During my eight years at ElderCounsel, I’ve had the opportunity to speak with many estate-planning attorneys about their practice goals. One goal that’s often expressed is the desire to add elder law to their firms. It’s also one of the most popular courses we teach. When I run into the same attorneys who attend the sessions the next year, many of them have stuck with the status quo but still express a desire to add this practice area. Generally, these attorneys tell me they see and understand that elder law has huge growth potential, but they’re overwhelmed with having to learn the nuances of the practice area and aren’t sure how it fits in with their current practice. Here are some of the most common blind spots and insights into the practical side of an elder law planning practice.
Services to Provide
The first hurdle to overcome when attorneys are thinking about adding elder law is what services exactly does an elder law office provide to their clients. This is a question that has no bright line rule other than the services are defined by the clients and those services the law office has decided to include within its menu of elder law services. Some offices will provide elder abuse and guardianship litigation representation, but most estate-planning attorneys want to stick to the transactional planning side of things.
An estate-planning firm can choose from a variety of services to add under the umbrella of elder law planning. The most common services for estate planners include:
Medicaid planning (crisis or pre-crisis/proactive planning). Medicaid is a federal program that’s managed by individual states. The program pays for in-patient long-term care (LTC). Each state has specific resource and asset limits for an applicant to qualify. The availability of home- and community-based programs varies from state to state.
Crisis Medicaid planning. The law firm serves as the quarterback for a family that’s facing an immediate impact of the cost of LTC. Generally, a loved one is heading into a nursing home or is already living in the facility. There are limited planning options for the family, but usually working with an attorney can help the family save some of the client’s resources. The family then applies for Medicaid benefits that assist in paying the cost of the LTC. This type of planning usually requires dedicated staff and the ability to move quickly when a client retains the law firm. The house is on fire, and a firefighter is needed. Many attorneys think that elder law planning only encompasses Medicaid planning for sick clients who are in a crisis. Crisis Medicaid planning is a much-needed service in many communities as there aren’t enough attorneys who understand those legal strategies or how to deploy them appropriately. However, crisis Medicaid planning is specifically focused on individuals who haven’t done any planning for LTC. They wait to see an attorney when they realize the large financial obligation that lies ahead of them. The house is already on fire at this point, and the solutions available to mitigate this financial disaster are very specific and based on the state Medicaid rules. With crisis planning, the attorney is often able to save clients months or years of paying thousands of dollars a month in nursing home costs.
A great alternative to Medicaid crisis planning is avoiding the crisis. If the attorney is effectively able to talk to their client about these risks while designing the client’s estate plan, they can provide clients protection against these risks. Providing this enhanced estate planning to clients allows the attorney to market their firm differently from all the other estate-planning firms in the community. Many of these solutions overlap with the estate-planning services the attorney is currently providing and are necessary for clients as both the attorney and they mature.
Pre-crisis proactive Medicaid planning. This planning is very similar to estate planning, but it also allows the client to contemplate whether LTC planning is a priority for them. The attorney needs to have a strong understanding of how trusts work and an ability to describe the value of using an irrevocable trust. This type of planning opens up choices for clients should an LTC event happen down the road, as the planning was done early with this eventuality in mind while waters were tranquil.
Veterans pension planning. Wartime veterans or the surviving spouse of a wartime veteran may be entitled to receive funds to help pay for their care short of needing nursing home level care. The pension benefit is a cash payment to pay for unreimbursed medical expenses and doesn’t require the applicant to receive in-patient care. This allows a wartime veteran or surviving spouse to receive assistance and stay in their home or assisted living facility longer than they would otherwise be able. The planning opportunities are very similar to proactive Medicaid planning using a combination of revocable, irrevocable and special needs trusts (SNTs) as valuable tools. An attorney practicing before the Veterans Administration (VA) needs to be accredited and maintain specific continuing legal education requirements.
Special needs planning. While not technically elder care, special needs planning overlaps with many of the services encompassed by elder care. Many families with children with disabilities rely on government benefits for essential services. Those services can include transportation, in-home visits from professionals, counseling, medical care and social programs that improve their child’s quality of life. There are also cash disability benefits available to qualified applicants. This type of planning also requires a solid understanding of trusts, specifically SNTs. There’s no common age for this type of planning as disabilities affect the lives of the young, old, rich or poor.
Evolving Needs
Estate-planning attorneys who’ve added elder law successfully to their practices have identified that their clients’ needs evolve as their clients get older. Specifically, firms that provide elder law add legal solutions that help clients make informed decisions regarding their quality of life as they age. These plans can include updating their current estate plan using a combination of revocable trusts, irrevocable trusts and SNTs. This consideration is important to middle class clients due to the high cost of LTC and the percentage of the population that will need this care. According to Genworth, the average monthly cost of a private room in a nursing home was $8,821 in 2020.1 These costs increase an average of 2.8% percent per year.2 The longer a client lives in a facility, the more the cost will continue to increase from a baseline of $105,000 annually. That’s a lot of rent for most American families to bear.
Another unfortunate reality is that the older we get, the higher our risk of spending all of our savings on LTC. To illustrate, an American who’s 65 years old has a 51% chance of needing LTC before they pass away, whereas, an 85 year old has a 75% chance of developing the need for LTC.3 Therefore, as clients get older, their planning needs to transition from “who’s going to get my nest egg?” to a graver concern, “is there going to be enough money to pay for my care, and where will I receive that care?” An estate plan generally is focused on how to maximize the client’s remaining assets, but what if there are no remaining assets to pass on to the next generation? At that point, it won’t matter how elegantly the attorney has skipped generations for tax purposes. Elder law planning is the office’s solution to this maturing concern.
