Estate Planning For The Elderly and Disabled Requires Additional Thought And Care
The holidays are a good time to consider estate planning objectives, particularly when elderly parents and the disabled are involved. Here are seven important factors to consider:
1. No Estate Tax - But Still A Need For Sound Planning. As the unified credit for gift and estate tax increases to $1.5 million in 2004, most seniors will find that estate tax avoidance is no longer a concern. However, probate avoidance and nursing home Medicaid eligibility may remain a concern. Planning for Medicaid eligibility is becoming increasingly more complicated, and many estate planners are referring their clients to "elder law" attorneys who specialize in Medicaid planning.
2. Estate Plan Must Be Easy To Understand and Administer. Documents drafted for seniors are likely to be final, operative documents. The agents selected (personal representatives, trustees and power of attorney designees) are likely to actually serve in these positions, perhaps right away. The documents must be thorough and easy to understand, and create a plan that can be easily administered.
3. Powers of Attorney And Living Wills Should Not Be Taken For Granted. Many attorneys, even attorneys specializing in estate planning, have taken powers of attorney and living wills far too lightly. A financial power of attorney can enable a senior to appoint an agent (perhaps one or more children, close friends or relatives) to handle all manner of financial matters should the senior be unable to do so, or simply choose not to do so. Such a document can either be durable (effective immediately and designed to continue in effect in the event of incapacity) or "springing" ("spring" into effect upon the occurrence of a designated event). If you don't know the difference, or don't know which you have, you should clarify this with your attorney. Utah law now requires that any authorization to make gifts be specifically set forth in the power of attorney. The now operative HIPPA privacy rules may require an update to your special medical power of attorney. And the recent events in Florida, involving Terri Schiavo, have again emphasized the need for every individual to provide definitive instructions regarding their end of life desires, including the possible use of respirators and feeding tubes.
4. Independence, Influence and Undue Influence. Many seniors struggle to retain their independence-with good reason. Their independence should never be compromised or marginalized. At the same time, seniors may be relying extensively on one (or less than all) of their children to assist them. The senior is thus susceptible to influence, and perhaps to undue influence. Seniors may also be in second marriages, perhaps of short duration. Thus, second spouses and blended families will create additional issues. As the "baby boom" generation ages, and finds it more difficult to satisfy wants and plan for retirement, the assets of the "greatest generation" become more tempting. Claims of financial abuse and undue influence regarding seniors are virtually certain to increase in coming years.
5. Consider Long Term Care Insurance. A leading consumer magazine recently published an update on long term care insurance. Among other things, the article contended that for most people, long term care insurance is too risky and too expensive. While long term care insurance has perhaps not yet lived up to its promise, new products blending life insurance and long term care needs may have additional appeal and are worthy of consideration. Be sure you are working with an agent who thoroughly understands the product.
6. Medicaid Planning May Be A Viable Option, But Involves Ethical and Societal Issues. Nursing home Medicaid planning is a complicated issue. On one hand, a majority of nursing home residents receive some Medicaid assistance. For many, the question is not whether to qualify for Medicaid assistance, but when (i.e., whether to plan for Medicaid assistance prior to entering a nursing home, perhaps with a goal of leaving family members an "inheritance", or first exhausting all resources prior to qualifying for such care). While there are a number of strategies that may be employed to qualify for nursing home care (qualified elder law attorneys, including members of the National Academy of Elder Law Attorneys, can assist with such planning) everyone should remember that Medicaid was designed to be the "payor of last resort" and that expansive use of Medicaid, already a top budget item for most states, including Utah, will strain an already burdened program.
7. Estate Planning For Disabled Individuals Requires Additional Care. If your estate plan will provide a benefit to a disabled individual, perhaps a child, grandchild or sibling, you should consider use of a special third party disability trust, which may enable your gift to be held and distributed for special or supplemental needs, enabling the recipient to continue to qualify for any essential government benefits. An outright distribution may disqualify the recipient from such benefits, or force the recipient to engage in additional planning. Again, qualified elder law attorneys can assist with these issues.
