A lot of people view estate planning as a strictly financial endeavor. Yes, you have to state your final wishes in writing, but you should also consider the eventualities that may enter the picture toward the end of your life.
It is important to put longevity into perspective when you are developing a plan for the future. Once you reach the age of 67, your life expectancy is 85 years if you are a man, and it is 87 years for a woman.
There is a good chance that you will experience life as an octogenarian, and things can be very different at that time.
A major cause of incapacity among elders is Alzheimer’s disease. We have all heard of it, but its widespread nature may surprise you. The Alzheimer’s Association tells us that about 32 percent of elders that are 85 years of age and older have contracted this disease.
There are other causes of dementia, and cognitive impairment is not the only form of incapacity, so this is something that everyone should take seriously.
If you become unable to handle your own affairs due to some form of incapacity, there is a mechanism in place. People close to you could petition the state to appoint a legal guardian to act on your behalf.
It is disconcerting to imagine a judge having the power to decide who will make decisions for you under these circumstances. Plus, everyone in your family may not be on the same page with regard to the right way to proceed.
You can proactively address possible incapacity in advance through the execution of the appropriate documents, and advance directives for health care will be part of the plan.
Your life support preferences can be recorded in a legally binding manner in a living will. If you choose to do so, you can address each type of life-support method individually, and you can add organ and tissue donation choices.
The other advance directive that should be included is a durable power of attorney for health care. It must be “durable” because this type of power of attorney will remain in effect if you become incapacitated. You name an agent to make medical decisions on your behalf in this document.
To be clear, the choices that are recorded in the living will would be honored when it comes to the specific matter of life-support utilization. Your health care agent would make other types of medical decisions when you are unable to communicate.
Doctors would not be able to share your medical information with your representative because of HIPAA regulations. You can provide the access if you sign a HIPAA release form.
If you use a living trust as your primary asset transfer vehicle, you would act as the trustee while you are alive and well, so you would control the trust. When you are drawing up the trust agreement, you can name a disability trustee to assume the role if it ever becomes necessary.
To account for property that is not held by a trust, you can execute a durable power of attorney for property.
Nursing Home Asset Protection
Obviously, many people that are incapacitated reside in nursing homes. These facilities are very expensive, and Medicare does not pay for the custodial care that nursing homes provide.
Medicaid is the widely embraced solution, but you cannot qualify if you have more than $2000 in countable assets in your name. You can fund an irrevocable trust to develop a financial profile that will lead to eligibility, but advance planning is necessary.
There is a five-year look back period, so you have to fund the trust at least five years before you apply for Medicaid. If you violate this rule, your eligibility is delayed by a period of time that is based on the amount of the funding and the average cost of nursing home care.
Simply put, if you fund the trust with enough to pay for two years of nursing home care, your eligibility would be delayed by two years if you apply for Medicaid within the five-year window.
Schedule a Consultation Today!
We are here to help if you are ready to work with a Hilton Head, SC estate planning lawyer to put a plan in place. You can send us a message to request a consultation appointment, and we can be reached by phone at 843-815-8580.
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