Why filial laws are a 'sleeping giant' that could prompt long-term-care planning

The laws create the possibility that clients' their long-term-care expenses may be shouldered by their children
JUL 21, 2016
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.

Latest News

GLP-1 users are trading retirement savings for their prescriptions
GLP-1 users are trading retirement savings for their prescriptions

A Nationwide survey finds 47% of GLP-1 users have never discussed the drugs’ financial impact with an advisor, even as many dip into savings.

Inspired Healthcare sale price of properties is 59% of $1.2 billion sold by advisors
Inspired Healthcare sale price of properties is 59% of $1.2 billion sold by advisors

The hundreds of millions of dollars from a sale of Inspired Healthcare properties does not mean an immediate windfall for investors.

Class action alleges Webull misled investors about China operations
Class action alleges Webull misled investors about China operations

Its SEC filings said one thing - a congressional probe said another.

Investors accuse Netcapital of inflating revenue through sham deals
Investors accuse Netcapital of inflating revenue through sham deals

Sham agreements allegedly padded revenue by 345%.

Pre-retirees are looking for flexibility, security, and guidance when it comes to retirement income: Cerulli
Pre-retirees are looking for flexibility, security, and guidance when it comes to retirement income: Cerulli

"Most pre-retirees are uncomfortable making key retirement income decisions without an advisor's help," said Chris Bailey of Cerulli.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor