Making Sure Your Aging Parent has the Correct Estate Plan in Place

It’s a delicate discussion, but when parents are aging, their children should find out if their parents have several basic estate planning documents in place and talk about their final wishes. If they have not done any planning, now is the time—before a crisis occurs.  Here at The Dorcey Law Firm, our goal is to transform families for generations to come; something we can only do through proper proactive planning.

The Monterey Herald’s recent article, “Financial planning: Making sure Mom is taken care of,” says to first make sure that they have their basic estate planning documents – a will or trust, power of attorney, and advanced healthcare directives – in place. It is important to be sure these documents fully reflect your parent’s desires. An advanced healthcare directive lets them name a person to make health care decisions on their behalf, while a power of attorney allows a named person to make financial decisions.

Based on the way in which the forms are written, the agent or surrogate can have broad authority, including the ability to access bank accounts, consent to or refuse medical treatment, or to leave instructions for health care.  Big decision, such as whether or not to be resuscitated or have life prolonged artificially, can also be put in writing, thus removing this tough choice from a child or other loved one. To limit these instructions in any specific way, it is important to talk with an experienced attorney, and have these wishes in writing.

Another key document to have is a last will & testament or living trust.  When determining if a trust is advisable, there are many factors to consider, particularly when the goal is to avoid probate after passing away.  These factors include the type of assets, and whether they are held jointly or allow for beneficiary designations; the beneficiaries ages and financial stability; whether planning for future divorce or creditor is a concern; and many more. You should conduct a full inventory of your parent’s accounts, including where they are held and how they are titled, as well as gathering the named beneficiaries on all accounts and policies.

It is also important not to make any major changes without consulting your attorney first.  For example, if your parent has a brokerage account with low-cost basis investment, you will not want to change this to a joint ownership account. The step-up in cost basis that assets receive at the time of death makes it better for the account to remain in their individual name. While you may gain control of the asset doing that (something that can also be accomplished through the power of attorney), you will lose the step up in basis.  A beneficiary designation may suffice.

To inquire more on how our law firm helps families plan for their long-term care needs, whether years in advance or after a health care crisis has occurred, please contact our office for a free consultation at (239) 418-0169.

Family Caregivers and Home Care

Caring for an ailing family member is difficult work, but it doesn’t necessarily have to be unpaid work.  Traditionally, Medicaid has paid for long-term care in a nursing home, but because most individuals would rather be cared for at home and home care is cheaper, all 50 states now have Medicaid programs that offer at least some home care. In some states, even family members can get paid for providing care at home.  The programs vary by state, and also include some non-Medicaid-related programs.

Medicaid’s program began as “cash and counseling,” but is now often called “self-directed,” “consumer-directed,” or “participant-directed” care.  The first step is to apply for Medicaid through a home-based Medicaid program.  Medicaid is available only to low-income seniors, and each state has different eligibility requirements.  Medicaid application approval can take months, and there also may be a waiting list to receive benefits under the program.

The state Medicaid agency usually conducts an assessment to determine the recipient’s care needs—e.g., how much help the Medicaid recipient needs with activities of daily living such as bathing, dressing, eating, and moving.  Once the assessment is complete, the state draws up a budget, and the recipient can use the allotted funds to pay for goods or services related to care, including paying a caregiver.  Each state offers different benefits coverage.  Some services that Medicaid may pay for include the following:

  • In-home health care
  • Personal care services, such as help bathing, eating, and moving
  • Home care services, including help with household chores like shopping or laundry
  • Caregiver support
  • Minor modifications to the home to make it accessible
  • Medical equipment

The Medicaid applicant must apply for Medicaid and select a program that allows the recipient to choose his or her own caregiver, often called “consumer directed care.”  Recipients can choose to pay a family member as a caregiver, but states vary on which family members are allowed.  For example, most states prevent caregivers from hiring a spouse, and some states do not allow recipients to hire a caregiver who lives with them.  Most programs allow ex-spouses, in-laws, children, and grandchildren to serve as paid caregivers, but states typically require that family caregivers be paid less than the market rate in order to prevent fraud.

In addition to Medicaid programs, some states have non-Medicaid programs that also allow for self-directed care. These programs may have different eligibility requirements than Medicaid and are different in each state. Family caregivers can also be paid using a “caregiver contract,” increasingly used as part of Medicaid planning.

To inquire more on how to utilize family caregivers for long-term care needs, whether for yourself or for an aging parent or relative, please contact our office for a free consultation at (239) 418-0169.

