Ep. 83 | What You Need To Know About Long-Term Care (LTC)
Download MP3Welcome to the Teaching Tax Flow podcast, where the goal is to empower and educate you to legally and ethically minimize taxes paid over your lifetime. Hey, everyone, and welcome back to the Teaching Tax Flow podcast episode 83 today. We are gonna discuss what you need to know about long term care. So as always, let's take a brief moment and thank our episode sponsor.
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John Tripolsky:We know that you're in this for a long term relationship with teaching tax flow. So that being said, we are going to talk about today what you need to know about long term care, also referred to as LTC in summer guard. And, of course, we got this guy back on here with me again, this beautiful bald man goes by Chris Piquero. What's happening, man? Welcome to your own show as always.
Chris Picciurro:It's thank you for introducing me back to my own show, John, and it almost feels like you know? The fact that our wives never listen to this unless we tell them we mentioned them, and then they still won't listen, it's kinda like that strategy where I feel when I get get into my own home and it's clean, it's like, hey, honey. We should probably have, the so and so's over for dinner, and then I know that's gonna be precipitated by the house getting cleaned, you know, having someone come over so so just like when I go out in my own house and it's clean all of a sudden, I I always feel welcome when you welcome me back into this fine podcast. I know I always say this, but I am extremely honored and excited about our guest today, and someone that you've we both have known for decades. So That's very true.
John Tripolsky:In decades not to age us, but and we say decades because it's experience based. And, you know, another fact, sir, it's your own show, and you're on the the cover art. So now you're you're pretty famous whether you know, don't get a big head. Don't get a big head. You know?
Chris Picciurro:I don't have
Chris Picciurro:a big head. I don't have any hair, so I'm always wearing a child's extra large cap. So now that there's anything to do with what we're talking about today, but, I want you know, today, we're really excited to talk about a topic that the defeating taxes community was asking for. I feel like it's something that everyone should be considering in their overall financial plan. A lot of times we find taxpayers wait too long to address long term care, and they don't have as much control over their assets as they would have if they did the proper planning.
Chris Picciurro:So we're gonna welcome Brook Acre, certified financial planner, one of my most dear friends, and we are honored to have her on the show. I've known her for almost 20 years if we start adding it up, and we have worked together. We've partnered been business partners. We've worked together for forever. So Brooke, welcome to the show, and I'm gonna try not to use any nicknames on the show.
Brooke Acre:Well, good afternoon, friends. I'm very, very honored to be here and excited to be here with the 2 of you. I have a lot of fun memories of traveling and doing roadshows with you. So this is a different spin doing a podcast, but I know we can't get in as much trouble as we did when we were back in the day on our road trip. So
John Tripolsky:And, basically, what Brooke's saying is she's she was a very good babysitter, and she's a much more responsible individual, I think, than than me and Chris back
Chris Picciurro:in the day. So I would agree to that.
John Tripolsky:Let's get down to business. Let's talk let's talk about this long term care. So, Brooke, actually, yeah. You know what? I almost used a nickname there.
John Tripolsky:Oh, man. I gotta hit the pause button. So let's actually talk about from your perspective. What is the quote unquote definition of long term care? And then let's get into, you know, following that.
John Tripolsky:What are some of the the basics of it? Right? So, like, what should people consider when they consider long term care and also some things that maybe it's not? So maybe debunk a couple myths or scares that are out there.
Brooke Acre:Yes. So, long term care as you mentioned, is also known as LTC. And so, we a lot of times, we'll refer to it just as LTC for a quicker term. But what long term care is is support and services to help you meet your personal and medical needs as we all age. One of the things that I've seen throughout my life, is being a mother and being a caregiver, is that it's important the way people are cared for.
Brooke Acre:Whether it's children when you start off as a mom, how, you know, we are there for every need from feeding to changing diapers to just their their needs. But, what happens is is as we age, we also have those same needs, some people unfortunately need more than others. So my mother, her father lived to be 99 years old, and he lived in his home and he was great. He ended up passing away, at the age of 99 because truly his body just was done living. He died of old age.
Brooke Acre:He was able still to cut the grass, he was able to still be at home, shower, feed himself, do all of those daily activity, things, which we'll talk about in a second. So I watched him, and then my dad's dad ended up dying at 97, but he lived his final years in an assisted living center. And so seeing both different paths and how both of their end of their lives ended really made me want to help people in that time of need.
