Category: Elder Law

Less Restrictive Alternatives to Guardianship

Less Restrictive Alternatives to Guardianship

The benefit of less restrictive alternatives to guardianships is that they don’t require court approval or judicial oversight. They are also much easier to set up and end.

The standard for establishing incapacity is also less rigorous than the standard required for a guardianship, says Kiplinger’s recent article entitled “Guardianships Should Be a Last Resort – Consider These Less Draconian Options First.”

Limited guardianships. A guardianship takes away an individual’s right to make decisions, just as full guardianships do, but they are specific to only some aspects of the person’s life. A limited guardianship can be established to manage an individual’s finances and estate or to control medical and health care decisions. These types of guardianships still require court approval and must be supported by a showing of incapacity.

Powers of attorney. Powers of attorney can be established for medical or for financial decisions. A second set of eyes ensures that financial decisions are well-considered and not harmful to the individual or his or her estate. A medical power of attorney can allow an agent to get an injunction to protect the health and well-being of the subject, including by seeking a determination of mental incapacity. A durable power of attorney for health care matters gives the agent the right to make medical decisions on behalf of the subject if or when they are unable to do so for themselves. Unlike a guardianship, powers of attorney can be canceled when they are no longer needed.

Assisted decision-making. This agreement establishes a surrogate decision-maker who has visibility to financial transactions. The bank is informed of the arrangement and alerts the surrogate when it identifies an unusual or suspicious transaction. While this arrangement doesn’t completely replace the primary account holder’s authority, it creates a safety mechanism to prevent exploitation or fraud. The bank is on notice that a second approval is required before an uncommon transaction can be completed.

Wills and trusts. These estate planning documents let people map out what will happen in the event they become incapacitated or otherwise incapable of managing their affairs. Trusts can avoid guardianship by appointing a friend or relative to manage money and other assets. A contingent trust will let the executor manage assets if necessary. For seniors, it may be wise to name a co-trustee who can oversee matters and step in should the trustor lose the capacity to make good decisions.

Speak with your estate planning attorney to explore if these less restrictive alternatives to guardianship work for your family’s situation. If you would like to learn more about guardianships, please visit our previous posts. 

Reference: Kiplinger (July 7, 2022) “Guardianships Should Be a Last Resort – Consider These Less Draconian Options First”

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Preparing for Retirement with a Special Needs Child

Preparing for Retirement with a Special Needs Child

For parents of children with disabilities, the challenges of preparing for retirement with a special needs child are far higher than for families with healthy, high-functioning adults. Planning for your own retirement, while needing to secure the stability and basic needs of a child who will be a dependent forever often feels impossible, according to the recent article “Planning for Your Retirement, and for a Child’s Special Needs, All at Once” from The New York Times.

Even under the best of circumstances, where there’s plenty of money available and many hands to help, caring for an adult child with special needs is emotionally and physically challenging. As parents age, they have to address their own needs plus the needs of their adult dependent. Who will care for them, provide safe and comfortable housing and care for them when their parents no longer can?

Understanding the entire picture can be difficult, even for parents with the best of intentions. First, they need to understand how preparing for their retirement will be different than other families without a special needs child. Their investments need to be multi-generational to last not just for their lifetimes, but for their child’s lifetime. They can’t be too conservative because they need long-term growth.

In addition, special needs parents need to keep a certain amount of funds liquid and easily accessible, for times when their child needs a new piece of expensive equipment immediately.

One of the parents will often leave the workforce to provide care or take a lower paying position to be more available for care. This creates a double hit; the household budget is reduced at the same time its strained by costs not covered by benefits or insurance. Paying for gas to drive to therapy appointments and day program, buying supplies not covered by insurance, like adult diapers, waterproof bedding, compression garments to promote circulation, specialized diets, etc. adds up quickly.

Even with public health assistance, finding affordable housing is not easy. One adult may need supervised care in a group home, while others may need in-home care. However, the family home may need to be modified to accommodate their physical disabilities. With wait times lasting several years, many families feel they have no choice but to keep their family member at home.

Another challenge: if the parents wanted to downsize to a smaller house or move to a state where housing costs are lower, they may not be able to do so. Most of the public benefits available to special needs people are administered through Medicaid at the state level. Moving to a state with a lower cost of housing may also mean losing access to the disabled individuals’ benefits or being placed at the end of the waiting list for services in a new state.

For disabled individuals, maintaining eligibility is a key issue. Family members who name a disabled individual as a beneficiary don’t understand how they are jeopardizing their ability to access public benefits. Any money intended for a disabled person must be held in a specialized financial instrument, such as a special needs trust.