Next Steps When the Diagnosis is Alzheimer’s

Next Steps When the Diagnosis is Alzheimer’s: We hope to enjoy out golden years, relaxing after decades of working and raising children. However, as we age, the likelihood of experiencing health issue increase. That includes Alzheimer’s disease and other forms of dementia.

Learning that a loved one has Alzheimer’s or other diseases that require a great deal of health care is devastating to the individual and their families. The progressive nature of these diseases means that while the person doesn’t need intensive health care yet, eventually they will. According to an article from Newsmax, “5 Insurance Steps After Alzheimer’s Strikes Loved One,” the planning for care needs to start immediately.

Alzheimer’s Disease International predicts that 44 million individuals worldwide have Alzheimer’s or a similar form of dementia, and 25% of those living with it never receive a diagnosis. Healthcare, including assisted living, memory care and in-home care is expensive. Health insurance is an important component of managing the ongoing expenses of living with Alzheimer’s.

Look at your existing policies. There are different types of coverage, depending on the policy type and company. Review current insurance policies to determine if the level of coverage is acceptable and how much will be required to be paid out-of-pocket. See if there’s existing coverage for long-term care, hospital care, doctors’ fees, prescriptions and home health care.

Maintain those policies. The Patient Protection and Affordable Care Act does offer some protections for those diagnosed with early onset Alzheimer’s. They can now access government subsidies to help them purchase health insurance and the Affordable Care Act prohibits pre-existing condition exclusions and cancellation, because the policyholder is considered high cost.

Look into long-term care insurance. This is a way to protect the patient and the family financially, when the day arrives when long-term care is necessary. When diagnosed with Alzheimer’s, a person isn’t eligible for long-term care insurance.

In addition to verifying and reviewing insurance coverage, there are some additional tasks that every family should address in the early stages of a diagnosis.

Sign an advance directive. This document allows patients to voice how they want their healthcare and decisions handled, before they are no longer capable of making decisions for themselves. In addition, they should have a living will that states their wishes for medical treatment, a designated power of attorney to can make financial decision, and a DNR (Do Not Resuscitate) order, if that is their wish.

Get estate planning done. Time is of the essence, as the estate plan must be completed while the person still has the mental capacity to understand what they are doing. Three documents are necessary: a last will and testament, a power of attorney so that an agent be named can handle finances and a health care power of attorney for health care decisions. An estate planning attorney will be able to work with the family to make any necessary legal preparations.

Reference: Newsmax (June 28, 2019) “5 Insurance Steps After Alzheimer’s Strikes Loved One”

 

 

Planning for the Impact of Medicaid

Planning for the Impact of Medicaid: One of the most complicated and fear-inducing aspects of Medicaid is the financial eligibility. The rules for the cost of long-term care are complicated and can be difficult to understand. This is especially true when the Medicaid applicant is married, as reported in the Delco Times in the article “Medicaid–Protecting Assets for a Spouse.”

While each state is different, the State of Florida mandates that to be eligible for Medicaid long-term care, the applicant may not have more than $2,000 in countable assets in their name, and a gross monthly income of not more than $2,313. That’s the 2019 asset and income limits.

There are Federal laws that mandate certain protections for a spouse, so they do not become impoverished when their spouse enters a nursing home and applies for Medicaid. This is where advance planning with an experienced elder law attorney is needed. The spouse of a Medicaid recipient living in a nursing home, who is referred to as the Community Spouse, is permitted to keep as much as $126,420, known as the “Community Spouse Resource Allowance,” without putting the Medicaid eligibility of the applicant spouse who needs long-term care at risk. The rest of the applicant spouse’s assets must be spent down. The community spouse’s assets will either have to be spent down or “planned for”. A seasoned elder law attorney is essential in this regard.

Countable assets for Medicaid include all belongings. However, there are a few exceptions. These are personal possessions, including jewelry, clothing and furniture, one car, the applicant’s principal residence (if the equity in the home does not exceed $585,500 in 2019) and certain retirement accounts under certain circumstances.

Unless an asset is specifically excluded, it is countable.

There are also Federal rules regarding how much the spouse is permitted to earn. This varies by state. In Florida as of 2019, the community spouse’s income is unlimited.

The rules regarding requests for additional income are also very complicated, so an elder law attorney’s help will be needed to ensure that the spouse’s income aligns with their state’s requirements.

These are complicated matters, and not easily navigated. Talk with an experienced elder law attorney to help plan in advance, if possible. There are many different strategies that can be implemented to help preserve & protect your assets and they are best handled with experienced professional help.