Chris Picciurro:Well, we always say in our private CPA practice, clients don't care how much you know till they know how much you care. So I could tell you from personal experience, Brooke cares a lot. She brings a lot of her own, even deciding to become a financial advisor, taking life experiences and taking that passion and making it into a career, and, again, long term care, I think if we look at the demographics of our society, it's going to be much more prevalent over the next 20 years as our baby boomers we all continue to age, but that baby boomer generation continues to age, and we see a monstrous wealth transfer from that generation to to the the next 2 to 3 generations. So, Brooke, as far as the long term care, when is it how does it differ at all, from life insurance, and should it could they actually work together in some way?
Brooke Acre:Life insurance, as you know, you have to pass away for your heirs to receive the life insurance death benefit. With long term care, it used to be one of those things people didn't wanna even look at because they said, well, I can't afford this. And so the old way of looking at long term care was just like your life insurance or your car insurance or your homeowners insurance, you would pay a monthly premium for the expectation that you would maybe need a long term care to cover a long term care event later in life. What we see is that clients would start off paying, for instance, $100 a month, saying that in the event that they need long term care later, they would get x amount of dollars. For care.
Brooke Acre:Well as they age that insurance premium would keep going up to 200. Then maybe up to 300. Maybe up to 500. So by the time they're 90, they could be having this huge expense per month to pay for this long term care coverage. And when budgets get tight, the first thing to get cut would be that policy.
Brooke Acre:Right at the time that the client needs it the most, as they're aging. And so, clients would end up canceling their long term care policy, and then they would need it and have nothing. So that was the old way of looking at long term care insurance. The new way of looking at long term care insurance is to earmark money that you would not really be needing right now, and utilize that money for a couple different purposes. 1, in the event you or your spouse have a long term care event and need it, you both would be able to be on claim on that insurance policy.
Brooke Acre:The other thing is is, hopefully, none of us will ever need it and never have a long term care event, and live like my grandpa to be 99 and die of old age. At that point, that money that you had set aside for long term care would pass on to your beneficiaries or your heirs. And so it's not a use it or lose it. So, you know, if you don't use it, you don't lose it. And that is what, to me, is very important when we're planning for long term care is that that money is always yours.
John Tripolsky:And that makes a lot more sense. Right? So I I imagine telling people about that. They're a lot more comfortable. It's not like you're getting an auto insurance policy.
John Tripolsky:Right? And, you know, the older you get, kinda compare it to, is what you're saying the old way is almost if you every month, I don't know anybody that's done this, but every month so you get a citation for speeding. Right? Your policy is gonna go up. So it's almost what you're saying the old way.
John Tripolsky:The older you get, your policy, your your premium in the sense, would increase month over month. So it's kind of looked at, as you mentioned, is, you know, it's on the bottom bottom of the totem pole to get cut and and off it goes. So for to clarify a little bit too. So there is long term care. Right?
John Tripolsky:So as you mentioned so that is most likely and I I know a little bit about this. I won't go into too much detail and try to impress my mother-in-law or my wife knowing that they're in senior living.
Chris Picciurro:Ron, you like older women. Don't do it.
John Tripolsky:They don't live in senior living, but they work in senior living. Let's clarify that one. But that being said, you know, sometimes it's, I'm gonna leave shopping references out of this one. But, anyways, so that being said, I mean, it's kind of a no brainer. Right?
John Tripolsky:If somebody goes into, say, a assisted living, that very unlikely they're gonna leave that and go back to independent. Right? So go home. So that being said too, as far as for long term care coverage, policy insurance, etcetera, whatever we wanna call this, like, how how should somebody approach that? Like, what's their first steps in saying, you know what?
John Tripolsky:Yes. I I want this. I want this covered. Talk to me about that. So say they came to you.
John Tripolsky:What's maybe the process of walking them through it? Because I'm sure it's not cookie cutter. Right? You just don't say, okay. Cool.
John Tripolsky:You check the box. You're interested in it. Here you go. So very, very high level. What does that look like for those early stage discussions?
Brooke Acre:Yeah. So that's a great question, John. So a few things I wanna mention. So number 1, as Chris had started saying that I'm a certified financial planner, so I've been helping clients plan for their retirement for over 20 years. And as I said, I love what I do.
Brooke Acre:And I've really seen this need, as I mentioned with my grandparents, is to kinda help people navigate through long term care and creating what does that look like for them. It's a topic nobody really wants to talk about. Long term care is one of those, like, I hope and pray that those events never happen to me or my spouse, and so if I just don't talk about it, it's not gonna happen. So, I've really seen the need from different clients having a long term care event happen in their life and what that has looked like and what financial impacts and mental and emotional impacts that's been on their spouses and their children. So I have created a website that could really help clients navigate through this.
