place, and that they have named the correct beneficiaries on their IRAs and 401(k) accounts.

Choosing where to live in old age can be a difficult and emotionally trying decision for clients and their families. Older people are often understandably reluctant to leave their homes, even if they are struggling with everyday tasks. Senior housing—even when clients won’t require skilled nursing care—can be expensive, and it comes in a bewildering variety of options, from assisted-living facilities to skilled nursing homes to continuing care communities. Hiring an in-home caregiver comes with its own set of tax and liability implications. As CPAs, we can help clients assess their finances and determine which senior living or long-term-care options make the most sense.

Our team welcomes conversations about pre-planning. This is where we can often be most effective for our clients and fall is the perfect time to talk, while there is still time before year-end to make recommended changes.

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