With healthcare costs rising twice as much as inflation for the past several decades, it's important for trustees to understand how to revise old trusts that have been around for decades or set up new trusts that will best address the future healthcare needs of their beneficiaries, while limiting expenses.

In a recent article in Barron's, New York Private Wealth partner Joshua Rubenstein talks about the importance of considering beneficiaries' ages when establishing trusts in relation to health care. While Joshua recommends establishing a single trust per beneficiary for adults to prevent assets from being used up by the needs of a single family member, he explained that, for children, a single group trust can cover all their health care needs "no matter how imbalanced," until they become adults and it’s time to discuss making changes.

"It makes sense to say that until your youngest children are adults, all the money stays in a common pot and everybody's expenses get paid if you die early — which is what would happen when you’re alive," Joshua said.

The article in Barron's references a 2017 study conducted by Fidelity Investments that shows how couples will spend, on average, $285,000 on healthcare in retirement, while wealthy individuals could spend over $1 million.

Other methods that trustees can implement to address these rising and unpredictable healthcare costs in trusts include defining the specific healthcare expenses that their trust will cover and, instead of capping coverage, requiring that beneficiaries attempt to contain costs without compromising their care.

Read, "Planning for Soaring Health-Care Costs," in its entirety.