Reference: Delco Times (June 26, 2019) “Medicaid–Protecting Assets for a Spouse” and edited for Florida reference. 

Think of Estate Planning as Stewardship for the Future

Despite our love of planning, the one thing we often do not plan for, is the one thing that we can be certain of. Our own passing is not something pleasant, but it is definite. Estate planning is seen as an unpleasant or even dreaded task, says The Message in the article “Estate planning is stewardship.” However, think of estate planning as a message to the future and stewardship of your life’s work.

Some people think that if they make plans for their estate, their lives will end. They acknowledge that this doesn’t make sense, but still they feel that way. Others take a more cavalier approach and say that “someone else will have to deal with that mess when I’m gone.”

However, we should plan for the future, if only to ensure that our children and grandchildren, if we have them, or friends and loved ones, have an easier time of it when we pass away.

A thought-out estate plan is a gift to those we love.

Start by considering the people who are most important to you. This should include anyone in your care during your lifetime, and for whom you wish to provide care after your death. That may be your children, spouse, grandchildren, parents, nieces and nephews, as well as those you wish to take care of with either a monetary gift or a personal item that has meaning for you.

This is also the time to consider whether you’d like to leave some of your assets to a house of worship or other charity that has meaning to you. It might be an animal shelter, community center, or any place that you have a connection to. Charitable giving can also be a part of your legacy.

Your assets need to be listed in a careful inventory. It is important to include bank and investment accounts, your home, a second home or any rental property, cars, boats, jewelry, firearms and anything of significance. You may want to speak with your heirs to learn whether there are any of your personal possessions that have great meaning to them and figure out to whom you want to leave these items. Some of these items have more sentimental than market value, but they are equally important to address in an estate plan.

There are other assets to address: life insurance policies, annuities, IRAs and other retirement plans, along with pension accounts. Note that these assets likely have a beneficiary designation and they are not distributed by your will. Whoever the beneficiary is listed on these documents will receive these assets upon your death, regardless of what your will says.

If you have not reviewed these beneficiary designations in more than three years, it would be wise to review them. The IRA that you opened at your first job some thirty years ago may have designated someone you may not even know now! Once you pass, there will be no way to change any of these beneficiaries.

Work with an experienced estate planning attorney to create your last will and testament. For most people, a simple will can be used to transfer assets to heirs.

Many people express concern about the cost of estate planning. Remember that there are important and long-lasting decisions included in your estate plan, so it is worth the time, energy and money to make sure these plans are created properly.

Compare the cost of an estate plan to the cost of buying tires for a car. Tires are a cost of owning a car, but it’s better to get a good set of tires and pay the price up front, than it is to buy an inexpensive set and find out they don’t hold the road in a bad situation. It’s a good analogy for estate planning.

Reference: The Message (June 14, 2019) “Estate planning is stewardship.”

 

Talking About Financial Planning with Aging Parents

Talking About Financial Planning with Aging Parents: Unless you are raised in a family that talks about money, values and planning, starting a conversation with elderly parents about the same topics can be a little awkward. However, it is necessary.

In a perfect world, we’d all have our estate plans created when we started working, updated when we married, updated again when our kids were born and had them revised a few times between the day we retired and when we died. In reality, a recent report by Merrill Lynch and Age Wave says that only half of Americans have a will by age 50.

More than 50% said their lack of proper planning could leave a problem for their families.

CNBC’s recent article, “How to have ‘the (money) talk’ with your parents,” explains that, according to the study, just 18% of those 55 and older have the estate planning recommended essentials: a will, a health-care directive and a power of attorney.

To start, get a general feel for your aging parents’ financial standing.

This should include where they bank, and whether there’s enough savings to cover their retirement and long-term care. If they don’t have enough saved, they’ll lean on you for support.

Next, start a list of the legal documents they do have, such as a power of attorney, a document that designates an agent to make financial decisions on their behalf and a health-care directive that states who has the authority to make health decisions for them.

You should include information on bank accounts and other assets. It is also important to list their passwords to online accounts and Social Security numbers.

Next, your parents should create an estate plan, if they don’t already have one. When you put a plan in place for how financial accounts, real estate and other assets will be distributed, it helps the family during what’s already a difficult time. Having an estate plan in place keeps the courts from determining where these assets go.

While you’re at it, talk to your own children about your financial picture.

Many people think they don’t need to yet have the talk. However, the perfect time to have the conversation, is when you are healthy.