1. No Estate Tax - But Still A Need For Sound Planning. As the unified credit for gift and estate tax increases to $1.5 million in 2004, most seniors will find that estate tax avoidance is no longer a concern. However, probate avoidance and nursing home Medicaid eligibility may remain a concern. Planning for Medicaid eligibility is becoming increasingly more complicated, and many estate planners are referring their clients to "elder law" attorneys who specialize in Medicaid planning.
2. Estate Plan Must Be Easy To Understand and Administer. Documents drafted for seniors are likely to be final, operative documents. The agents selected (personal representatives, trustees and power of attorney designees) are likely to actually serve in these positions, perhaps right away. The documents must be thorough and easy to understand, and create a plan that can be easily administered.
3. Powers of Attorney And Living Wills Should Not Be Taken For Granted. Many attorneys, even attorneys specializing in estate planning, have taken powers of attorney and living wills far too lightly. A financial power of attorney can enable a senior to appoint an agent (perhaps one or more children, close friends or relatives) to handle all manner of financial matters should the senior be unable to do so, or simply choose not to do so. Such a document can either be durable (effective immediately and designed to continue in effect in the event of incapacity) or "springing" ("spring" into effect upon the occurrence of a designated event). If you don't know the difference, or don't know which you have, you should clarify this with your attorney. Utah law now requires that any authorization to make gifts be specifically set forth in the power of attorney. The now operative HIPPA privacy rules may require an update to your special medical power of attorney. And the recent events in Florida, involving Terri Schiavo, have again emphasized the need for every individual to provide definitive instructions regarding their end of life desires, including the possible use of respirators and feeding tubes.
4. Independence, Influence and Undue Influence. Many seniors struggle to retain their independence-with good reason. Their independence should never be compromised or marginalized. At the same time, seniors may be relying extensively on one (or less than all) of their children to assist them. The senior is thus susceptible to influence, and perhaps to undue influence. Seniors may also be in second marriages, perhaps of short duration. Thus, second spouses and blended families will create additional issues. As the "baby boom" generation ages, and finds it more difficult to satisfy wants and plan for retirement, the assets of the "greatest generation" become more tempting. Claims of financial abuse and undue influence regarding seniors are virtually certain to increase in coming years.
5. Consider Long Term Care Insurance. A leading consumer magazine recently published an update on long term care insurance. Among other things, the article contended that for most people, long term care insurance is too risky and too expensive. While long term care insurance has perhaps not yet lived up to its promise, new products blending life insurance and long term care needs may have additional appeal and are worthy of consideration. Be sure you are working with an agent who thoroughly understands the product.
6. Medicaid Planning May Be A Viable Option, But Involves Ethical and Societal Issues. Nursing home Medicaid planning is a complicated issue. On one hand, a majority of nursing home residents receive some Medicaid assistance. For many, the question is not whether to qualify for Medicaid assistance, but when (i.e., whether to plan for Medicaid assistance prior to entering a nursing home, perhaps with a goal of leaving family members an "inheritance", or first exhausting all resources prior to qualifying for such care). While there are a number of strategies that may be employed to qualify for nursing home care (qualified elder law attorneys, including members of the National Academy of Elder Law Attorneys, can assist with such planning) everyone should remember that Medicaid was designed to be the "payor of last resort" and that expansive use of Medicaid, already a top budget item for most states, including Utah, will strain an already burdened program.
7. Estate Planning For Disabled Individuals Requires Additional Care. If your estate plan will provide a benefit to a disabled individual, perhaps a child, grandchild or sibling, you should consider use of a special third party disability trust, which may enable your gift to be held and distributed for special or supplemental needs, enabling the recipient to continue to qualify for any essential government benefits. An outright distribution may disqualify the recipient from such benefits, or force the recipient to engage in additional planning. Again, qualified elder law attorneys can assist with these issues.
Copyright 2006. Published for general informational purposes only, and should not be construed as legal advice. If you need legal advice please consult with your attorney.