Brooke Acre:And the number one thing is, is we created a ton of videos and content at your leisure you can look at. And I think it's really important with these educational videos that you can learn and expand your understanding about what is long term care and what options are out there. So I think that that's number 1 is the learning phase and figuring out what your options are. The second part of that is to plan. And to sit down and say, okay, what, in the event something does happen to me or my spouse, what does that look like?
Brooke Acre:What kind of care? Where do I wanna have the care? And what kind of care do I want? I know John you just mentioned your, you know, wife and mother-in-law work at a senior center. But you can with these policies, you can have the care right in your own home.
Brooke Acre:Which to me is more powerful than anything. I had a client who sat down and when we were creating this plan said, I want my Christmas tree up in my house. I want my Christmas decorations up in my house. I don't want to be at some facility looking at someone else's Christmas decorations. And that was when very important to her.
Brooke Acre:And I think those are powerful conversations to sleep in your own bed and have care in your own home. And so, sitting down and creating that plan, because there is no one size fits all, is every client has a different need from a financial to what are their personal wishes. And so I think sitting down and really articulating what, who, and how do you want that care to be facilitated is what we sit and do. And, so those are kind of our 2 big things from learning to then kind of creating that plan, and then you can live and not have to worry moving on, that you've had your wishes done, and you have what you want planned for you for that long term care.
Chris Picciurro:I have a question as far as when's the ideal because, obviously, people that that need long term care right now is are only gonna make up a sliver of our listeners. We have a lot of people that have parents or grandparents or a significant other, family member, friend that listen to the podcast that they might be thinking of right now. When's the ideal time for someone to start considering looking at planning for long term care and and starting to invest in that type of that type of insurance. And then what are some of the considerations? You made a great point as where does it you want that care to occur?
Chris Picciurro:I could say, from personal experience, Brooke and her team helped my parents with long term care, and I live obviously in in outside Nashville, and they're up in Detroit. So what we're seeing a lot of times is we we there's been a lot of mobility with people in our generation or younger, so that they might not live right by their parents. So what if the parent lives in Michigan and they wanted and their child lives in Florida, but they wanted the care to occur in Florida? So can you kinda walk us through some of those just, you know, 30,000 foot considerations that someone has to think about when they're working with you, and developing a long term care strategy?
Brooke Acre:So that's a great question, Chris. You know, when should you start considering planning for long term care? I always tell everybody if you're thinking about it, it's a good time. Typically our clients are at age 55 is when we start having these conversations. Of course you know the normal 30 year old is not thinking about long term care.
Brooke Acre:So 55 and older as you're getting into that retirement, you know, thinking of retirement, thinking of how does your future look, is when we really start to plan on this long term care. As you said, you know, your parents are in a different state. With these plans, you know, you can create them whatever's best for you. You can cover both spouse, so husband and wife. So, if God forbid either of you had a long term care event, simultaneously, you could both be on claim.
Brooke Acre:If one of you was on claim for 5 years and then, you know, passed away and then the other one doesn't need care for another 10, 15 years, that policy is still there. So, you know, both of you can be on claim and you it covers so it does cover both spouses and it is you can use qualified assets, which in the past you couldn't. So for example, if a client has an IRA and, for easy numbers, they have $1,000,000 in that IRA. Just for simple math. Most clients will never utilize all that $1,000,000 of assets.
Brooke Acre:And so, what we do is we take a slimmer or, you know, a $100, a $150. Again, each client would be different, but for just a simplicity purposes, we would take a sliver of that IRA assets and cover both spouses for long term care. As I said earlier, in the event that either of you need it, it's there. If neither of you need it, it passes on to your children or your whoever your beneficiaries are. So it's not a use it or lose it.
Chris Picciurro:Well, that's a great point because we we know that the power of using, you know, being tax efficient, so if you could use tax deferred dollars to do this policy, that is very powerful because if you're if you're using after tax dollars, then it becomes much more expensive. If someone has someone in their family that has special needs, you know, obviously, that that would be there's some there's some concerns there. Would that play a role at all in any type of long term care playdly?
Brooke Acre:Well, there if a a parent has a special needs child then they would definitely need to have some planning in place for them. Usually it would not cover the long term care policy that we're talking about, you know, wouldn't be covering them. If it's a child of a parent, it's usually the parents or the spouse, husband, and wife that would be covered on these policies. We could look into if they did have a special needs child and wanted to get some sort of plan. It would have to go through some underwriting, but you know all things are always possible.