Here’s an encouraging fact: young adults who discuss money with their parents are more likely to have their own finances under control. They are also more likely to have a budget, an emergency fund, to put 10% or more of their income toward savings and have a retirement account. That’s all according to a separate parents, children and money survey from T. Rowe Price.

For many families, having a conversation during a family meeting at their estate planning attorney’s office while working on their estate plan, is a good way to start a dialogue. Working with a professional who has the family’s best interest in mind, with two or even three generations in the room, can prevent many stressful problems for the family in the future.

Reference: CNBC (June 30, 2019) “How to have ‘the (money) talk’ with your parents”

 

 

The Decedent’s Debts: Who’s on First?

The Decedent’s Debts: Who’s on First? Estate planning attorneys are used to family members who, for some reason, determine that credit card bills need to be paid off first, when a loved one dies. It’s not the first thing to pay, advises The Mercury its article “There is a priority of debts when you die.”

In fact, credit card debt is unsecured debt. It is, therefore, on the bottom of a list of priorities in many states. Paying debts is an important part of executor responsibilities, but there is an order to what debts must be paid first. If there are cash flow issues for the estate, this is critical information.

First, the funeral home, nursing home and un-reimbursed medical bills should be paid within six months of the death, as well as administrative expenses. Administrative expenses include the cost of probate, which is filing the will and professional fees, including the attorney’s fees, executor’s fees, account fees for final tax returns, etc. Don’t ignore the funeral bill.

Nursing home and medical bills incurred within six months of death are also important to pay. If the executor believes the medical bill is to be paid by health insurance, Medicare or Medicaid, get this in writing. If Medicaid paid for care, there may be a claim under Estate Recovery. In Pennsylvania, the Department of Human Services; Third Party Recovery, could become a creditor of the estate, when a large asset like the home is sold.

This is a time when an attorney experienced in elder law and trusts and estates can help sort through what needs to be paid and when and where the money should come from.

There are times when an executor pays for administrative expenses or the cost of the funeral from their own pocket. Anyone who does this must maintain careful records and be sure to be repaid by the estate, after an estate account is established. That also applies for any expenses paid from a joint account with the decedent.

The responsibility of the executor is to pull together the assets that will pass through the will and the bills or debts that need to be paid, then to pay the debts, including taxes and expenses of probate, then distribute the remaining funds to beneficiaries, as directed by the will.

Some assets do not pass through the will, like joint bank accounts, payable on death and transfer on death accounts, life insurance and retirement funds. With the exception of life insurance, they may be subject to inheritance taxes, if the decedent’s state of residence has such a tax.

If there are not enough assets to pay the bills, states have lists of the order of distribution. At the top of the list: costs of the administration of the estate and funeral expenses. Medical bills from the most recent six months are given higher priority than older medical bills. Credit card bills are at the bottom of the list.

Secured debt, like the mortgage on the house or a loan on a car need to be addressed. These may be sold to pay off the debt.

Executors or family members who are contacted by creditors demanding payment need to know whether they are responsible or not. An experienced estate planning attorney will be able to help you work your way through the debts and financial responsibilities of the decedent.

Reference: The Mercury (June 18, 2019) “There is a priority of debts when you die”

 

What Do I Need to Know About Special Needs Trusts?

What Do I Need to Know About Special Needs Trusts? One of the hardest issues in planning for a child with special needs, is trying to calculate how much money it’s going to cost to provide for the child, both while the parents are alive, and after the parents die.

A recent Kiplinger’s article asks How Much Should Go into Your Special Needs Trust?” As the article explains, a special needs trust, when properly established and managed, lets someone with a disability continue getting certain public benefits.

Even if the child isn’t getting benefits, families may still want the money protected from the child’s financial choices or those who may try to take advantage of them. A trustee can help manage the assets and make distributions to the child with special needs to supplement his lifestyle beyond what public program benefits provide.

A child with special needs can have multiple expenses, and the amount will depend on the needs and lifestyle of the family and the child’s capabilities. One of the biggest unknowns is the cost of housing. If the plan is for the child to live in a private group home-type situation, there are options. Some involve the purchase of a condo in a building with services for those with special needs. Many families also add into the budget eating out once a week, computers and phones and other items.

When the parents pass away, this budget will need to increase, because what the parents did for their child must be monetized.

Fortunately, public benefits can usually offset many of the basic costs for a child with special needs. For example, the child may be eligible for Supplemental Security Income (SSI), as well as a Section 8 housing voucher and SNAP food assistance. When the parents retire, SSI is typically replaced with Social Security Disability Insurance (SSDI), which is one-half the parent’s payment.