Profitable Practice Area
Now that we understand why this planning is so important, the next question is, how can elder law be a profitable practice area? This type of planning can become more complex and niched than estate planning, which allows attorneys to price their services higher.
Estate-planning attorneys adding elder law to their practices can generate revenue through many channels. The most common is adding proactive LTC planning as an option for new clients. Reviewing clients’ goals with them and helping them understand the threat that the cost of LTC can pose allow broader planning opportunities. Attorneys can price these additional services as an add-on to their estate-planning services or as a more comprehensive planning package. This allows the client to decide if they would like to move forward with simple estate planning or an enhanced plan that provides greater protection.
There are many different successful pricing models for elder law planning. You can practice hourly or use a fixed pricing model. There’s also a multi-tiered approach to pricing services. This approach involves using an analysis letter as the initial retainer’s scope of services following a meet-and-greet for the initial consultation. In this type of initial consultation, the attorney focuses the conversation on the potential client’s goals and objectives to determine if the office is a good fit to provide the legal solutions. If so, then the client hires the attorney to prepare an analysis of the client’s financial situation, review planning that’s already been completed and make recommendations for the client to achieve their goals. The attorney then schedules a follow-up meeting for the client to review the contents of the analysis and decide if they would like to hire the attorney to move forward with implementation of the recommendations under a second retainer. This type of meet-and-greet model can work in any planning context but is very valuable in elder law planning, as families can be under a great deal of stress financially and emotionally from having to determine the best way to pay for their loved one’s care. Under this stress, the potential client may not provide completely accurate information to an attorney during an initial consultation. Building an intermediate step into the representation allows the law office to step in and analyze the facts of the case before making a recommendation.
The majority of law offices that use an analysis letter approach for Medicaid planning will then employ fixed pricing for the recommendation letter, then fixed pricing again for implementing those recommendations but reserve hourly pricing for funding the plan and communicating with any government agency.
A law office can’t be paid for work performed in connection with the preparation, presentation or prosecution of a claim for VA benefits. Therefore, it must be explicit in the retainer agreement that those services are included without a fee or done under a separate pro bono agreement. VA planning attorneys commonly provide the estate-planning work and then suggest the client work with a VA service officer on the application. The service officers provide assistance for no fee and are very familiar with the VA rules regarding the pension benefits.
Special needs planning firms generally charge fixed pricing for specialized services that usually include preparing a first-party or third-party SNT but can also include reforming estate planning that was previously completed without considering the impact an inheritance may have on a beneficiary’s benefits. Then the law firm may be employed to fund assets into the trust on a fixed price per asset or hourly basis. There are also times in special needs planning when an attorney will be involved with a court overseeing a settlement of a personal injury case using an SNT. This type of representation may involve a hybrid of fixed fee for creating the trust and then hourly for court appearances as the trust is administered.
High-net-worth (HNW) estate-planning firms have often expressed hesitancy to add elder law because they believe the client bases are too disparate. Unfortunately, the cost of LTC continues to rise and may impact those who would traditionally fall under the HNW category so we encourage those firms to at least have the conversation about structuring a plan for private care. However, we’ve seen HNW estate-planning firms successfully add elder law by branding the services under a separate business entity. The naming and marketing must meet the state bar’s ethical rules. This can be a way to provide these services while keeping marketing messages clear and effective for both types of services. This second firm approach also helps to avoid referral source confusion as to what type of client should be referred to which side of the business.
Getting Up to Speed
As with any new practice area, there’s a learning curve but as an estate planner, an attorney will understand the basic concepts of elder law planning. Elder law planning is a natural fit to an estate-planning practice. The basic concepts of this planning require an understanding of trust, tax and family dynamics, which are also the cornerstones of an estate-planning practice. An estate-planning attorney is halfway up the hill before they even start studying. There are a variety of elder law onboarding courses available in the private market (full disclosure: ElderCounsel provides one that I help teach) that will provide the requisite knowledge to get started on this path to learn the law and strategies necessary to help aging clients and the community at large. A Master of Laws (LL.M.) or certified elder law attorney (CELA) designation isn’t required to be an excellent elder law attorney but can be a great way to set oneself apart from other attorneys in the community. Potential elder law clients are much more interested in an attorney’s ability to help them preserve their assets should they need LTC in the future than the letters after an attorney’s name.
Estate-planning attorneys considering elder law also worry about the impact it will have on their current staff. There are practice models that require additional staffing and training. For instance, if a firm wants to specialize in crisis Medicaid planning, then its staff needs to be trained on the state’s Medicaid qualification rules and application process. However, estate-planning practices tend to start their elder law practice with adding LTC concerns to the estate planning they’re already providing to clients. This type of planning doesn’t add additional burden to staff because the work focuses on plan design and document execution that the staff has already been trained on and has been completing for the firm.
Leverage Existing Skills
The path for estate-planning attorneys to add elder law planning allows the leverage of already existing skills and strengths. The most successful attorneys who’ve added elder law have a clear plan based on what type of services they’re going to add, how they’re going to learn the law and what’s the best pricing model for the specific services they’ll be providing. Once the initial learning curve has flattened, most firms see exponential growth in the number of clients they serve as well as their firm’s financial success.
Endnotes
1. www.genworth.com/aging-and-you/finances/cost-of-care.html.
3. Ibid.