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Estate Planning For The Senior Adult

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Norman ("Gene") E. Richards
Foster Swift Estate Planning Insights
Summer 2012

May was designated National Elder Law Month by the National Academy of Elder Law Attorneys (NAELA). "Elder Law" attorneys use a variety of legal tools and strategies to address the special concerns of "senior adults". These concerns often include estate planning, dealing with incapacity, finding quality long term care (whether in assisted living or a nursing home), and qualifying for government benefits to pay for long term care (such as Medicaid and VA benefits).

As many as one out of eight people over the age of 65 and one out of two over the age of 85 will be at risk for dementia-related incapacities. According to a recent USA Today article, as many as 5 million people in the U.S. today have a form of Alzheimer's, and that number is expected to triple by 2050.

Senior adults facing an incapacity need specialized estate planning. Estate planning often focuses on avoiding probate, protecting assets from creditors, reducing taxes, and distributing inheritances. In addition to these concerns, many senior adults also have concerns about financial security, preserving their independence and dignity, having enough money to pay for good quality care, and taking care of loved ones. Foster Swift attorneys can help balance all these concerns with comprehensive, holistic planning and precisely tailored estate plan documents.

As people age, their estate plan and legal documents may not be aging with them. Young and middle-aged clients typically engage in planning before there is any hint of a chronic illness or threat to mobility or capacity. Many make the mistake of thinking that a legal document will suffice for every situation. The reality is that legal and estate plan documents need to be tailored to the specific needs a client faces in their present season of life. A seventy-five year old client with grown children may be less concerned about their children’s inheritance than they are about the implications of a diagnosis of Parkinson’s or dementia. As people transition through the different seasons and circumstances of life they should make sure that their plans are transitioning with them.

How can senior adults make sure they have the right plan and estate documents in place?

  • Plan as early as possible. Too often, senior adults wait until a crisis hits before asking an attorney for help. Usually the crisis triggers when a loved one is diagnosed with dementia, has a chronic illness, or is admitted to a nursing home for rehab. At that point some planning opportunities may not be available. Thorough pre-planning can preserve options and reduce complications when a crisis hits a family. The attorney should be contacted as soon as there is a hint of a health problem with long-term implications.
  • Update existing estate plan documents. As a rule of thumb, we recommend that an estate plan should be reviewed at least every five years to account for changes in life, asset values, and law. In addition, older documents may not include important powers needed by senior adults for creative problem solving such as allowing transfers of assets between spouses, authority over retirement plans, and the ability to take steps to qualify for Medicaid, VA and other government benefits. If important powers are missing, responsible family members may not be able to carry out the intended plan or take advantage of legal strategies that could save assets.
  • Carefully select caregivers and money managers. A plan is only as good as the persons authorized to execute it. Senior adults must carefully select the persons who will act on their behalf, especially when facing the increased likelihood of an incapacity. The best choice is not always a spouse or the oldest child. Distinctions need to be made between those qualified to make health care decisions and those who will make sound financial decisions. If necessary, two or more persons can serve at the same time. Accountability can be built into documents to reduce the risk of inappropriate decisions and attempt to prevent family squabbles.
  • Position for government benefits, if available. Long term care is extremely expensive, with nursing homes costing $70,000 to $90,000 per year. Long term care costs may not be covered by Medicare or private health insurance. And many senior adults do not have the personal resources to pay for the care they will need. Public assistance may be available through Medicaid and the VA to help pay for care, but these programs have strict financial and complex legal requirements. Foster Swift elder law attorneys can guide clients through the confusing legal maze and help them steer clear of mistakes that can jeopardize eligibility for benefits. With advance planning and the help of knowledgeable attorneys, many senior adults can position themselves to qualify for the maximum government benefits available to supplement their own personal funds, and protect spouses or disabled children from asset depletion.
  • Avoid costly mistakes. When faced with a health crisis and the threat of costly care, senior adults and their families often make decisions that hurt them financially. Examples of potentially costly mistakes include: giving money/property away; signing deeds; adding children's names to accounts or real estate; selling assets; buying inappropriate financial products; and acting without legal advice. These and other mistakes can result in unnecessary loss of assets and ineligibility for Medicaid and VA benefits.
  • Recognize special planning situations. There are some situations where an attorney can be especially helpful. These include:
    1. Married couples where only one spouse needs skilled or nursing home care.
    2. Senior adults with fading mental capacity.
    3. Senior adults without surviving or dependable family members to oversee their care or manage their assets.
    4. Owning real estate or a business interest with little available cash to pay for assisted living or nursing home care.
  • Build a team of professionals. The best plans are built on the combined knowledge and experience of a team. The team may include select family members, an attorney, physicians, care coordinators, and financial advisors. When surrounded by a team, a senior adult can face the future with assurance that their needs will be met and decisions will be made in their best interest.

Senior adults face many challenges to their health and financial security. In order to overcome these challenges it is essential to have an estate plan that is current and tailored to their specific needs. The estate planning and elder law attorneys at Foster Swift skillfully and compassionately assist senior adults and their families through a comprehensive planning to develop the right plan for the right time.