Estate Planning Blog Articles

Estate & Business Planning Law Firm Serving the Providence & Cranston, RI Areas

How to Protect Your Spouse when Diagnosis Is Dementia

Few illnesses are as terrifying as dementia, for which there is no cure. If estate planning is in place, it may need to be adjusted to address new, more imminent issues. Reviewing the family situation from a legal and financial aspect is critical, and there is no time for delay, explains a recent article from Morningstar, “’I don’t want my wife to lose everything’: I’ve been diagnosed with dementia –I suddenly could not spell or write legibly.”

There are a number of steps to be taken to smooth the path ahead. First is to update your will and create a financial power of attorney. Don’t try to do this without the help of an experienced estate planning attorney.

This may also be the time to reassess your investment portfolio based on your new financial plan and risk tolerance.

An Advanced Healthcare Directive will inform doctors what actions you want them to take when you cannot make those decisions for yourself. You may want to list your wife as your healthcare proxy to carry out these decisions, but be mindful of the pressures put on a marriage when serious healthcare issues occur. Your spouse will need emotional support as well, and you’ll want to have a successor to your spouse for both the healthcare and POA documents.

Share your situation with trusted family and friends to create a team–a community of people who can provide support, part of which will be updating beneficiaries. Now would also be the time to record instructions for access to devices, documents, and even daily habits.

Long-term care insurance will help with expenses and should serve as an example for anyone reading this article. Policies should be purchased early in life when they are relatively affordable to help alleviate the financial burden of nursing home costs.

An estate planning attorney and financial advisor will help you take an accounting for assets, expenses, and projected long-term care costs. You’ll want a team approach to provide as much guidance as possible.

When to put your long-term care policies into payout status is a difficult decision. You’ll need to time this with a Medicaid plan, which your elder law estate planning attorney will be able to help with.

Now may also be the time to create a trust and divest assets to make it through the five-year Medicaid look-back, using your long-term care policy in the next five years.

There are exceptions to the five-year look-back rule for Medicaid eligibility. They include paying off debts, buying medical devices, or making home improvements to improve accessibility. However, eligibility depends upon income and other assets.

Some states, including Florida and New York, have rules exempting homes from assets calculated by Medicaid under certain circumstances. California eliminated an asset limit this year, making a person’s home automatically safe from Medicaid while they are living, but this does not mean it’s exempt from the Medicaid Estate Recovery Program.

Working with a team of professionals, including an estate planning attorney, and having the support of family and trusted friends will be important as time goes by and the disease progresses.

Reference: Morningstar (Feb. 25, 2024) “’I don’t want my wife to lose everything’: I’ve been diagnosed with dementia –I suddenly could not spell or write legibly”

Should I Consider Working with an Elder Law Attorney?

Partnering with an elder law expert is the best way to make life transition easier as seniors age. RC Online’s recent article entitled “Why Is It Ideal for Working with An Elder Law Attorney During Life Transitions?” explains that many people have issues in the stage of life when they’re weak and not feeling well. This can result in health or mobility issues for many family members. The challenges faced by the family can cause financial strain, making lifestyle adjustments difficult, the article says.

Elder law attorneys can help family caregivers understand their loved one’s current situation and provide possible future solutions. This includes planning for situations where a debilitating illness requires long-term care.

Elder law attorneys often see various financial and medical circumstances when representing seniors in court, so their assistance can be extremely valuable when addressing issues, such as managing long-term care needs.

Specialized services for elderly care. Elder law attorneys focused on legal matters concerning older individuals. An elderly law attorney will be familiar with the elder laws of your state and will be able to identify potential conflicts or issues easily. As a result, they’ll be able to take appropriate actions to protect their client’s interests and rights.

Long-term care plan development for seniors. An elder care attorney can provide an objective perspective on the kind of care for their elders. This can help create a longevity plan that meets everyone’s needs.

The attorney will focus on families’ issues and problems as parents or spouses age. They provide legal services to individuals facing aging challenges, such as health care decisions and financial planning. An elder law attorney will consider the required level of care and whether a person can remain in their own home or require long-term nursing care.

Help for families in mediation and education. These are critical parts that play an important role during a family’s transitional phase. Mediation helps families maintain communication, and education provides knowledge for handling various issues.

It is important to have legal agreements related to retirement benefits, assets and who will be responsible for caring for an elderly loved one. An elder law attorney can help make these arrangements to prevent family fights and protect assets. They can assist seniors as well as heirs and beneficiaries to prevent losing assets due to financial problems or other circumstances.

