Planning for the “Silver Tsunami”

Estate Planning practitioners often counsel clients regarding whom they should name as fiduciaries in addition to advising them how to structure a plan to provide maximum protection and flexibility for their beneficiaries. Those beneficiaries often include a spouse and children, but when the client survives their spouse and children, never had a spouse or children, or is estranged from their loved ones, practitioners may need to think outside the box to create an Estate Plan. In the aftermath of Covid with the Baby Boomers reaching the age of retirement, a new category of individual referred to as the “solo silver,” “elder orphan,” or “senior orphan” has emerged. These individuals, like any other planning client, require a particular understanding of their situation and the potential problems inherent in their planning. Questions regarding who will help the elder orphan make financial, health, or other decisions when they can no longer make those decisions on their own need to be addressed in their Estate Plans.

While this issue has always existed, economists and demographers have coined the term “silver tsunami” to describe the drastic shift in the age of the human population as the generation of Baby Boomers reaches retirement. According to the National Academy of Elder Law Attorneys’ website, over 80 million people will have reached the age of 65 by 2040. That same year, over 14 million will have reached age 85. As more individuals live longer, it makes sense that many of them will live alone and be without a spouse or other loved ones to care for them. The questions that Estate Planning attorneys need to answer with these clients focus on who will help these individuals make decisions as they age. The type of decisions, either financial or medical, drives the choice made by the silver senior. Many will rely upon their doctors and other health professionals to help with medical decisions, while relying upon a corporate or professional fiduciary for financial decisions. Of course, if the senior orphan has another relative, such as a niece, nephew, or sibling, any of those individuals could be a suitable choice to make health care decisions or to serve as a fiduciary.

Interestingly, care management agencies have emerged as an option for seniors desiring coordinated medical assistance across the health care system. Using such an agency provides certainty for the senior; however, it comes at a price. These agencies charge a fee and the availability of such an agency varies by region. These agencies fill a need and often employ professionals with backgrounds in social work, nursing, and accounting. If the senior can establish a relationship with the agency during a period of capacity, then that helps the individual managing the senior’s case understand more about the individual, including their wishes, needs, and concerns. Determining the existence of these agencies locally, the types of services they provide, and the cost helps the Estate Planning practitioner add value for their elder orphans. These agencies don’t replace well-drafted health care documents, which include a health care power of attorney, advance directive or living will, and a Health Insurance Portability and Accountability Act (“HIPAA”) Authorization or Waiver but should be included when and where appropriate.

In addition to the health care documents noted above, a well-drafted trust that contains provisions regarding incapacity will address many of the issues that face the solo silver. Of course, the trust needs to lay out specific requirements for what constitutes incapacity and who makes that determination. If a trust contains these necessary provisions, that alone may not solve the problem. For example, most trusts that address the issue of incapacity indicate that a primary care physician and/or another doctor who has treated the individual in the last year may determine the individual to be incapacitated. If the senior fails to establish a primary care physician through regular visits or has not seen any doctor in the last year, that only exacerbates the issue. When counseling an elder orphan, the attorney should spend time discussing the importance of these incapacity provisions and which individual or individuals the client thinks should make this determination.

For those who comprise the silver tsunami, it’s important to create a plan in advance while the client has capacity and understands the consequences of their choices. A complete Estate Plan generally includes a revocable trust, a pour-over will, a property power of attorney, a health care power of attorney, an advance directive, and a HIPAA Authorization. If an individual has signed these documents, that increases the likelihood that others will follow the individual’s stated health and financial plan. Without these documents, the individual could end up in the court system, the subject of incapacity or guardianship proceedings. In those unfortunate situations, the court appoints someone to make medical and financial decisions for the incapacitated individual. If the individual doesn’t have a spouse or child willing to take on that responsibility, then it’s likely to be a stranger. Help your elder orphans memorialize their plan by understanding their unique situation and making recommendations designed for them.

Tereina Stidd, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com