The money in a special needs trust (SNT) may be used for quality-of-life enhancements like a cellphone, computer, better food, care providers, rent and utilities among other qualified expenses.

There are two main categories of SNTs: first party trusts, created with assets belonging to the individual. Any money in this trust must go to reimburse the state for the cost of their care. Another is a third-party special needs trust, established and funded by someone else for the benefit of the disabled individual. These are typically funded by parent’s life insurance proceeds and second-to-die life insurance policies. Both parents are covered under it, and the policy pays out after the second spouse dies, providing a more affordable option than insuring both parents separately. Your estate planning attorney can assist you in preparing for retirement with knowledge that your special needs child’s future is secure. If you would like to read more about planning for families with a disabled loved one, please visit our previous posts. 

Reference: The New York Times (Aug. 27, 2022) “Planning for Your Retirement, and for a Child’s Special Needs, All at Once”

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A Living Will is a Huge Benefit

A Living Will is a Huge Benefit

Having a living will is a huge benefit for yourself and your loved ones. During a medical crisis, families frequently must make decisions quickly regarding whether to withhold or provide life-sustaining treatments. A living will is a part of advance care planning. It’s a legal document that provides specific instructions on how to carry out your wishes to receive or decline such treatments when you otherwise can’t communicate those wishes yourself, explains, Forbes’ recent article entitled “How Does A Living Will Work?”

Your estate plan may already include a durable power of attorney for health care, which is a legal document that lets your designated agent or proxy make medical decisions for you if you become incapacitated. However, unlike that document, the instructions in a living will can be used only when the person named in the living will has no hope of recovery or cure.

A living will provides limited authority to an agent on behalf of the principal who’s no longer able to communicate their preferences to withhold or withdraw artificial means of life support or life-sustaining treatments. A living will should have your wishes noted for receiving or going without treatment when your condition isn’t expected to improve and treatment would extend your life for only a limited time.

A living will is designed to apply only in very limited situations when the principal who signed the document has an incurable or irreversible medical condition or conditions that will most likely result in the principal’s death within a short period of time—typically six months or fewer.

Life-sustaining treatments addressed in a living will may include:

  • Ventilators
  • Heart-lung machines
  • Nutrition via a feeding tube
  • Hydration via feeding tube or IV
  • Cardio-pulmonary resuscitation (CPR) or other extraordinary measures; and
  • Dialysis.

Living wills can also address issues, like pain management and palliative care. You may even include provisions such as “I would prefer to die at home” in a living will.

Provide as much information as you can to make certain that your proxy isn’t making the decision for you, but rather your wishes and words are moving through your proxy. A living will is a huge benefit to your loved ones. The more information you can provide in your living will to your proxy to illustrate for them the type of care that you’d want to receive or decline, the better. If you would like to learn more about living wills and other medical directives, please visit our previous posts. 

Reference: Forbes (Aug. 18, 2022) “How Does A Living Will Work?”

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Ways to Minimize Your Probate Estate

Ways to Minimize Your Probate Estate

Having a properly prepared estate plan is especially important if you have minor children who would need a guardian, are part of a blended family, are unmarried in a committed relationship or have complicated family dynamics—especially those with drama. There are ways you can protect your loved ones, and minimize your probate estate, as described in the article “Try these steps to minimize your probate estate” from the Indianapolis Business Journal.

Probate is the process through which debts are paid and assets are divided after a person passes away. There will be probate of an estate whether or not a will and estate plan was done, but with no careful planning, there will be added emotional strain, costs and challenges left to your family.

Dying with no will, known as “intestacy,” means the state’s laws will determine who inherits your possessions subject to probate. Depending on where you live, your spouse could inherit everything, or half of everything, with the rest equally divided among your children. If you have no children and no spouse, your parents may inherit everything. If you have no children, spouse or living parents, the next of kin might be your heir. An estate planning attorney can make sure your will directs the distribution of your property.

Probate is the process giving someone you designate in your will—the executor—the authority to inventory your assets, pay debts and taxes and eventually transfer assets to heirs. In an estate, there are two types of assets—probate and non-probate. Only assets subject to the probate process need go through probate. All other assets pass directly to new owners, without involvement of the court or becoming part of the public record.

Many people embark on estate planning to avoid having their assets pass through probate. This may be because they don’t want anyone to know what they own, they don’t want creditors or estranged family members to know what they own, or they simply want to enhance their privacy. An estate plan is used to take assets out of the estate and place them under ownership to retain privacy.

Some of the ways to remove assets from the probate process are:

Living trusts. Assets are moved into the trust, which means the title of ownership must change. There are pros and cons to using a living trust, which your estate planning attorney can review with you.