Reference: RC Online (Feb. 14, 2023) “Why Is It Ideal for Working with An Elder Law Attorney During Life Transitions?”

Why Does Government Deny Social Security Disability Benefits

Kiplinger’s recent article entitled “3 Main Reasons Why the Government Denies Social Security Disability Benefits” says three main issues are the primary contributors to the high denial rates and prolonged appeals process:

  1. Applicants fail to satisfy work history requirements. Anyone who pays FICA payroll taxes long enough, is typically insured for SSDI. However, that doesn’t mean they’re eligible for benefits. To meet the SSA definition of disability, one must have physical or mental impairments that prevent them from being unable to perform any substantial gainful activity (SGA) for at least 12 months or have a terminal diagnosis. SGA encompasses work performed for pay or profit, and for 2022, the monthly benefit one would receive after qualification is set at $1,350 a month, or $2,260 if you are blind.
  2. Applicants provide incomplete documentation. Detailed medical evidence is required to document a disability and its impact on the person’s ability to perform SGA—it’s a crucial part of the SSDI application. This should include diagnoses, medical tests and results, treatment history, prescription drugs, surgeries, ER and doctor visits and other relevant medical details to show not just that you have a problem, but also that you’ve been receiving regular medical treatment for your issue. This, along with details about how a disability influences your activities of daily living, is especially significant if you have an invisible disability, such as mental disorders, neurological conditions or cognitive dysfunctions caused by injury or disease. Regular monthly treatments and drug therapies with specialists and mental health professionals are an important part of your claim.
  3. Applicants not knowing they have the right to an SSDI representative. The SSA doesn’t tell initial applicants they have the right to retain a representative to assist them. As a result, most people try to navigate the complicated program on their own. You need an advocate to tell the story of your disability and its impact on you and your family. Less than 30% of applicants have an SSDI representative to help them apply. Those individuals are 23% more likely to get their application approved. It also means getting benefits in six months compared with a year or two!

Representatives are taking on more SSDI cases resulting from long COVID symptoms that have exacerbated physical and mental impairments. Long COVID may affect up to 30% of COVID patients, or an estimated 25 million people in the United States, especially those with respiratory disease, diabetes and cognitive issues.

Reference: Kiplinger (July 16, 2022) “3 Main Reasons Why the Government Denies Social Security Disability Benefits”

Can I Avoid the Economic Dangers of Caregiving?

AARP’s recent article entitled “5 Steps to Avoid Economic Pitfalls of Caregiving” reports that 20% of family caregivers have to take unpaid time off from work due to their caregiving responsibilities.

The average lifetime cost to caregivers in lost wages and reduced pension and Social Security benefits is $304,000 — that is $388,000 in today’s dollars. This does not count the more than $7,200 that most caregivers spend out of pocket each year, on average, on housing, health care and other needs for loved ones in their care, according to the AARP report.

Step 1: Calculate the gap. The average cost of a full-time home health aide is nearly $62,000 a year, and a semiprivate room in a nursing home runs about $95,000. Ask your parents about the size of their nest egg, how fast they are spending it, whether they have long-term care insurance and how much equity they have in their home. Compare your parents’ assets against their projected expenses to determine your gap.

Step 2: Fill the gap without going broke. Try to find free resources: Use the National Council on Aging’s BenefitsCheckUp tool to find federal, state and private benefit programs that apply to your situation. Then create a budget to determine what you can contribute, physically and in dollars, to closing the gap. In addition, ask your siblings if they can pitch in.

Step 3: If a gap remains, consider Medicaid. This program can cover long-term care. However, your parent or parents may need to spend down assets to qualify. Note that if just only one parent is in a nursing home, the other can generally keep half of the assets, up to a total of $137,400 (not including their house). However, the rules differ by state. As a result, this can get complicated. Speak with an elder-law attorney for help.

Step 4: No matter what the gap, try to get paid. If your parents have enough resources, you may discuss having them pay you for caregiving. However, you should speak with an attorney first about drawing up a contract. This should include issues like the number of hours a day you will spend on providing care and whether doing so will require you to quit your job. The caregiving agreement is written carefully, so that it does not violate Medicaid regulations about spending down assets.

Step 5: Protect your own earning ability. If you are mid-career, it is very difficult to leave a job for ​family responsibilities like caregiving and then go back into the workforce at the same salary. The Society for Human Resource Management says that it costs six to nine months’ salary to replace an employee, so many employers now see it is less expensive to make an accommodation.

Reference: AARP (Feb. 24, 2022) “5 Steps to Avoid Economic Pitfalls of Caregiving”

Must I Sell Parent’s Home if They Move to a Nursing Facility?