Brooke Acre:The other thing that we see a lot that, you know, nobody, as I said, wants to think about having a long term care event. So, what we're seeing though more and more is the dementia and Alzheimer's. And so, you know, I had a client who was healthy and was able to be at home, the husband and wife. And he was able to, you know, still function and wasn't a burden on her, because he could dress himself, beat himself, you know, with some instructions. But as he got older and the dementia really started to affect him, he was leaving the stove on.
Brooke Acre:He was putting things in the microwave that shouldn't go in the microwave. And so, he was almost becoming a hazard to both of them. He even one night got up and thought he had to go to work and went out the front door, in the middle of the night. And so, you know, having someone come to your house and be there so that you can have rest and you don't have to always be worrying about that spouse, was really powerful for her. So, they had a long term care policy.
Brooke Acre:And so she was able during the day to keep an eye on him and do all of that. However, at nighttime, she wanted someone there just in case he woke up and did something that, you know, could hurt both of them. And so for her, they were able still to stay in their house, utilize their policy, and just have someone be there at night, you know, to kinda keep an eye on him in the house in the event something happened.
John Tripolsky:And then really with any policy, so so back backtrack a little bit more too. We're talking about, you know, somebody in their thirties, forties is a little naive to it in a sense. And, you know, you don't wanna think the the worst of a good situation that you'll ever need it. So as far as for setting something up, say you did have somebody mid thirties, early forties wants to get this set up. I'm gonna imagine that it this is not a set it and forget it.
John Tripolsky:Right? You just don't set it up once and then worry about it if you ever need to in the future. I I mean, because obviously there's a a lot of influence in there. Right? So cost of living is a big thing.
John Tripolsky:I mean, even just seeing in the past 10 years, at least from my experience and my wife from other law, just the the, call it a a widespread pricing variation. I mean, do you have you have a some facilities that are couple thousand a month? You have some that are 10, 15, 20000 a month, depending on whatever some of the needs are. So how does that work with setting it up? And then is this something you have to look at continually every year?
John Tripolsky:Is that something that you work with your clients on kind of doing an annual review? What does that look like as far as for kind of quote, unquote maintenance mode of a policy like this?
Brooke Acre:Yes. That's a great question. So, you know, the first step is just getting a plan in place. And then what we do is we do keep reviewing the plan every couple years, making sure that it is staying with the cost of living, kind of where you're at from a financial standpoint and what your goals are. We do have options in these policies to add, an inflation protected portion.
Brooke Acre:So for our younger clients, especially, it's something that, you know, we would want to add to the policy. So it does take into account that, you know, right now, an adult day care is about $20,000 a year. In a few years, that might be 40, $50. You know, if you wanted a semi private room in a nursing home, we're looking at $90,000 now, which in the future could be a 150. And so those are things that we have to consider and continue to review it.
Brooke Acre:But, there isn't a lot of changes that have to be done because if we set it up right the first time, it should grow with you as you age.
John Tripolsky:And it so clearly, this this ties directly into everything we do at teaching tax flow, and that's really emphasizing the importance of planning. Right? So this is not a, oh, I need it now. I will get it next week or, oh my gosh. I my wife has dementia, and, oh, man, I need to get a plan in place right now.
John Tripolsky:It doesn't work that way. Right? It's like getting a a auto coverage policy after you hit a tree. Like, doesn't work.
Chris Picciurro:I mean, I think I've most taxpayers will be, will have to manage, you know, later in life medical costs, care costs, and you could either do things very tax efficiently and in a planned manner using, you know, long term care policies, you working with the right professionals, or you can not. Right? And you could be very reactive. And there are several benefits to being proactive, both financially, tax wise, and, you know, kind of like you say, you don't wanna be in the situation we used to tell our little kids, you get what you get and don't throw a fit. So we wanna be the people that that have done the planning.
Chris Picciurro:And this is something we talk about also on in in Teaching Tax Laws, building your your board of directors. So I'm gonna put a bow on it, Brooke. What are some of the other people, that should be involved with with a client that's doing long term planning other than, obviously, you know, their financial adviser? Any other professionals should be involved in talking through, this decision or or family members?
Brooke Acre:So that's a great point. Family members are really what's important. And a lot of times you'll see, you know, you you might have 2 or 3 kids or one kid, or you may have no kids. You might have a sister-in-law or brother-in-law, and you think, okay, well, God forbid something happens to me. This is who I want to take care of me.
