Long Term Care: Avoid the Pike Syndrome, Look the Problem in the Face and Make a Plan
No one wants to think about needing long term care. And, figuring out how you are going to pay for it (if you are among the potentially 70% who will require it) isn’t fun. Of course you hope you’ll be in the 30%!
Darol Tuttle is an accomplished attorney with over 23 years experience in estate planning and elder law. He writes below about how he has seen too many people look away from the problem of long term care and likens that practice to an obscure, but interesting experiment called the Pike Syndrome.
The Pike Syndrome
Ever hear of the “Pike Syndrome”? It comes from an experiment in which a pike, (a big, very ugly, predator fish) was placed in a tank. The researchers dumped goldfish or some other lame, tasty looking fish into the tank with the pike.
Next the researchers divided the tank into two compartments, separated by a transparent acrylic wall. Then, they dumped a second set of goldfish in the compartment that did not house the pike but they made sure the pike could see its new neighbors.
The pike beat itself bloody trying to get a second meal. Finally, bruised and embarrassed, it gave up. You know what happened next?
Researchers are twisted. They then lifted the partition out of the tank and the dumb goldfish swam around the entire tank without a care in the world.
The pike did nothing. It had learned helplessness from the pain of past failures.
Don’t Be a Pike: Identify the Key Defects in Your Financial Planning Decision Making
I am of the opinion that any type of planning should identify defects in decision-making.
I spent the early parts of my career drafting estate planning documents. I also litigated. Over time, I saw the problem. I actually think I suffered a bit of PTSD. Respectfully, retirees can be kinda mean.
However, the main thing that bothered me was the extent to which my clients suffered.
I could tell you stories. In most cases, my clients suffered intentionally. They took deliberate steps or refusal to take steps that led to financial devastation. I mean that quite literally.
With regards to long term care, clients are somehow conditioned that they won’t need it. This is a clear defect in decision making.
There is a high probability you’ll need long term care
Long term care is not covered by MediCARE
Long term care is covered by MediCAID, BUT…
Long term care is very expensive
The costs of long term care can compound and add up quickly
So, What to Do? How to Plan for Long Term Care
1) Get a health care power of attorney
2) Educate yourself and make some preliminary decisions
3) Draft a limited power of attorney
This power should preserve the right to create one of five different trusts and transfer the assets you want to protect at the trigger event you determine in advance. Follow me?
The horror stories you hear are called “crisis cases” in legal services. They drain a big chunk of the estate and the attorney’s fees are super high. BUT, crisis cases are easy to close. Why? Because the kids are making the decisions, they are stressed, they have their own families, and are younger. As such, they are more prone to see the benefit of a plan, especially if it leverages federal law.
4) Model the financial impact of your decisions
5) Married? Create a Trust.
Tips and Resources
Model the impact of your long term care decisions using the NewRetirement Planner.