The problems that seniors face can erupt suddenly from out of nowhere or can start small and grow more serious over time. A crisis can occur when a senior family member is diagnosed with dementia, has a chronic illness or is admitted to a nursing home. Often after the crisis has already occurred is when the end-of-life documents are pulled out of the drawer and the family calls an elder law or estate planning attorney for help.
Unfortunately at that point, some planning opportunities may no longer be available.
How can seniors plan ahead to make sure they are prepared and have the right documents in place?
1. Plan before the crisis occurs
Pre-planning beforehand can preserve your options and reduce complications when a crisis hits. Contacting an attorney, along with any financial advisors before there is even a hint of a health problem with long-term implications can alleviate your concerns and allow you to review your options and make decisions carefully. Contacting trusted counsel before a crisis hits is one of the biggest preventative steps to minimizing not only the damage caused by a crisis but also the financial cost is less compared to waiting until after the crisis has occurred.
2. Update your existing estate plan documents and review asset titling and beneficiary designations
Your estate plan should be reviewed every two to five years to account for changes in life, the value of your assets and any changes in the law. If important powers or directives are missing, family members may not be able to carry out your plan or use the legal strategies that can save assets. Powers needed for creative problem solving include:
- Power to allow transfer of assets between spouses
- Authority over retirement plans
- Power to take steps to qualify for Medicaid, VA (Veteran Healthcare) or other government benefits
An elder law or estate planning attorney can help update your documents in accordance with your wishes. Once your documents have been updated, you should store them in a secure location in your home such as a fire-proof safe. We also recommend that you provide your attorney and any caregivers that you name in your documents with sufficient information to locate copies of your documents when necessary. We don’t recommend that you provide copies of the documents to other individuals as there might be changes you make to the documents or the fiduciaries you name, and you don’t want to have competing documents floating around.
You should be in the habit of reviewing your assets for proper titling and beneficiary designations every couple of years. When you open a new bank account or change financial planning institutions, you may not have titled the account correctly or put beneficiary designations on the account. This is referred to as “funding” and is vital to achieving your estate planning goals. Sit down with your attorney and review your assets to make sure they are properly titled and have the proper beneficiary designations.
3. Carefully selecting caregivers
There is no one-size-fits-all answer when it comes to who you should select to manage your finances and carry out your wishes. You know your family and friends and that your plan is only as good as the person(s) you authorize to execute it. Therefore, when facing the strong likelihood of incapacity, it is important that you select your caregivers carefully. Before the crisis occurs, it is also important to communicate with them on whether you want long-term care or life-sustaining treatment.
The best choice may not always be a spouse or the oldest child. And, the person who can make health care decisions may not be the same person who can make responsible financial decisions. If necessary, two or more persons can serve in different roles at the same time. It is also possible to build accountability into your documents to reduce the risk of bad decisions and try to prevent family squabbles, such as naming one person to handle the financial matters and another to be the guardian of your children. This acts as a check and balance so that all of the power is not with one individual. Talk to your attorney about your concerns and making informed decisions.
4. Research and Plan for government benefits, if possible.
There is no shortage of expenses when it comes to Long-Term Care. Depending on the location, what the individual’s needs are, and other factors, nursing home care in Michigan can cost anywhere between $70,000 to $100,000 a year. Medicaid and the VA (Veteran Affairs) may help pay for care, but these programs have strict financial and complex legal requirements. For example,
Medicaid asset limits are:
- $2,000 for Medicaid Patient
- Non-Medicaid Spouse: ½ of countable assets of couple (maximum for 2018 of $123,600)
Experienced legal counsel can help guide you through the confusing legal maze and help you steer clear of mistakes that may threaten your eligibility for benefits. If you have elderly parents and would like to learn more about ways that you can help them finance their care such as reverse mortgages and disability insurance, see our previous blog on “Helping my Aging Parents Pay for Care”.
The legal needs for aging individuals are broad and complex. Counsel from experienced elder law attorneys can assist you in making the best decisions for your circumstances. With concise pre-planning, many seniors can qualify for the maximum government benefits available to supplement their own personal funds and protect spouses or disabled children from asset depletion.