Could this be you? You’re in your thirties or forties, with several active children and a busy social and business life. You’ve got volunteer activities and school programs to keep track of. Your parents are in their seventies or eighties, have their own home, and appear to pay all their bills when due. You have no idea what your parents’ income or assets are because they don’t want to bother you about it, and they seem to be able to manage on their own. You and they have always known that they would be able to depend upon you for loving care and support if the need arose. You and they have always known that if necessary, you will arrange to take care of them, and you will try to keep them in their home.
Then one day you start to realize that your mother is asking very confused questions, and is calling you repeatedly to ask the same thing over and over, not remembering your recent answers. You visit the house and you find that she’s letting the mail pile up, and your father seems unable to communicate clearly. A neighbor calls you out of concern that they’re not able to take care of themselves. Or you get a frantic phone call informing you that one of your parents has had a terrible stroke, is in the hospital and will need nursing home care, which can cost $11,000 a month. You wonder whether you’ll be able to keep them at home. And you feel so disrespectful when you try to step in and manage the elder care situation.
Sound familiar? When these problems develop, they can be readily handled if the family planned ahead. Without planning, these problems are likely to become a major crisis.
The longer we live, the higher the risk of catastrophic illness and expense. What can you do to protect your parents, and prevent the chaos which so often occurs when a person becomes severely, irremediably disabled? You can encourage your parents to do what I call Disability Planning. Careful planning is like having insurance on your home – you wouldn’t dream of not keeping up that policy, even though, in your entire lifetime, you probably won’t ever put in a single claim. What follows is a discussion of the key elements of disability planning. It must start with asking questions, and helping your parents to share information with you so that you can take care of them when the time comes.
ASK THEM TO UPDATE THAT OLD WILL. If one spouse is severely ill, such as with Alzheimers’ Disease, it may not be a good idea for them to inherit their spouse’s entire estate outright. The other spouse may want to divide the estate between the ill spouse and the children, or to create a Trust to receive the inheritance. It’s probably time to select someone else as the Executor also. And be sure to plan carefully for the future care of a dependent disabled child by considering a Supplemental Needs Trust.
ASK THEM TO SIGN A DURABLE POWER OF ATTORNEY. If your parent becomes completely incapacitated and can’t manage their affairs, but never designated an Agent by signing a Durable Power of Attorney, no one will be able to carry out transactions with the parent’s assets. The house can’t be sold; gift transfers to children or spouse can’t be made; life insurance can’t be cashed in; contracts can’t be signed; stocks can’t be sold; etc. It will be necessary for someone to file a legal action for a Guardianship, in which they seek to be appointed as the parent’s Guardian by the court. Unfortunately, sometimes there is bitter disagreement among family members. If there is any disagreement in the family as to who should be the Guardian, there may be a drawn-out, costly legal battle, during which the court will designate a third party to be the guardian until the final decision is made. Your parent will have no control over the outcome. A comprehensive Durable Power of Attorney should be signed which covers everything from banking to life insurance, 401K’s, gift transfers and real estate. It can be made to be effective as of the time it is signed, or it can “spring” into effectiveness at some specified later date or condition. Your parent can leave their Power of Attorney with their attorney, to deliver to the Agent when some specified condition occurs.
ASK THEM TO SIGN HIPAA FORMS AND A LIVING WILL OR A HEALTH CARE PROXY. Living Wills (also called “advance directives”) express a person’s wishes on whether life supports should be used if the person is in a severe, vegetative or terminal condition, or has advanced brain diseases which leaves him/her unable to interact with others in a meaningful way, and then suffers a life-threatening event like a heart attack, kidney failure, breathing failure, or inability to swallow. A Health Care Proxy document doesn’t express advance wishes, but it does appoint the designated decision-maker who would make all the health care decisions if the patient could not communicate with his/her doctors. The HIPAA form will immediately enable a health care provider to share confidential information with the trusted person who is trying to help out. HIPAA.
What happens if there’s no advance directive or proxy?
Typically, the doctor will turn to the spouse for guidance, consent and decision-making. In a case of no spouse, there is increased risk of disagreement if there’s more than one child. One will see improvement where the other sees hopelessness. One will be willing to implement the advance wishes the parent expressed verbally in conversation; the other won’t agree because he can’t let go. It is the Living Will which stands as the clearest expression of the parent’s wishes regarding resuscitation and other life supports, regardless of the personal preferences of other family members.
COMPILE AND CONSOLIDATE THE ASSETS. Your parents need to know what they have in order to plan for how they’ll pay for care in the event of disability. They should save five years’ of bank records, cancelled checks and financial statements, as well as their filed income tax returns.
DEVELOP A PLAN FOR LONG-TERM CARE. Care can be provided in the home, in an Assisted Living group residence, or in a nursing home. Unless the person is eligible for Medicaid, s/he’ll be paying privately for care. Can your parents still take care of each other? Who should be brought in? To be eligible for Medicaid, the applicant’s assets must be below specified levels and there is a complex network of laws that typically need a lawyer’s interpretation. Since Medicaid doesn’t pay for 24/7 care in the home, careful planning means looking into all the ways your parents could finance their care at home, whether that’s with a reverse mortgage or other means.
The Medicaid applicant can be asked to provide the last 5 years’ of documentation of the value of each of the assets, copies of all cancelled checks, as well as proof of what was done with each of those assets. The more disorganized your parent’s portfolio, the harder it will be for you to provide the necessary documentation. Banks are now charging high fees to retrieve bank records for customers.
DON’T JUST GIVE EVERYTHING AWAY WITHOUT A PLAN. Also, they should not make gifts of their assets without advice from an attorney familiar with the consequences of doing so. So if they do wish to transfer assets to the children, they must be sure to get advice from an elder law attorney with substantial expertise in this area.There are many different strategies which can be utilized to protect the family’s assets. Sometimes it is a good idea to transfer full or partial ownership of the house, and sometimes it isn’t. A lot depends on the other assets available to pay for care if it is needed. Also, a lot depends on the family structure and the impact on a potential Medicaid application. Once assets are given away, the parents may not have as many choices as they need for different kinds of care which have to be paid for privately.
In conclusion, you show your love and respect for your parents by helping them to plan for their future protection. Careful planning is the key to success when it comes to your parents’ personal wishes, their financial security, their family’s peace of mind.
Call us for help in planning for a good old age ….. 732-382-6070