For those clients stubbornly objecting to engage in long-term-care planning, here's a point that could drive home its importance: They could inadvertently stick their kids with a huge medical bill down the road.
That's because of something known as filial responsibility laws, on the books
in around 30 states. These laws could hold children legally responsible for long-term-care expenses such as nursing home bills should a parent requiring care not be able to pay.
While enforcement of filial laws has been rare to date, some feel it's only a matter of time before states start enforcing them more regularly.
“It could be a sleeping giant,” according to Charlie Douglas, board member of the National Association of Estate Planner and Councils and an Atlanta-based wealth adviser. “Most people aren't even aware of filial responsibility laws.”
One fairly recent case,
Health Care & Retirement Corp. of America v. Pittas, highlights just how substantial the financial burden can be on children. Enforcing Pennsylvania's filial support laws, the defendant was found responsible for his mother's long-term-care bill from a skilled nursing facility, to the tune of $93,000.
Pointing out to clients that their children could be on the hook for bills down the road for failure to address long-term-care planning is one way to potentially nudge them to do so, said Jamie Hopkins, the Larry R. Pike chair in insurance and investments and an associate professor of taxation at The American College.
“In planning, fear could be a good thing as long as it drives people to action. A little bit of concern is okay,” Mr. Hopkins said. Filial laws help clients notice long-term-care planning is a family decision, he added.
Such financial responsibility could also work the other way, prompting clients to bring up long-term-care planning with their parents, according to Carolyn McClanahan, the director of financial planning at Life Planning Partners Inc.
If a client has parents living in a state that does have such laws, for example, it would be good practice for advisers to mention the client could be held financially liable for taking care of them in the future, Ms. McClanahan said.
“To me, this is one part of a bigger issue of how families all together need to have a conversation about long-term care for parents and themselves,” Ms. McClanahan said.
Those conversations could focus on helping families understand what long-term-care would look like for them (for those individuals that would want to age in place, what it would take to keep a home age-friendly) and which child would be responsible for certain items (bills, maintaining the home, driving the parent around, etc.), for example, Ms. McClanahan said.
Since the Pittas decision in 2012, more nursing homes have begun sending letters as a sort of “call to action,” notifying children of past-due bills for parents and threatening to enforce filial law if the individual needing treatment doesn't enroll in Medicaid or if the bill isn't paid, Mr. Hopkins said.
As health care costs
continue to grow at a rapid clip and state deficits could become more of an issue due to Medicaid outlays, states will likely begin enforcing their filial laws more regularly, advisers said.
“They haven't been heavily enforced yet, but I think we'll see more of it with Medicaid being overstretched,” Ms. McClanahan said.