Beneficiary designations. Retirement accounts, investment accounts and insurance policies are among the assets with a named beneficiary. These assets can go directly to beneficiaries upon your death. Make sure your named beneficiaries are current.

Payable on Death (POD) or Transferable on Death (TOD) accounts. It sounds like a simple solution to own many accounts and assets jointly. However, it has its own challenges. If you wished any of the assets in a POD or TOD account to go to anyone else but the co-owner, there’s no way to enforce your wishes.

An experienced, local estate planning attorney will be the best resource to minimize your probate estate. If there is no estate plan, an administrator may be appointed by the court and the entire distribution of your assets will be done under court supervision. This takes longer and will include higher court costs. If you are interested in learning more about the probate process, please visit our previous posts. 

Reference: Indianapolis Business Journal (Aug. 26,2022) “Try these steps to minimize your probate estate”

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Planning for Long Term Care Is Important

Planning for Long Term Care Is Important

Elder law attorneys have far too many stories of people who fail to plan, plan incorrectly or incompletely, or plan to fail by doing nothing at all, as described in the article “Elder Care: People in a pickle” from The Sentinel. Planning for long term care is important. Here’s a sad story.

A woman calls the elder law office because her husband fell at home—a common occurrence among the elderly. He was hospitalized and is now receiving rehabilitation in a nursing home. The treating physician recommends that the husband remain in the nursing home because he has significant limitations and his wife, who has her own medical issues, isn’t physically able to care for him.

The wife agrees. However, she has a host of challenges to overcome that were never addressed. The husband took care of all of the finances, for decades telling his wife not to worry. Now, she has no idea what their resources are. Can they afford to pay for his nursing home care? She doesn’t know. Nor does she have the authority to access their accounts, because there are accounts in her husband’s name only and she does not have access to them.

Her husband’s insistence of being the only one in control of their finances has put her in a terrible predicament. Without the estate planning documents to give her access to everything, including his own accounts, she can’t act. Can he now sign a Power of Attorney? Maybe—but maybe not, if it can be shown he lacks capacity.

If the couple cannot pay the nursing home bill, they have given their children a problem, since they live in Pennsylvania, where the state’s filial support law allows the nursing home to sue one or more of the children for the cost of their parent’s care. (This law varies by state, so check with a local elder lawyer to see if it could impact your family). Even if the wife knew about the family’s finances and could apply for public benefits, in this case his eligibility would be denied, as they had purchased a home for one of their children within five years of his being moved to the nursing home. Medicaid has a five-year look back period, and any large transfers or purchases would make the husband ineligible for five years.

If this sounds like a financial, legal and emotional mess, it’s a fair assessment.

Unexpected events happen, and putting off planning for them, or one spouse insisting “I’ve got this” when truly they don’t, takes a big impact on the future for spouses and family members. All of the decisions we make, or fail to make, can have major impacts on the future for our loved ones.

Other situations familiar to elder lawyers: a parent naming two children as co-agents for power of attorney. When she began showing symptoms of dementia, the two children disagreed on her care and ended up in court.

A father has guardianship for a disabled adult son. He promised the son he’d always be able to live in the family home. The father becomes ill and must move into a nursing home. Neither one is able to manage their own personal finances, and no financial or practical arrangements were made to fulfill the promise to the son.

No one expects to have these problems, but even the most loving families find themselves snarled in legal battles because of poor planning. Careful planning for long term care is important. It may not reduce the messy events of life, but it can reduce the stress and expenses. By choosing to exert some control over who can help you with decisions and what plans are in place for the future, you can leave a legacy of caring. If you would like to learn more about long term care issues, please visit our previous posts. 

Reference: The Sentinel (Aug. 19, 2022) “Elder Care: People in a pickle”

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Important to consider Long-Term Care Insurance

Important to consider Long-Term Care Insurance

It becomes especially important to plan for the future when the world around us seems so volatile and unpredictable. We can’t control future health care costs, but we can plan for them, says a recent article titled “Economic instability and the need to plan for long-term care” from The Indiana Lawyer. Failing to plan could mean lost assets and a lost legacy. It is important to consider long-term care insurance as you get older.

According to Genworth’s Cost of Care survey, from 2004 to 2021, the cost of long-term care has outpaced inflation by a large margin. Many of the increases were driven by supply and demand issues. There aren’t enough people to care for the growing population of people needing services, which will continue to be the case for at least the next decade. A total of 10,000 boomers turn 65 every day and 70% will require care and support services in their lifetimes.

How can assets be protected from long-term costs?

