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Balancing a legacy with the cost of long-term health care

Many senior citizens in British Columbia may live frugally as they try to help their children cope with financial challenges and leave as much of their estate intact to pass on after they do. However, some financial planning experts believe that this may not always be a prudent path to take. Health care costs that will not be covered by the government are expected to rise sharply in the coming decades, and too much concern over what will be bequeathed in their wills could leave retirees vulnerable.

The investment required to equip a home so that it provides for the needs of a resident with mobility issues can be significant, but even this outlay is minor compared to the costs of long-term care in a nursing home or similar facility. The Canadian Life and Health Insurance Association estimates that the cost of providing long-term health care to retiring members of the baby boomer generation could be as high as $1.2 trillion, but only $595 billion of this figure would be paid for by the government if current spending levels are maintained.

Governments are aware of a looming fiscal crisis resulting from a glut of retiring baby boomers expected to live for decades after their careers end, and many initiatives encourage retired individuals to eschew institutional care and remain in their homes. Seniors who fail to make adequate financial plans face the prospect of either relying on their children for support or living off their home equity with a reverse mortgage.

While a long life is an undoubted blessing, it raises a number of financial questions. A lawyer with wills and estates experience could provide clients with estate planning options that serve their immediate and future needs while providing a meaningful legacy for their heirs.

Source: The Globe and Mail, "Seniors: Put late-life health care costs before your kids’ inheritance", Rob Carrick, June 17, 2014

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