Brooke Acre:That might not be the right person that should take care of you. Or you might assume that that's the person you want to take care of you. And then when you if God forbid you do have a long term care event, that person says, oh, I can't take care of your finances or I can't take care of your, you know, health needs. So that's why when we do start to create this plan, we go through, where do you want care take in place? Who do you want to be in charge of your care?
Brooke Acre:What are the things that you want to happen with your care? Because it's a lot easier now to document that and to have someone say, okay, this is what mom wants, or this is what grandma wanted, or this is what my sister wanted, opposed to not asking that person, and then all of a sudden someone gets thrown into it and says, well, I don't have time to take care of grandma, so we're just gonna go put her in a in a home. No. We wanna have that document done and say, this is where grandma wants care, this is who she wants to be in charge of it, and this is who she wants to make her financial decisions for her. And having those conversations with those family members so that they are already aware of that and what the goals are of grandma or mom or sister or brother.
Chris Picciurro:And and I would say in closing, it's much easier. I mean, I know my wife and I did our estate planning, gosh, over a decade ago. I was looking at the documents, so it's much easier to have these conversations when you don't need it.
Brooke Acre:Yes.
Chris Picciurro:To the next day. Just and like Brooke said, a lot of the folks that that we are caring for, that we love, will that that might have dementia or or another condition that their mental capacities are declining. You wanna make sure that we understand what their needs and wants are while they can communicate that to us as well. So I I I Brooke, I really appreciate it. I was gonna try to make it through the entire podcast without singing any type of naughty by nature, like, you know, he's not LTT, and you know me.
Chris Picciurro:But we always have naughties naughties rap references in here. Oh, I love that. I love
Brooke Acre:that music.
Chris Picciurro:I didn't mention that. I did hey.
John Tripolsky:At least you didn't mention pickleball. You didn't mention pickleball at all, the this one. I'm I'm really proud of you. There you go. It's it's all it's all about growth and planning around this place.
John Tripolsky:So that being said, yes, Brooke. Thank you so much for joining us and and dealing with us as much as you, possibly can can swallow, so we appreciate that. Thank you for your insight. We will absolutely have you back on, though, as we touch on this, and, you know, we'll we'll start to be a little bug in people's ear. Right?
John Tripolsky:If it's something you've thought about doing, maybe haven't done it yet. You know, if if you're a firm believer in what we do not refer to as tax season around here. Get pa get past whatever you think is is April 15th of right around that time. If that's a hurdle for you, get past that maybe midyear after that. Make that a goal of looking at potentially a long term care or LTC policy.
John Tripolsky:And, you know, we got a we got a good, good gal here that can help you with that. So it's Chris Petcher. We'll drop all the, contacts in the show notes there as well as a couple reference points, and we look forward to having Brooke back here as, I guess, as long as you would join us. Right, Brooke? If I don't know if you wanna hang out with us again.
John Tripolsky:That's up to you.
Brooke Acre:Yes. This was fun. Definitely fun. I miss you guys, and it's great to be part of your awesome Teaching Tax Flow podcast.
John Tripolsky:Oh, man. Listen to that. That's a that's not a paid promotion, but it is a genuine one. I I assume so. It'd make my little marketing heart sing.
John Tripolsky:So that being said is I always like to close out with, we will see everybody back here next week on the Teaching Textful podcast, same time, same place, different topic. Hey, everybody. Thanks for hanging out with us here on this episode of the podcast. Obviously, thank you, Chris. Thank you, Brook, for joining us.
John Tripolsky:It's almost like getting the old old crew back together. As you guys heard a reference of earlier in the show here, we've known each other all for about 20 years or so, so 2 decades. It's longer than I know some of our listeners have been alive for. So there we are. We're getting a little older, but as we mentioned in this show, this is definitely not just a tax planning tool, right, but a life tool, something that we all should take pretty serious even if you're in a position now in your life where you think, you know what?
John Tripolsky:I won't need this. I'm good. I'm gonna live to be a 100, healthy as an ox. Things happen. Right?
John Tripolsky:So as we always say, planning on the tax side, this is a great tool, especially, do a little life planning, something you can look into. Obviously, you can reach out to Brooke, Reach out to, and really any individual that's on your personal board of directors, as we mentioned as well, and we always do in a lot of episodes. So lean on those people for some great advice, and as I did not mention in the show, but I do believe we mentioned it in previous ones, We have a great roster coming up especially over the next 2 months of some fantastic guests, some great topics Chris and myself are gonna discuss here on the podcast. So we look forward to hearing from everybody on feedback on those shows and also keep sending over those ideas. We love them.
John Tripolsky:See everybody soon.
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