Life can change in an instant, and people can die unexpectedly, which makes estate planning important for people of any age. However, as you grow older, it becomes even more important. The older you get, the more critical it is to have all your plans put in place before illness, disease, or unexpected injury can incapacitate you and leave your family wondering what you would have wanted. When you are getting ready to enter a nursing home, or simply know that there will come a day when you need to enter one, your estate plan becomes even more important. Proper planning is essential for ensuring that you have the ability to pay for the long-term care you need, whether this is with your own money or assets, long-term care insurance, or Medicaid. If you would like assistance in ensuring that your elderly estate planning is in order, the accomplished attorneys with Roulet Law Firm, P.A. may be able to assist you. Call our Florida office at (941) 909-4644 or our Minnesota office at (763) 420-5087 to schedule a consultation and review your estate plan. Or you can fill out the contact form on this page and a member of our team will reach out to schedule your consultation.
Why Elderly Estate Planning Is Critical For Those Considering Entering a Nursing Home
Estate planning is important for everyone, but when someone is looking at entering a nursing home, it can be critical. Nursing homes and other long-term care can be very expensive. Without the right estate plan, individuals may deplete their assets paying for this care so that nothing is left for their loved ones when they die. Depending on the size of the individual’s estate, this asset depletion can also leave the individual or their spouse with nothing while they are still alive.
Additionally, several other documents are part of elderly estate planning that must be completed while the individual is still competent. These documents include powers of attorney, living wills, and health care agent authorizations. It is important that every individual review their options and understand what each document provides. Without these documents, if a day comes when the individual is incapacitated by an injury, illness, or disease, they will no longer be able to make decisions and others may not know what they would want. This can lead to conflict as family members disagree on what the individual would have wanted or to a lack of action as next of kin is sought out or tries to decide what the individual would want.
Start With an Asset Inventory
Elderly estate planning should begin with an asset inventory. Most people accumulate extensive, and often expensive, assets over a lifetime. As they go through life, having children, changing jobs, relocating, and dealing with other life changes, it is possible to have forgotten an asset or two. An asset inventory allows the individual to ensure that all of their assets are properly recorded so that when they begin writing a will, creating trusts, or otherwise preparing for passing their assets to loved ones, they do not leave any assets out.
Individuals should remember to think about real estate, bank accounts, investments, retirement accounts, life insurance policies, motor vehicles, artwork, jewelry, and personal belongings when inventorying their assets. They should also review any wills or existing trusts to ensure all assets are accounted for and determine whether they need to make any changes to these documents.
Create or Update Trusts
If the individual already has one or more existing trusts, they can review those trusts to ensure they still meet their needs. If they have not yet created a trust, they should consider creating one. There are two main types of trusts, irrevocable and revocable.
Irrevocable trusts can protect assets from being considered when calculating Medicaid eligibility, if the individual is considering Medicaid as an option for paying for their nursing home care. Irrevocable trusts can also prevent the individual from using the assets within it for paying for their long-term care, which can be useful if there are specific assets that they want to ensure are passed on to their loved ones. Revocable trusts keep assets accessible during the individual’s lifetime. Within the framework of an irrevocable or revocable trust, individuals can create specific trusts, such as charitable, spendthrift, pet, special needs, and others to meet specific needs.
Create Powers of Attorney
Elderly estate planning often includes durable powers of attorney (POA), which allow the elderly individual to grant another person specific decision-making authority. To be durable, the POA must include a statement that says that the POA is not impacted by the principal’s incapacity. A financial POA appoints a trusted individual to manage the principal’s finances and make financial decisions on their behalf when the principal is incapacitated or in other circumstances the principal dictates. For example, if the principal has moved into a nursing home and is unable to leave to do their own banking, they may grant a POA so the individual can go to the bank and stop payment on a check or dispute a transaction.
A medical POA designates a healthcare proxy to make medical decisions when the principal is unable to make them for themselves. While this proxy should attempt to ensure their decisions align with what the principal would have decided if they were able, a POA does not require them to make specific decisions. Therefore, individuals should choose their healthcare proxy carefully to ensure the decisions made are the ones they would want. Additionally, the POA must be signed while the individual is still mentally competent. Fla. Stat. § 709.2105 requires all POAs to be notarized, and the Office of Minnesota Attorney General requires POAs to be notarized as well.
Create Advance Healthcare Directives
Advance healthcare directives allow the individual to indicate their wishes regarding life-sustaining treatments if they are facing a terminal illness or injury. A living will is a form of advance healthcare directive in which the individual outlines whether they want treatments such as artificial nutrition or hydration, mechanical breathing (life support), cardiopulmonary resuscitation (CPR), dialysis, and others. They may also address organ donation in this directive.
Explore the Option of a Life Estate
When individuals own their own home, they typically want to pass it on to a beneficiary. If the individual uses Medicaid to pay for their nursing home care, the state may attempt to take the home after the individual’s death to recover the costs. A life estate can potentially protect the home from being used to pay for nursing home costs; however, this is not guaranteed and its effectiveness varies by state.