If a parent is transferring to a nursing home, you may ask if her home must be sold.

It is common in a parent’s later years to have the parent and an adult child on the deed, with a line of credit on the house. As a result, there’s very little equity.

Seniors Matter’s recent article entitled “If my mom moves to a nursing home, does her home need to be sold?” says that if your mother has assets in her name, but not enough resources to pay for an extended nursing home stay, this can add another level of complexity.

If your mother has long-term care insurance or a life insurance policy with a nursing home rider, these can help cover the costs.

However, if your mom will rely on state aid, through Medicaid, she will need to qualify for coverage based on her income and assets.

Medicaid income and asset limits are low—and vary by state. Homes are usually excluded from the asset limits for qualification purposes. That is because most states’ Medicaid programs will not count a nursing home resident’s home as an asset when calculating an applicant’s eligibility for Medicaid, provided the resident intends to return home

However, a home may come into play later on because states eventually attempt to recover their costs of providing care. If a parent stays a year-and-a-half in a nursing home—the typical stay for women— when her home is sold, the state will make a claim for a share of the home’s sales proceeds.

Many seniors use an irrevocable trust to avoid this “asset recovery.”

Trusts can be expensive to create and require the help of an experienced elder law attorney. As a result, in some cases, this may not be an option. If there’s not enough equity left after the sale, some states also pursue other assets, such as bank accounts, to satisfy their nursing home expense claims.

An adult child selling the home right before the parent goes into a nursing home would also not avoid the state trying to recover its costs. This because Medicaid has a look-back period for asset transfers occurring within five years.

There are some exceptions. For example, if an adult child lived with their parent in the house as her caregiver prior to her being placed in a nursing home. However, there are other requirements.

Talk to elder law attorney on the best way to go, based on state law and other specific factors.

Reference: Seniors Matter (Feb. 25, 2022) “If my mom moves to a nursing home, does her home need to be sold?”

What are States Doing to Help Pay Long-Term Care Costs in Future?

Starting this year, workers in Washington state must pay 58 cents of every $100 they earn into the Washington Cares Fund. That money will help pay their long-term care costs in the future. Those with qualifying long-term care insurance can be eligible for an exemption.

Next Avenue’s recent article entitled “How Medicaid and Medicare Fit Into Planning for Long-Term Care” says that starting in 2025, those Washington residents who’ve paid in for at least three out of the prior six years, or for 10 years in total, will be able to withdraw up to $36,500 to pay for their costs of care. It is an effort by the state to fill in a major gap in our long-term care system. California has also enacted a law to bring down the eligibility threshold for Medicaid to totally eliminate it by the end of 2023. New York state is considering similar legislation.

Any senior may need assistance as they age, whether due to dementia, illness, loss of eyesight, or simple frailty. The level of assistance and how long it will last can vary greatly. However, few retirees have enough saved to pay for their care for very long out-of-pocket. According to research from Boston College, more than half of today’s 65-year-olds will need a medium to high level of assistance for more than a year. Almost two thirds of that care will be provided by family members – mostly children and spouses – for no cost, but more than a third will be provided by paid caregivers.

According to the Congressional Research Service, 43% of long-term care services are paid for by the Medicaid program, 20% by Medicare, 15% out-of-pocket and 9% by private insurance. The rest comes from a combination of private and public sources that includes charitable payments and VA benefits.

Medicare Coverage. This is the federal health insurance program for people beginning at age 65. Note that Medicare only covers so-called “skilled” needs following a hospitalization. It pays for up to 100 days of care in a skilled nursing facility following a hospitalization and longer term for home health services.However, the home health coverage is not comprehensive.

Medicaid Coverage. The financial rules for Medicaid coverage are complicated and state-specific. However, generally people must spend down to about $2,000 in savings and investments. Planning to use Medicaid to pay for long-term care is also complicated by the fact that while its coverage of nursing home care is comprehensive, its payment for home care and assisted living facility fees is only partial and differs both from state to state. Even if you may be able to leverage Medicaid to help pay home and assisted living care, you must also rely on your own savings.

Out-of-Pocket Costs. The low percentage of long-term care costs paid for out-of-pocket is surprising, in light of the vast growth of both assisted living and private home care agencies over the last several decades. However, this demonstrates the fact that most older adults have limited resources to pay for anything beyond their basic living expenses. When the need for care arises, they must rely on family members or Medicaid.

