Good news, bad news. The good news is that Americans are living longer than ever. The bad news is that we eventually wear out physically, mentally or both. It is a classic Catch-22.
What is Elder Law?
Elder Law encompasses a very broad are of law. While estate planning is of concern to people of all ages, elder law deals specifically with unique issues facing an aging population. For example, elder law includes basic estate planning, but it also addresses long-term care planning and preventing elder abuse and neglect. Accordingly, although elder law as a general topic includes estate planning, not all estate planning involves elder law.
Elder Law 101
The number one fear of most people as they approach their golden years is losing control over their lives, their money and where they live. No one wants to give up their freedom of choice over such fundamental matters. Therefore, it is very important to have a plan in place should you become legally incapacitated, whether due to an injury or illness, and are no longer able to handle your own money or to make medical decisions for yourself. The degree to which you cover all of the bases will enhance your independence.
Many people, especially seniors, are reluctant to appoint someone to act for them if they become incapacitated. Why? Because they want to maintain “control” as long as they can. Who can blame them? However, by not having a plan in place, you ultimately risk losing the control you desire. By default, a probate court will appoint someone of its choosing to make your decisions…instead of your own first, second or even third choices.
On the other hand, a proper plan includes the use of legal documents that allow you to remain in control. For example, a durable power of attorney is a document that allows you to name a trusted family member or friend to make financial decisions for you, if you are incapacitated. An advanced directive for healthcare allows you to determine the course of your health care when you cannot communicate your won wishes. For example, to what extent do you want to remain on a breathing machine or a feeding tube if you become permanently unconscious or terminally ill?
Without a durable power of attorney and an advanced medical directive, someone will have to go to the probate court to be appointed as guardian over your “person” and as conservator over your assets upon your incapacity. After all, your decisions still must be made and your taxes paid. Coincidentally, this court process can be expensive, a hassle for your loved ones and will expose your personal, financial and health care circumstances to the public record. Get the appropriate legal documents in place as the first step in your elder law planning.
Incapacity Planning Essentials
Long-Term Care Concerns
Elder Law also involves planning for long-term care and how to pay for it. There are different long-term care options depending on the level of care needed, including:
- In-home care
- Independent living
- Assisted living; and
- Skilled nursing care
Each of these options costs money and can be expensive. And the costs increase as the level of care provided increases. Unfortunately, there are only three ways to pay for long-term care: out of pocket, long-term care insurance or the government.
Most long-term care insurance pays for all of the types of care. However, most people do not have it and wait too long to apply for it. As you get older and your health deteriorates, the premiums increase and you may not be insurable. For those who do have these policies, they are a great way to pay for care.
Many people assume that Medicare will pay for long-term care. While Medicare pays for some care on a very short-term basis, it does not pay for care on a long-term basis. As a government program, Medicaid will only pay for nursing home care, if you qualify financially.
It is difficult for most people to qualify for Medicaid. In fact, it will not pay if you have too much income or too many assets. These amounts vary slightly by state, with certain assets being “countable” and others “non-countable” when determining your eligibility for benefits. Unfortunately, any amount paid by Medicaid on your behalf is considered a “loan” from the government that is repaid from your “non-countable” assets at death.
Fortunately, there are ways to plan ahead to more easily qualify for Medicaid and to protect more of your assets for your loved ones. Medicaid planning is another important but often overlooked aspect of elder law. If you are a wartime veteran, then you may qualify for a special Aid & Attendance benefit through the Department of Veterans Affairs. This is also subject to eligibility rules.
In the final analysis, unless you have long-term care insurance or qualify for one of these government benefits, you must pay for care out of your own pocket. If you do not have enough income to pay, you must liquidate your savings and other assets to pay for your care.
Another concern addressed by elder law is the prevention of elder abuse and neglect. With our aging population, the incidents of elder abuse and neglect have reached epidemic proportions. The harm to senior victims can be physical, mental, financial or all three. It is important to build in safeguards to your plan to ensure that you are not subjected to one or more of these forms of elder abuse and neglect by appointing the decision-makers you know and trust in advance.
As Bette Davis famously quipped, “Getting old ain’t for sissies.” Nevertheless, with the right elder law planning now, you can preserve your control and more of your gold in your golden years.
Elder Abuse & Neglect
Being a caregiver to a senior loved one can be difficult, even when you are next door or across town. But what if you are several time zones away? Trying to provide (or monitor) care from a distance can seem almost impossible. When you are far away, it is difficult to know what to do and where to turn when your parent or loved one starts showing signs of aging and needs some type of ongoing assistance.
Long-Distance Caregiving Concerns
Most seniors do not want to admit that they are slipping. Who would? Even if they do, most do not want to ask for help. Understandably; seniors do not want to give up control of their lives, do not want to give up their car keys and do want to manage their own money. Unfortunately, with increasing birthdays, come increasing risks.
Take driving, for example. As we age, our reflexes slow. A car accident can injure your senior loved one. It can even wipe out their life savings, if the accident injures or kills another person. Many scammers also prey on seniors and devise schemes to get their money.
Take Action Now
There are things that you can do to minimize these risks to your loved ones, protect them and allow them to remain in control as long as possible. First, have “the conversation.” Sit down and talk with them about these risks. This can be the most difficult part of all.
When you have this talk, you should discuss things that can happen to take away their independence and security. Discuss the importance of putting a plan in place so everyone is on the same page.
The talk should include:
- Their wishes for emergency or end-of-life medical care (i.e., life support, feeding tubes, blood transfusion, organ dontions etc.);
- Who they want to make these medical decisions, if they are unable to speak for themselves.
- Their thoughts on long-term care, to include preferences for the location of that care and how to pay for it; and
- Their estate plan (or lack thereof), the location of relevant legal documents and the attorney who prepared them.
Any existing legal documents should be reviewed to ensure that they are current. [Anecdotally, the average age of an estate plan is roughly the age of one’s oldest child because the estate planning documents were created to appoint a guardian for the then-minor child in the event he or she were orphaned.] There is not time like the present to make sure the legal plans are ship-shape. Do you realyl want unpleasant surprises later?
Are there other family members who also share a stake in the well-being of your senior loved one? If yes, then it is mission-critical that you communicate as well. All of you should be involved in “the conversation” and each of you should bear responsibility for some aspect of their care. The “failure to communicate” has led many a family into unnecessary (and unpleasant) drama, when expectations are not articulated and addressed up-front.
Ultimately, when the “time comes to act,” there must be some agreed method of accountability to ensure that everything is being done in the best interests of your senior loved one. Remember that your own children will most likely model the caregiving you give to your senior loved ones.
This web page does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material. Note: Nothing on this web page is intended or written to be used, and cannot be sued by any person for the purpose of avoiding tax penalties regarding any transactions or matters addressed herein. You should always seek advice from independent tax advisors regarding the same. [See IRS Circular 230.]