When the parent dies, this payment becomes three-quarters of that amount. Adult Family/Foster Care may be available. That will depend on the group housing situation.

The child may also be working and bringing in additional income (minus whatever benefits may be offset by this income).

It’s vital to do a complete analysis of the future costs to provide for a child with special needs, so parents can start saving and making adjustments in their planning right away.

The laws on this planning may vary from state to state, so be sure to contact an experienced elder law attorney.

Reference: Kiplinger (June 10, 2019) “How Much Should Go into Your Special Needs Trust?”

 

Is Estate Planning Really Such a Big Deal?

Delaying your estate planning is never a good idea, says The South Florida Reporter, in the new article entitled “Why Estate Planning Is So Important.” That’s because life can be full of unexpected moments and before you know it, it’s too late. Estate planning is for everyone, regardless of financial status, and especially if they have a family that is very dependent on them.

Estate planning is designed to protect your family from complications concerning your assets when you die. Many people believe that they don’t require estate planning. However, that’s not true. Estate planning is a way of making sure that all your assets will be properly taken care of by your family, if you’re no longer able to make your decisions due to incapacity or death.

Without estate planning, a court will name a person—usually a stranger—to handle your assets and finances when you die. This makes the probate process lengthy and stressful. To protect your assets after you die, you need to have an estate plan in advance. You also need to address possible state and federal taxes. Your estate plan is a way to decrease your tax burdens.

With a proper estate plan, your final wishes for your assets will be set out in a legal document. With a will or trust, all of your assets will be distributed to your beneficiaries, according to your final wishes.

This will also save your family from having to deal with the distribution of your assets, which can become very complicated without a will. There can also be family fights from the process of distributing assets without a will.

It is also important to remember that if you do create an estate plan, you’ll need to update it every once in a while—especially if there’s a significant event that happened in your life, like a birth, a death, or a move. Your estate plan should be ever-changing, since your assets and your life can also change.

It’s vital that you work with an experienced estate planning attorney, who can help you draft the legal documents that will make certain your family is taken care of after you pass away.

Reference: South Florida Reporter (June 12, 2019) “Why Estate Planning Is So Important”

 

How To Avoid Senior Financial Abuse

How To Avoid Senior Financial Abuse:  Medical research has demonstrated a clear link between accelerated cognitive aging to financial vulnerability, even without any kind of dementia. In other words, as described in the article “Be prepared to avoid financial exploitation” from SBJ, we may feel fine and we may be fine, but our cognitive abilities change as we age.

One of the first signs of cognitive decline is diminished financial capacity, or the progressive loss of a person’s ability to manage banking and investment decisions. If you have an aging parent, you may have seen them struggle with tasks that were previously easy for them to do, like balancing a checkbook or tracking investments.

It’s estimated that for every 44 cases of senior financial abuse, only one is reported to authorities.  In a 2010 study by a nonprofit, one in five adults 65 and older have been a victim of financial fraud or manipulation.

There are several actions that can be taken to mitigate the risk of financial fraud and exploitation. However, the first one is planning before signs of cognitive impairment are seen. Here’s how:

Financial preparation. First, designate a trusted emergency contact for all financial accounts to receive information, if the institution suspects exploitation. Have an estate planning attorney create a durable power of attorney to appoint a trusted individual to act on your behalf. “Durable” means that it will remain in effect, even if you become incapacitated.

Prepare a will to dispose of assets after your death.

Don’t discuss your will or any financial matters with people who are new in your life. That includes caregivers, the new neighbor down the street or people who call claiming some distant connection.

Monitor your credit report and stay up to date with the latest in scams. Seniors are now being targeted by thieves presenting themselves as calling from the Social Security Administration and threatening to cut off benefits. The SSA does not call to threaten individuals, and it never asks for payment in gift cards.

Plan how to transition your financial accounts. That may mean having a professional manage your finances, but make sure they are a licensed fiduciary, so that your interests must come first. Your estate planning attorney may know of these services.

Not all financial institutions have addressed the issue of safeguarding customers from financial fraud and exploitation. Find out what your bank, financial advisor and investment companies are doing. Do they monitor accounts for unusual transactions? What tools are available to account holders to detect suspicious activity?

Speak with your estate planning attorney about making sure all  your legal documents are properly prepared for any cognitive decline, to protect yourself and your family.

Reference: SBJ (June 10, 2019) “Be prepared to avoid financial exploitation”