Financial Planners Risk Lawsuits for Failing to Recommend Realistic Plans for Long-Term Care

Gordon, Harley
August 2005
Journal of Financial Planning;Aug2005, Vol. 18 Issue 9, p50
Academic Journal
Increased life expectancy is creating a greater need for long-term care planning. Yet many financial planners are failing to adequately discuss the issue with clients. Even planners who think they've adequately addressed the issue just by bringing up long-term care insurance to clients may find themselves vulnerable to a lawsuit Many planners don't understand what long-term care is; a continuum of care, housing, and services needed when the aging process begins to exact a toll on our cognitive and physical abilities. It is custodial care, not skilled care, and thus is not paid for by most government programs. Planners and clients forget that it is the caregivers who must struggle to provide the care necessary to keep their loved one in the community, through either their unpaid labor or their financial assistance, or both. The need for long-term care insurance should be couched in terms of protecting the overall retirement plan, not merely as a way to protect assets. LTCI should be part of the establishment of a plan for providing long-term care. Trying to scare clients into buying LTCI--and having them sign a waiver if they don't buy it--will not necessarily insulate a planner from a lawsuit. The mere sale of LTCI to a client does not eliminate liability, because the version of the product sold may be inadequate. Following the recommendation of an attorney who says a three-year benefit combined with Medicaid planning is adequate will not eliminate liability.


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