Insurance. A large component of insurance coverage of long-term care consists of Medicare supplemental insurance payments for skilled nursing facility copayments. While Medicare will pay for up to 100 days of skilled care following a hospitalization, it actually pays entirely for only the first 20 days. For days 21 through 100, there is a copayment which for most is paid by their MediGap insurance. As such, long-term care insurance pays for a very small share of long-term care costs. For those who have coverage, it can be terrific. However, due to its high cost, those who have it often also have the resources to pay for their care out-of-pocket, at least for some period of time.

Veterans Benefits. More vets are taking advantage of a Veterans Administration benefit known as Aid & Assistance that will provide veterans who qualify financially with up to $2,431 a month (in 2022) to help pay for their care.

Reference: Next Avenue (Feb. 2, 2022) `“How Medicaid and Medicare Fit Into Planning for Long-Term Care”

What’s Elder Law and Do I Need It?

Yahoo News  says in its recent article entitled “What Is Elder Law?” that the growing number of elderly in the U.S. has created a need for lawyers trained to serve clients with the distinct needs of seniors.

The National Elder Law Foundation defines elder law as “the legal practice of counseling and representing older persons and persons with special needs, their representatives about the legal aspects of health and long-term care planning, public benefits, surrogate decision-making, legal capacity, the conservation, disposition and administration of estates and the implementation of their decisions concerning such matters, giving due consideration to the applicable tax consequences of the action, or the need for more sophisticated tax expertise.”

The goal of elder law is to ensure that the elderly client’s wishes are honored. It also seeks to protect an elderly client from abuse, neglect and any illegal or unethical violation of their plans and preferences.

Baby boomers, the largest generation in history, have entered retirement age in recent years.  Roughly 17% of the country is now over the age of 65. The Census estimates that about one out of every five Americans will be elderly by 2040.

Today’s asset management concerns are much sophisticated and consequential than those of the past. Medical care has not only managed to extend life and physical ability but has itself also grown more sophisticated. Let’s look at some of the most common elder law topics:

Estate Planning. This is an area of law that governs how to manage your assets after death. The term “estate” refers to all of your assets and debts, once you have passed. When a person dies, their estate is everything they own and owe. The estate’s debts are then paid from its assets and anything remaining is distributed among your heirs.

Another part of estate planning in elder law concerns powers of attorney. This may arise as a voluntary form of conservatorship. This power can be limited, such as assigning your accountant the authority to file your taxes on your behalf. It can also be very broad, such as assigning a family member the authority to make medical decisions on your behalf while you are unconscious. A power of attorney can also allow a trusted agent to purchase and sell property, sign contracts and other tasks on your behalf.

Disability and Conservatorship. As you grow older, your body or mind may fail. It is a condition known as incapacitation and legally defined as when an individual is either physically unable to express their wishes (such as being unconscious) or mentally unable to understand the nature and quality of their actions. If this happens, you need someone to help you with activities of daily living. Declaring someone mentally unfit, or mentally incapacitated, is a complicated legal and medical issue. If a physician and the court agree that a person cannot take care of themselves, a third party is placed in charge of their affairs. This is known as a conservatorship or guardianship. In most cases, the conservator will have broad authority over the adult’s financial, medical and personal life.

Government programs. Everyone over 65 will, most likely, interact with Medicare. This program provides no- or low-cost healthcare. Social Security is the retirement benefits program. For seniors, understanding how these programs work is critical.

Healthcare. As we get older, health care is an increasingly important part of our financial and personal life. Elder law can entail helping a senior understand their rights and responsibilities when it comes to healthcare, such as long-term care planning and transitioning to a long-term care facility.

Reference: Yahoo News (Jan. 26, 2020) “What Is Elder Law?”

What Is Elder Law?

WAGM’s recent article entitled “A Closer Look at Elder Law“ takes a look at what goes into estate planning and elder law.

Wills and estate planning may not be the most exciting things to talk about. However, in this day and age, they can be one of the most vital tools to ensure your wishes are carried out after you’re gone.

People often don’t know what they should do, or what direction they should take.

The earlier you get going and consider your senior years, the better off you’re going to be. For many, it seems to be around 55 when it comes to starting to think about long term care issues.

However, you can start your homework long before that.

Elder law attorneys focus their practice on issues that concern older people. However, it’s not exclusively for older people, since these lawyers counsel other family members of the elderly about their concerns.

A big concern for many families is how do I get started and how much planning do I have to do ahead of time?

If you’re talking about an estate plan, what’s stored just in your head is usually enough preparation to get the ball rolling and speak with an experienced estate planning or elder law attorney.

They can create an estate plan that may consists of a basic will, a financial power of attorney, a medical power of attorney and a living will.

