As an elder law attorney who also does estate planning, I’ve noticed a marked increase in client couples with dual incomes and no kids (so-called “DINKs”). While my experience in elder law informs my planning across the board, in no area of the practice has this perspective been more valuable than in planning for DINKs.
Planning Without the Kids
The “no kids” part of DINK planning has a variety of implications that matter to estate planners. It means:
• The couple can work fulltime throughout their adult lives without the common disruptions that often occur when raising kids.
• Their earnings won’t be reduced by expenses typically associated with raising children and sending them to college.
• The couple often doesn’t have a class of persons a generation younger than themselves that they trust and can appoint to serve as fiduciaries. (Although, at times, the relationships between DINK clients and nieces, nephews and even children of friends are often elevated to nearly a parent-child relationship.)
• The usual importance of preserving assets for the benefit of another generation more often doesn’t exist or is a lower priority than for many “traditional” estate-planning clients.
It’s these last two points that invite further discussion.
Developing an estate plan often involves planning for the care of clients as they age. In today’s environment, adults are appropriately concerned about how they’ll be cared for, who will handle their finances, who will make decisions about the type of care they receive and how end-of-life decisions will be made.
In traditional estate plans, children usually are at the center of long-term care (LTC) plans. While in some cases, DINK clients will have close relationships with family members or other younger individuals, these relationships typically don’t rise to the same level as a parent and child. Thus, planning for the DINK client requires special attention to the choice of who will act as financial agent and successor trustee. Professional trustees are often the answer, but some won’t act as an agent under a durable power of attorney (DPOA), and this reluctance can be an issue.
For example, DINK clients typically had more flexibility to save money earlier in life (when parents were spending on children) and are more likely to have maximized contributions to retirement accounts. Thus, it’s common for DINK clients to have a substantial amount of retirement assets. But generally, retirement assets can’t be placed into trust. Thus, the practitioner must pay special attention to coordinating retirement distributions with trust funding, particularly if the trustee and agent under a DPOA are different. The trust and agent must work in unison, or obstacles to planning and management can arise.
Additionally, financial exploitation is a huge problem and becomes an even bigger concern for a DINK client. The practitioner should consider added protections, such as a trust protector or advisory committee. Trust provisions that create trust protectors, trust advisors or trust committees (as well as carefully drafted accounting provisions) can be extremely beneficial to a DINK client. These provisions can also provide appropriate checks and balances between management of assets by professional trustees, while still involving friends, family or even social workers and care managers to assist with advice and distributions for personal care.
For an example of provisions to include in a trust for a DINK client, see “Sample Trust Provisions,” this page.
Quality of Life
The driving dynamics of estate planning today are that people live longer, face an increased prospect of needing LTC and are more likely to live some portion of their lives with a cognitive impairment. As discussed above, planning for a DINK client in these areas can be more complicated because there are no children to provide this support.
On the flip side, DINK clients are more likely to come to a planner with the two greatest commodities in LTC planning: money and time. The cost of implementing a long-term plan is often not an issue. Many DINK clients have specifically saved, knowing that they don’t have natural family supports (and are less concerned about leaving a legacy to residuary beneficiaries). Also, because they’re particularly attuned to LTC concerns, DINK clients are more likely to take enough time to do comprehensive planning.
Unless expressly disabled in the document, all jurisdictions impose a duty on trustees (when managing trust property for an incapacitated client) to balance the interests of the life beneficiary with those of remainder beneficiaries. In the typical estate plan, this balance is usually appropriate. In DINK planning, that dynamic typically doesn’t apply. Rather, the trust should include language that provides that the trustee is to use trust property to provide the highest quality of life to the settlor and disregard the interests of the remainder
For most DINK clients, their biggest concern is ensuring that they have personal and caring support systems in place when LTC assistance is needed. In this sense, I often find myself borrowing planning tools that are more commonly used in special needs planning. Specifically, clients may be interested in executing a letter of intent regarding their LTC wishes and even establishing relationships with care managers or social workers in advance of need.
Letter of Intent
A letter of intent should be focused on the interests and concerns of a client, rather than wedded to a specific format. A letter can include information and/or guidance about socialization, enjoyed activities, religious views, instructions on pets, medical history and wide-ranging personal preferences that could impact life care decisions. Indeed, I encourage my clients to get into the minutiae. If a beloved sports team or a preferred brand of toothpaste is important to us while we have capacity, wouldn’t we want people to know this information when caring for us during periods of incapacity?
Although a letter of intent is usually a separate document with minimal legal significance, a practitioner may consider referencing it in a trust and/or DPOA. However, no letter or document is a substitute for the client regularly meeting with a trustee or the other individuals who will be in charge of his care. Having at least annual meetings with a trustee, agent or even attorney, is strongly recommended.
Quality of Care
A DINK client may be interested in engaging a professional care manager or social worker well in advance of need. By doing so, the client can learn more about LTC options and discuss what choices would be most acceptable for him. Indeed, a client may be interested in establishing a long-term relationship with such an individual. At a minimum, a planner should suggest putting language in the trust agreement that allows the trustee to hire a professional care manager or social worker to assist with appropriate recommendations. I often tell clients, “a care plan made in crisis is rarely the one a person would want.”
Many of our clients wish to avoid institutional care and have strong opinions regarding LTC options. It’s a common desire to be cared for at home. When counseling a DINK client, it’s best to remember that being an aged individual at home can be a very lonely place. If there are no children and little extended family, exploring options that provide more socialization and activities can provide a huge increase in quality of life and much desired additional support.
When planning for DINK clients, a planner should pay particular attention to the definition of incapacity and when a successor trustee or agent will replace the settlor. Boilerplate incapacity clauses may not be appropriate for a DINK client and should be discussed with him.
Additionally, the expansive powers commonly given to fiduciaries in Medicaid planning may not be appropriate for a DINK client. The trust agreement and DPOA should provide detailed directions regarding how decisions are to be made to protect assets, particularly when protecting assets involves quality of care decisions. Asset preservation always sounds good, but it may conflict with the settlor’s desire for independence, preservation of dignity and high-quality LTC choices.
Further, most traditional estate plans fail to give direction regarding decisions between protecting assets for the spouse against quality of care decisions for the settlor. DINK clients may be very interested in finding the right balance between ensuring each spouse has sufficient assets and making sure that sufficient assets are spent on their own care needs.
This article isn’t intended to be a comprehensive discussion of planning for DINK clients. For instance, it’s probably true that DINKs are more likely than the general population to have charitable objectives, concerns for pets and many other distinctive wishes. Rather, the purpose of this article is to focus on the biggest desire of most DINK clients—estate-planning documents that address their LTC fears and wishes.
It’s precisely because DINKs have resources and an elevated need for advice that they are “good clients” to reach. However, to successfully market to this audience, planners need to be sophisticated about their unique needs. Understanding and articulating these concepts provide planners with both the ability to connect with DINK clients and to market directly to this growing audience.