Real madrid is quite aware of Luca modric age and would probably not expect much from him as it was in the previous season. Modric already offered to Madrid all he could and I think Madrid is trying to reciprocate the good gesture by giving him the captain role. Luca even before now has been displaying leadership qualities in that squad and I believe he can do more better as a captain. Some of these young players need someone who’s capable of putting the squad together in and out of the pitch. They will surely listen and respect him as the senior player he is and as the legend.
Only he remains at Real Madrid as a veteran player besides Carvajal, at the age of 38 Real Madrid still gave him a contract even though at his age he should have returned to play for his first club (Dinamo Zagreb) or at least go to the SPL. Both sides show their loyalty to each other, with Modric at Real Madrid, it's hoped that the young players there can learn more from him.
BTW, have you heard about Los Galacticos 3.0? they say that Real Madrid is currently the third golden generation after the Zidane era, the BBC era.
Currently Madrid is filled with many talented young players but still Madrid extended the contracts of Carvajal and Modric, the extension of the contracts of the two old players has a strong reason at the moment, Ancelotti is well aware that his current young squad will be able to compete in La Liga and also the Champions League, but he still needs Modric and also Carvajal as a player who is able to help the young players with his experience and maturity on the pitch Later, currently Modric and Carvajal are the two remaining players from the previous Los Galaticos golden era, although both are currently still part of the new era Los Galaticos squad but their roles will no longer be as crucial like as previously.
Modric and Carvajal were important players in the previous Los Galatics era when the BBC trio (Benzema, Bale, Cristiano Ronaldo) became Madrid's attacking line, even though they are now old, but Madrid still entrusts the two to be an important part of the rise of the new era of Los Galaticos today.