You may have recently heard the term “negative inheritance” in connection with elder law and estate planning. Essentially a sociological, rather than legal, term, the apparent meaning of the phrase is misleading. At first, it appears to refer to the unfortunate situation of dying while owing debt. However, it is easy to determine that this is not how things work, your debt is not transferred to your inheritors, at least not directly.
So, if “negative inheritance” does not mean passing on your liabilities to your beneficiaries, what does it mean? It means: should one not effectively plan for future and long-lasting health care financial requirements and other money needs as one grows older, those costs will fall to someone else, in most cases the children. Therefore those who would must likely inherit any assets at the death of the parents, expends considerable resources in caring for those parents, as they age. When those resources exceed any future inheritance, it is termed “negative”.
In what common scenarios is this happening? One might have thought about one’s own aging and the needs of those years, and might have some substantial paper worth, but it is usually frozen in real estate, the family home. That equity can be tricky and difficult to liquidate for health needs. If some significant long term health care insurance has not been secured, or if some alternative equivalent supply of health care payments has not been set up, the task of providing such care will be borne by the closest relatives, most usually the progeny.
One or more of the children often have to taken stringent steps, sometimes using or leveraging their own retirement monies to provide the care they must.
Acquiring health care insurance, accessing the government assistance out there, or making use of other resources requires the participation of knowledgeable experts in estate planning. Please contact Vanguard at your convenience for more information on this most important, time-sensitive subject. Providing less stress and more success for those involved in this life-enriching aspect of aging and elder planning is a valuable commodity we strive to share with the community.