ADVICE FOR PLANNING WITH ELDERLY CLIENTS

As Baby Boomers age and demographics continue to shift, more and more families are faced with a variety of issues on how best to help elderly parents or grandparents with the transitions of life. Perhaps a senior loved one is experiencing dementia or other cognitive decline and can no longer safely remain in their home. Or perhaps elderly Mom and Dad are trying to plan for their sunset years and need to create an estate plan to protect assets and make sure their wishes are clearly spelled out. There are several important issues families should consider.

First, many families have concerns regarding the cost of long-term care. Failing to plan appropriately for long-term care can result in an entire estate being consumed by long-term care facility fees, which may impact a potential inheritance for beneficiaries. Long-term care facilities are very expensive and can quickly eat through an individual’s life savings. The net result is that oftentimes an individual’s entire estate will be used for long-term care, leaving little behind for their children, grandchildren, or future generations.

If an individual qualifies for Medicaid (either because they have exhausted their resources by paying for long-term care or have not done any long-term care planning), estate recovery may leave little or no inheritance for future generations. Estate recovery laws vary by state but, generally, it is the state’s attempts to recover the cost of public health benefits received during the decedent’s life from the decedent’s estate. When a person becomes a resident of a long-term care facility, the bills accumulate rapidly and oftentimes will quickly outpace the individual’s ability to privately pay for services received. Once the individual’s financial resources have been depleted, there often is no alternative but to apply for state Medicaid benefits to cover the cost of care. Depending on how long the person lives and what level of services the person requires, the cumulative total over the person’s lifetime for these state health benefits may well reach in the hundreds of thousands of dollars.

There are options available for protecting assets for future generations, such as gifting strategies. However, detailed planning is required to accomplish those goals.  It is important to work with an experienced estate planning/elder law attorney for any such planning, as many states employ “lookback” periods for a set number of years prior to the Medicaid application.  Gifting or transfers during this time period may disqualify an otherwise qualified applicant from receiving public benefits.

Second, many families have also encountered issues when a loved one passes away without an estate plan, which can result in an expensive and drawn-out probate proceeding. Probate is the process of settling a decedent’s affairs through the court system. If a person passes away with no estate plan in place, state intestacy statutes will typically dictate who will inherit. There are strict rules regarding surviving spouses and children, whether those children are joint or from a previous relationship. In an era where blended families are becoming more and more common, this can cause family infighting and permanent damage to relationships. For this reason, it is especially important to encourage elderly loved ones to make sure they create an estate plan, or if they set up an estate plan decades ago, that they review those documents and update if needed. Estate plans will typically be comprised of a Last Will & Testament, a Durable Power of Attorney for Finances, a Health Care Power of Attorney, and other documents such as Revocable Trusts, as appropriate.

Finally, seniors should consider what may happen if they become incapacitated during life and have not designated proper decision makers to handle affairs on their behalf. In such cases guardianship may become necessary, which can be a time-consuming and expensive process. The individual ultimately appointed by the court as guardian may or may not be who the incapacitated person would have actually intended. Here again, there is high potential for family infighting and discord. It is much more efficient, from a planning and cost perspective, to engage in planning before an incapacity event occurs.

Transitions are rarely easy and sometimes it can be difficult to know when is the right time to address these issues with elderly loved ones.  By starting conversations early and building a relationship with a trusted professional, families can ensure they are on the right track and hopefully prevent problems down the road. If you or an elderly loved one are in need of elder law or estate planning guidance, please contact our experienced attorneys today to set up a free consultation.