CENTER FOR ESTATE PLANNING

Using Estate Planning for the Needs of the Elderly

As the population ages, there are more people who are senior citizens, with very specific needs for health care and legal concerns that they had not anticipated.  Besides estate planning needs, elder law attorneys assist their clients in preparing for long-term healthcare needs, applying for government programs, dealing with financial fraud, physical abuse and establishing guardianships.  If you have elder law or estate planning related legal questions, call our firm today to schedule a consultation with an estate planning lawyer.

What if the Senior Citizen has Health Concerns?

If a senior citizen has health care issues, many times that person will want to stay in their own home, particularly when the person has their mental faculties intact.  If the senior is physically impaired, that may require additional care within the person’s home to help take care of the senior, such as a companion, nurse, meals on wheels or other assistance.  If the senior has the assets, many times it is a good idea to look to long term care insurance before the need ever arises to help defray the cost of those services to allow that elder person to stay in their own home.

If staying in the home is not an option as the senior does not have long term care insurance and cannot afford to pay for the additional healthcare professionals to come into their home, the senior may have to go into a nursing home.  Medicare is not of much assistance towards this care, as it only covers the first 20 days and a portion of the next 80 days of care in a nursing home, as long as the senior is receiving treatment and is improving.  Medicare does not cover any long term care in a private home.  The only government program that may pay for nursing home care is Medicaid, which is designed to help low income people with their medical bills, and nursing home costs.  In order to qualify for Medicaid, there are certain income limitations, as well as limitations in the amount of assets that you may possess.  If you possess more assets than the limitation or more income than the limitation, you do not qualify or you may have to spend down your assets until you do qualify.

As you might guess, at the time the senior needs that extra care, if that senior has assets, he or she may have to use most of them to pay for his own care prior to Medicaid.  This may cause the assets accumulated by seniors over a lifetime to be wiped out.  To avoid this, the elder person can make gifts of his or her assets over time to reduce the assets below the level to qualify for Medicaid.

There are two important caveats to consider with respect to such gifts.   First, once the senior gifts the funds or assets, they do not control those assets anymore.  If they need them for some reason, they may be already spent by the recipient of the gift.  Second, under Medicaid rules, there is a five year lookback period for gifts made.  In other words, any gifts made in the five years prior to the date the senior goes into a nursing home will be considered assets of the senior, resulting in the senior failing to qualify for Medicaid until similar amounts are used for the care of the senior.  As a result, this strategy does not allow the senior to transfer assets right before going into a nursing home.  An estate planning attorney can work with the elder person to help plan ahead for their residential care needs while attempting to minimize the financial impact on the elder person’s estate.

Guardianships

When a person can no longer care form himself or is not able to manage his own affairs, many times it is appropriate to ask the court to appoint a guardian , who will make financial decisions under court supervisions for a person who lacks capacity to make those decisions for himself.  The costs and expenses of the guardian, including any attorney’s fees, are paid by the estate of the incapacitated person.

Using a guardian is usually not the preferred route, as there is no guarantee that the disabled person’s goals and desires will be known by the guardian.  A good estate plan may preclude the need for the appointment of a guardian.  The estate plan may include a durable power of attorney in which the person appoints someone to act for them, rather than having the court choose who should act for him.  A living trust will have a successor trustee chosen previously by the disabled person who will manage the assets of the disabled person.  A power of attorney for healthcare allows a person to name someone to make healthcare decisions in the event that they are unable to make such decisions for themselves.

Conclusion

There are many special concerns and issues that must be addressed for the elderly client.  It is important to plan early and draft a plan that allows the person to control who will handle things for them if they are not able.  The elder person should stay in control by virtue of the plan that is drafted.  If you have any questions about estate planning or need to have estate planning documents drafted, contact our firm to schedule a consultation with an estate planning attorney.