One of the most frequently used tools is an asset protection trust or an irrevocable trust. The irrevocable trust cannot be modified, amended, or terminated without permission of the grantor’s beneficiary or beneficiaries. Once the grantor transfers assets into the trust, the grantor no longer has the rights of ownership. The trust can be designed to minimize taxation, maximize access to long-term benefits and protect assets.

The trust must be drafted properly, so trust income and principal, if needed, can be accessed.

The timing is critical. Asset protection trusts must be created when there is no immediate health care crisis, and the grantor has no need for long-term care. The best trust is created when the person is in good health and of sound mind.

Those who are nearing retirement, passed retirement age or who may have health issues in the distant future and expect to need Medicaid in the future are best candidates for an asset protection trust.

Medicaid’s Five Year Look Back Period

Planning needs to be done at least five years in advance, as Medicaid looks at the applicant’s past five year’s finances to see if any assets were sold or gifted for under market value. Transferring assets to an irrevocable trust is treated as a gift and violates the five-year look back, making the person ineligible for Medicaid coverage. Nursing home care will have to be paid out-of-pocket until the person becomes eligible.

Asset protection strategies are available for those who need immediate protection of assets. However, they have to done quickly and correctly with an estate planning elder law attorney. People who have suffered a fall and have significant injuries or who have received a diagnosis of a difficult disease should speak with an elder law attorney in a timely manner. They’ll need to discuss preparing for a Medicaid application, what assets can be protected and steps they need to take. It is important to consider long-term care insurance before you reach a point when it is needed. The earlier the plan is put into place, the better. If you would like to learn more about long-term care insurance, please visit our previous posts. 

Reference: The Indiana Lawyer (Aug. 3, 2022) “Economic instability and the need to plan for long-term care”

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Spotting early Dementia Symptoms is Critical

Spotting early Dementia Symptoms is Critical

It’s easy to miss the first signs of cognitive decline. Spotting early dementia symptoms is more critical than ever: the Alzheimer’s Association projects that 12.7 million people 65 and older will have some form of dementia by 2050. That’s why a lot of research on behavioral changes associated with dementia could help in the early detection of the neurodegenerative condition. However, this subtle action is often ignored by people with dementia and their families.

Yahoo’s recent article entitled “This Is the No. 1 Dementia Symptom People Ignore, Doctors Say” explains that many people believe that memory loss is the only sign of dementia. However, there’s much more to this debilitating condition than forgetfulness. There are a number of other behavioral and psychological symptoms associated with dementia, the most common of which are apathy, depression, irritability, agitation and anxiety. The rarest symptoms are euphoria, hallucinations and lack of inhibition. Many of these are subtle at first. Therefore, understanding what to look for is critical in early detection. It can significantly affect the course of your disease and delay its progression. This behavior change can be seen many years before a dementia diagnosis.

A 2020 study in JAMA Internal Medicine found, when looking at the medical records and consumer credit reports of more than 80,000 people aged 65 and older who were Medicare beneficiaries, people who developed dementia were significantly more likely to have financial problems and poor credit scores. These financial problems became more prevalent following a dementia diagnosis.

Monica Moreno, Senior Director of Care and Support at the Alzheimer’s Association, tells Best Life, “While there are several signs or symptoms of dementia, challenges with problem-solving or planning can cause a person to mismanage their finances. Other dementia-related symptoms that can adversely affect money management or personal finances include poor judgment and difficulty completing familiar tasks.”

The study concluded that missed bill payments lead to higher penalties and interest fees that are detrimental to your financial well-being. Therefore, financial guidance is essential for dementia patients after diagnosis.

“During the early stages of dementia, a person may be able to do simple tasks like paying bills but struggle with more complicated tasks, like managing investments or making a decision on large purchases,” explains Moreno. “Since dementia is often progressive, these challenges will increase over time. Therefore, family members need to identify these potential signs early and intervene as soon as possible.”

It’s important to spot financial behavior changes for early detection of dementia. Common signs include:

  • The inability to balance checking accounts
  • Consistently making late payments on credit cards; and
  • Overspending.

Moreno adds, “People with dementia are susceptible to fraud, including identity theft, insurance scams and get-rich-quick schemes. Allowing these problems or potential threats to go unaddressed can put individuals living with dementia [and their families] at great financial risk.”

Spotting early dementia symptoms is critical to protecting older adults and their families from the burden of unnecessary financial stress.

The JAMA Internal Medicine study advises, “Families should be counseled about the potential need to help with financial management following [dementia] diagnosis.” If you are interested in learning more about dementia and other cognitive disorders, please visit our previous posts. 