A life estate transfers ownership to a beneficiary while allowing the owner to retain the right to live in the home for the rest of their life. Other options that may confer the same benefits include the lady bird deed in Florida and the transfer on death deed in Minnesota. However, we do NOT recommend them to our clients. If an individual is considering any of these options for their home, a skilled attorney at Roulet Law Firm, P.A., may be able to offer guidance as to which option may be more appropriate for their circumstances.
Review Beneficiary Designations
There are a number of assets that have beneficiary designations. These designations indicate that rather than passing through probate, the asset is to be given directly to the named beneficiary. Assets that may have these designations include life insurance, retirement accounts, investment accounts, bank accounts, and others.
While these designations make it simple and quick for the beneficiary to receive the asset, if the designated beneficiary is deceased or unable to be located, this can cause the asset to revert back to the estate and be distributed according to the terms of the will if there are no contingency beneficiaries. As part of the elderly estate planning process, individuals should review these beneficiary designations, confirm their accuracy, and consider adding contingency beneficiaries if they have not already.
Gather and Store Estate Plan Documents Together
An important part of the elderly estate planning process is gathering and storing all of the estate plan documents together. This allows the individual’s family, the executor of their will, trustee of a trust, or legal representation, to find the estate plan and use the appropriate documents, whether that is finding a power of attorney or living will to determine who is making medical decisions or taking the will to file it in probate court.
Individuals should ensure that their elderly estate planning documents include their will, trust documents, beneficiary designation, deeds to property, titles to motor vehicles (including boats, recreational vehicles, personal watercraft, etc.), and the information required to assist the executor of the estate to find retirement, investment, and bank accounts or life insurance policies. All of these documents should be stored together in a safe, easily accessible location. Individuals may want to consider a safety deposit box in a bank and telling the executor or others where the key is kept, or a fireproof lockbox in their home to ensure the documents are safe from fires and floods. If you use a saefty deposit box, it is important that you have your executor listed on the paperwork at the bank so that they can access it.
Tips to Qualify for Medicaid Without Spending and Eliminating All Assets
Long-term care insurance can be expensive and if it is not already in place before the individual needs it, they may not be able to purchase it once it becomes necessary. On the other hand, people may pay the premiums for this coverage for years or even decades and never use it. Many people opt to forgo long-term care insurance and instead use Medicaid to pay for nursing home care and other forms of long-term care that may be needed. However, this requires having income and assets that are low enough to qualify for Medicaid. This presents a problem for individuals who have significant assets and want to retain those assets to pass on to loved ones.
While it is not a simple thing, it is possible to take steps to qualify for Medicaid that do not deplete all the individual’s assets. The individual can gift money to loved ones who are not in significant debt and have no legal issues. They can transfer a portion of their monthly income to their spouse for financial security. They can establish a Medicaid Asset Protection Trust. They can also consider an annuity, including a Medicaid-compliant annuity, which Annuity.org describes as providing a benefit that allows one spouse to be eligible for Medicaid while ensuring the other spouse continues to have a reliable monthly income. Individuals who want to explore annuities may wish to consult with an estate planning attorney to ensure their annuity options align with their Medicaid goals
Other Estate Planning Steps to Consider
Elderly estate planning can be complex and even overwhelming. Individuals may have heard of a pourover-will that can ensure any remaining assets are transferred into a trust after their death, but may not be sure about how to create such a will or whether it will benefit them. Legal counsel may be able to assist in confirming that the individual has properly created their estate plan and that their plan is legally compliant.
Once the individual knows they have created a clear plan that is legally compliant, they should consider conducting regular reviews of the plan to ensure all the information remains valid. Once they are in a nursing home, most of these reviews will consist of confirming that beneficiary designations are still accurate and that other names and contact information for beneficiaries named in their will or trust are still correct. With a properly planned estate, their assets should be protected and safe whether the individual is in a nursing home for a temporary recovery or for the rest of their days.
How an Estate Planning Attorney Can Assist You
Whether your nursing home stay is temporary as you recover from a surgery or illness, or is a permanent move, ensuring that your estate plan is accurate and updated is important. Even before the day arrives that you need to move into a nursing home, you need to think ahead to when that day may come, particularly if Medicaid may be an option for paying for your care in the nursing home. As part of the elderly estate planning process, individuals will want to ensure their assets are protected from being depleted to pay for their care as well as from being taken by the state after their death to recover Medicaid expenses. The practiced estate planning attorneys at Roulet Law Firm, P.A. have cultivated extensive knowledge of Minnesota and Florida laws and may be able to assist you in creating or reviewing your estate plan in anticipation of a current or future nursing home move. Contact our Florida office at (941) 909-4644 or our Minnesota office at (763) 420-5087 for an appointment to ensure your estate plan is in order. Or you can fill out the contact form on this page and a member of our team will reach out to schedule your consultation.
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