In part, our field is devoted to events that will take place after you pass away. At the same time, holistic estate planning should also address the eventualities of aging, and life as we age can be quite challenging.
A lot of people become incapacitated late in their lives, and Alzheimer’s disease or dementia are major culprits. It strikes about one third of the oldest old, and there are other causes of cognitive impairment.
If you can no longer take care of your affairs and you do nothing to prepare for this outcome, the state could appoint a guardian to act on your behalf. The government would intervene in your life, and the Court would be involved in some decision making.
Some people become unable to communicate their decisions because of other serious medical conditions. This can occur after an accident or a devastating illness, so this is another possibility to take into consideration.
As a response, holistic estate planning will include an incapacity plan within your broader estate plan. If you use a revocable living trust as the centerpiece of your plan, you can name a disability trustee to administer the trust in the event of your incapacity.
While you are living, you would be the trustee, so you would maintain direct control of the assets. After you are gone, the assets held in the living trust would be distributed outside of probate.
If you do not have a trust, you can empower someone to handle your financial affairs if you name them as an agent in a durable power of attorney for property. Even if you have a trust, you should have one of these documents to account for property that is not held by the trust.
Advance directives for health care are necessary as well. You can record your life support preferences in a legally binding manner as well as appoint individuals to make those difficult decisions if you are unable to do so yourself. You should include a HIPAA release to give this individual the legal right to access your health care records.
Clearly, many elders with Alzheimer’s disease ultimately require nursing home care, and people move into nursing homes for other reasons. In fact, 52 percent of senior citizens will require some type of paid living assistance eventually.
Medicare does not cover custodial care, and you can expect to pay well over $100,000 for a year in a Northwest Indiana nursing home. Fortunately, Medicaid will cover long-term care costs if you can gain eligibility.
It takes informed advance planning to develop a financial profile that will lead to future Medicaid eligibility. The term “future” is important because of the 60 month look back period. If you transfer assets out of your name, you will be ineligible for a period of five years.
There is a solution in the form of an irrevocable asset protection trust. You could continue to accept distributions of the earnings after you fund the trust, but you would surrender the principal.
When and if you apply for Medicaid, the principal would not count as long as you fund the trust at least 60 months before you submit your application.
Implement a Plan for Aging!
When you take the right steps in advance, you can enjoy your golden years in comfort, secure in the knowledge that your bases are covered.
If you are ready to get started, we can gain an understanding of your financial position and your legacy goals and help you devise a plan that is ideal for you and your family.
You can schedule a consultation at our Schererville estate planning office if you give us a call at 219-865-2285, and you can use our contact form to send us a message. We also have a Lafayette location that can be reached at 765-767-5225.