Everyone knows that you have to state your final wishes regarding the way you want your assets to be distributed when you are planning your estate. That facet is important, but a properly constructed plan should include another component.
Once you are old enough to collect Social Security, your life expectancy is over 80 years. A very significant percentage of people that are in their 80s and older become unable to handle their own affairs.
Alzheimer’s disease strikes three out of every 10 seniors, and there are other causes of cognitive impairment. When you add the people that cannot communicate because of other types of medical conditions, you can see that incapacity is not uncommon among elders.
If you do nothing to prepare for possible incapacity and you do in fact become unable to handle your affairs, the state can appoint a guardian to act on your behalf. You would become a ward of the state, and this is an outcome that would not sit well with most people.
In addition to the fact that your privacy is lost, and the government is involved in your life, family members may not be on the same page. This can cause disagreements and hard feelings during a time when members of the family should be supporting one another.
You have the ability to choose your own decision-makers in advance and prevent a guardianship. If you are using a living trust as an asset transfer vehicle, you would be the trustee while you are living. In the trust declaration, you can name a disability trustee to assume the role if necessary.
A durable power of attorney for property can be utilized to name an agent to manage property that is not held by a trust. When you have your own hand-picked decision-makers in place, people you trust will be empowered to manage your affairs.
Incapacity Planning & Advance Directives for Health Care
Your plan should also address medical scenarios that can arise when you are unable to communicate your own decisions. A living will is a document that is used to state your life support choices, and you can add organ and tissue donation decisions.
When you are drawing up your living will, you can express choices for each different type of life-support method if you choose to do so. You can also assert your comfort care medication preferences, and this is an element that many people overlook.
Another advance directive that should be included is a durable power of attorney for health care or health care proxy. You name an agent in this document to make decisions that are not related to the use of life-support.
This agent would not be able to access your health care information unless you give them permission in a HIPAA release, so this should be added as well.
Nursing Home Asset Protection
The majority of senior citizens will need help with their activities of daily living at some point in time, and 35 percent of seniors will move into nursing homes. You can expect to pay somewhere in the vicinity of $170,000 for a year in a nursing home in the New York City area.
If you are thinking that Medicare will pick up the tab, we have to share some unpleasant news. Many people think that it is not fair, but in fact, Medicare will not cover custodial care costs.
Medicaid will pay for long-term care, and there is a Community Medicaid program that will cover in-home care that is delivered by a home health aide. You cannot qualify if you have significant assets in your name, but there is a solution.
An irrevocable, income only Medicaid trust can be the centerpiece of your nursing home asset protection plan. If you convey assets into the trust, they would not be counted if you apply for Medicaid, but advance planning is key. Moreover, incapacity planning is the ideal situation to ensure that you and your family members are protected.
There is a five-year look back period, so you have to fund the trust at least 60 months before you apply for Medicaid.
We Are Here to Help!
Today is the day for action if you are going through life without a plan for aging. You can schedule a consultation at our Manhattan, NY elder care and incapacity planning office if you call us at 212-973-0100. There is also a contact form on this site you can use to send us a message.