Reference: Yahoo! (Aug. 8, 2022) “This Is the No. 1 Dementia Symptom People Ignore, Doctors Say”

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Key Documents Every College Kid Needs

Key Documents Every College Kid Needs

In the United States, as soon as a minor turns 18, they’re typically considered a legal adult. As a result, parents no longer have any authority to make decisions for their child, including financial and health care decisions. That is why there are key documents every college kid needs.

Yahoo’s recent article entitled “Don’t Let Your Child Leave for College Without Signing Three Critical Documents” asks what if your adult child becomes sick or is in an accident and ends up hospitalized?

Because of privacy laws, known as Health Insurance Portability and Accountability Act (HIPAA), you wouldn’t have any rights to get any information from the hospital regarding your child’s condition. Yes, we know you’re her mother. However, that’s the law!

You also wouldn’t have the ability to access his or her medical records or intercede on your child’s behalf regarding medical treatment and care.

If your child’s unable to communicate with doctors, you’d also have to ask a judge to appoint you as your child’s guardian before being able to be told of his or her condition and to make any healthcare decisions for them.

While this is hard when your child is still living at home, it’s a huge headache if your child is attending college away from home.

However, there’s a relatively easy fix to address this issue:

Ask an experienced estate planning attorney about drafting three legal documents for your child to sign:

  • A Durable Power of Attorney (DPOA) for Health Care. This document designates the parent as your child’s patient advocate.
  • A HIPAA Authorization gives you access to your child’s medical records and lets you to discuss his or her health condition with doctors.
  • A DPOA for Financial Matters, designates the parent as your child’s agent, so that you can manage your child’s financial affairs, including things like banking and bill paying, in case your child becomes sick or injured, or is unable to act for any reason.

If you are a parent, it is imperative that you consider these key documents that every college kid needs. If you would like to read more about estate planning for young adults, please visit our previous posts. 

Reference:  Yahoo (Aug. 2, 2022) “Don’t Let Your Child Leave for College Without Signing Three Critical Documents”

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Protecting the Community Spouse is Necessary

Protecting the Community Spouse is Necessary

Despite the intent of the law, allowing one spouse to remain in the family home and having enough income to live on when the other spouse needs Medicaid to pay for nursing home care does not happen automatically. According to the article “What a ‘Community’ spouse can keep” from The Bristol Press, protecting the community spouse is necessary if they are to maintain their prior standard of living.

The community spouse is entitled to have a minimum monthly maintenance needs allowance (MMNA), which changes every year. If the MMNA is $2,288.00, and the healthy spouse has an income of $1,000.00, Medicaid allows a diversion of the sick spouse’s income of the difference, or $1,288.00 per month to the healthy spouse. In most situations, this is not enough to maintain a home, pay bills and enjoy a well-deserved retirement.

An elder law lawyer can help protect assets for the community spouse. The family home is exempt, if it is in the name of the healthy spouse, although most states have a limit to the allowed value. If the sick spouse is approved for Medicaid, the healthy spouse may choose to sell the home and keep the proceeds or downsize to a smaller home.

The community spouse may keep up to $137,400.00 in investment assets in 2022. That’s considered one half of the couple’s total “countable” assets. If the couple’s investment exceeds this amount, there are a number of strategies used to protect the life savings, as long as they stay within the “spend down” rules. Money may be spent on house expenses or improvements. A new car could replace an old model.

Another method is the use of a Single Premium Immediate Annuity, sometimes referred to as a Medicaid Annuity Trust. The well spouse can purchase this and protect their life savings. However, if the well spouse dies before the sick spouse, the balance of the annuity will need to be paid to Medicaid to reimburse it for expenses paid for the care of the sick spouse.

One positive note: personal property is not considered a countable asset. Things like home furnishings, decorations, jewelry, etc., and any personal property will not be counted. Embarking on a spending spree with an eye to reselling personal property to raise cash is not a good idea, since few items maintain their value after the initial purchase.

Planning should be done in advance, when both spouses are well and healthy, because Medicaid strictly enforces the five-year look back rule. Protecting the community spouse is necessary if they are to maintain their prior standard of living. Any assets transferred within five years of a Medicaid application will make the sick spouse ineligible for Medicaid coverage, and healthcare expenses will have to be paid out of pocket. If you would like to learn more about Medicaid planning, please visit our previous posts. 

Reference: The Bristol Press (July 29, 2022) “What a ‘Community’ spouse can keep”

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Information in our blogs is very general in nature and should not be acted upon without first consulting with an attorney. Please feel free to contact Texas Trust Law to schedule a complimentary consultation.
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