For long term care planning, people will frequently wait too long to start their preparations, and they’re faced with a crisis. That can entail finding care for a loved one immediately, either at home or in a facility, such as an assisted living home or nursing home. Waiting until a crisis also makes it harder to find specific information about financial holdings.

Some people also have concerns about the estate or death taxes with which their families may be saddled with after they pass away. For the most part, that’s not an issue because the federal estate tax only applies if your estate is worth more than $12.06 million in 2022. However, you should know that a number of states have their own estate tax. This includes Connecticut, Hawaii, Illinois, Maine, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont and Washington, plus Washington, D.C.

Iowa, Kentucky, Nebraska, New Jersey, and Pennsylvania have only an inheritance tax, which is a tax on what you receive as the beneficiary of an estate. Maryland has both.

Therefore, the first thing to do is to recognize that we have two stages. The first is where we may need care during life, and the second is to distribute our assets after death. Make certain that you have both in place.

Reference: WAGM (Dec. 8, 2021) “A Closer Look at Elder Law“

How Do I Hire a Caregiver from an Agency?

Part One of AARP’s recent article entitled “How to Hire a Caregiver” explains that when you have a list of promising agencies, you should schedule a consultation.

It doesn’t matter if your family member is eligible for Medicare, Medicare’s Home Health Compare can be a terrific tool for finding and researching home health agencies in your area.

It provides detailed information on what services they provide and how patients rate them.

Working with an agency has its pros and cons. The pluses include the following:

  • Background checks. Caregivers must pass a background check.
  • Experienced caregivers. Agencies are likely to have a number of caregivers who cared for other seniors with the illness or condition affecting your loved one.
  • Backup care. If the primary aide is sick or doesn’t work out, an agency typically can quickly find a replacement.
  • Liability protection in the event that a caregiver is injured while at the home.
  • No paperwork. The agency takes a fee, pays the aide and does the payroll and taxes.

Here are some of the corresponding minuses of working with an agency:

  • Greater expense. You’ll pay more for an agency-provided caregiver.
  • Little choice. The agency chooses the worker, and he or she may not fit well with you or your family member.
  • Negotiation is limited, and individuals are generally more flexible about duties, hours and overtime than agencies.
  • There are agencies that don’t permit a part-time schedule.

In addition, you can contact an experienced elder law attorney and ask for recommendations.

Reference: AARP (Sep. 27, 2021) “How to Hire a Caregiver”

Can I Restructure Assets to Qualify for Medicaid?

Some people believe that Medicaid is only for poor and low-income seniors. However, with proper and thoughtful estate planning and the help of an attorney who specializes in Medicaid planning, all but the very wealthiest people can often qualify for program benefits.

Kiplinger’s recent article entitled “How to Restructure Your Assets to Qualify for Medicaid says that unlike Medicare, Medicaid isn’t a federally run program. Operating within broad federal guidelines, each state determines its own Medicaid eligibility criteria, eligible coverage groups, services covered, administrative and operating procedures and payment levels.

The Medicaid program covers long-term nursing home care costs and many home health care costs, which are not covered by Medicare. If your income exceeds your state’s Medicaid eligibility threshold, there are two commonly used trusts that can be used to divert excess income to maintain your program eligibility.

Qualified Income Trusts (QITs): Also known as a “Miller trust,” this is an irrevocable trust into which your income is placed and then controlled by a trustee. The restrictions are tight on what the income placed in the trust can be used for (e.g., both a personal and if applicable a spousal “needs allowance,” as well as any medical care costs, including the cost of private health insurance premiums). However, due to the fact that the funds are legally owned by the trust (not you individually), they no longer count against your Medicaid income eligibility.

Pooled Income Trusts: Like a QIT, these are irrevocable trusts into which your “surplus income” can be placed to maintain Medicaid eligibility. To take advantage of this type of trust, you must qualify as disabled. Your income is pooled together with the income of others and managed by a non-profit charitable organization that acts as trustee and makes monthly disbursements to pay expenses on behalf of the individuals for whom the trust was made. Any funds remaining in the trust at your death are used to help other disabled individuals in the trust.

These income trusts are designed to create a legal pathway to Medicaid eligibility for those with too much income to qualify for assistance, but not enough wealth to pay for the rising cost of much-needed care. Like income limitations, the Medicaid “asset test” is complicated and varies from state to state. Generally, your home’s value (up to a maximum amount) is exempt, provided you still live there or intend to return. Otherwise, most states require you to spend down other assets to around $2,000/person ($4,000/married couple) to qualify.

Reference: Kiplinger (Nov. 7, 2021) “How to Restructure Your Assets to Qualify for Medicaid”