How Parents and Adult Children Talk about Money and Aging

If you thought it was hard to talk with your children about sex, try talking with them about money and death. Americans generally steer clear of talking about death and money. Nevertheless, these conversations are necessary, according to a recent article, “Let’s talk about money and death: Why aging parents and their adult children should have ‘the talk,’” from MarketWatch. Sharing information about finances and end-of-life wishes can prevent resentment or stress before a crisis and gives everyone involved peace of mind.

If an estate plan has been created and financial and tax planning accomplished, but the adult children aren’t told a plan exists, there may be general worry over decades as parents age. What will happen when they die? Will the siblings know what to do? Who will be in charge? A family meeting to discuss the plan and the parents’ wishes can address these issues.

This is especially important for members of Generation X (Americans born between 1965 and 1980). This cohort has the most assets, may deal with a significant wealth transfer and often cares for its children and aging parents.

Start by putting together an agenda for the family meeting. Understand that there may need to be more than one meeting, since there is so much ground to cover. Long-term Care planning, the current status of the parent’s living situation and plans for a possible move to a continuing care facility are just the start. Do the parents have an estate plan and documents like a Power of Attorney, Healthcare Proxy, Advanced Care Directive and the like?

Money can be an emotional conversation, especially if there are disparities in the sibling’s financial status. Parents are often extremely reticent to share information about their net worth, sometimes because they don’t want their children to lose incentive to work, and in other situations because they are embarrassed about not having enough money to sustain them through their later elder years.

Having a neutral third party in the meeting, like an estate planning attorney, can be helpful when emotions are running high. Holding a family meeting in a law office may sound formal. However, having a professional on hand who can clarify estate, financial and tax matters may help keep the conversation focused. If the estate planning attorney works with a therapist or geriatric specialist who facilitates family discussions, they may be able to help the family move past the emotions of anticipated grief into productive, concrete planning.

Confronting the realities of mortality and money is difficult even in the best of circumstances. Nevertheless, with the support of skilled professionals, a focus on care and the creation of a no-judgment zone, the family will be able to help each other as they prepare for the future.

Reference: MarketWatch (March 23, 2024) “Let’s talk about money and death: Why aging parents and their adult children should have ‘the talk’”

Estate Planning Strategies to Care for Aging Parents

Our parents are pillars of support along our journey through life, guiding us through the ups and downs with unwavering love and care. As our parents age gracefully, we can choose estate planning strategies that support them along their journey to retirement and beyond. These strategies address long-term care and living arrangements for our parents’ well-being and peace of mind. We explore why caring for aging parents in estate planning is necessary to preserve their dignity, security and legacy.

Comprehensive Estate Planning Strategies to Care for Aging Parents

Modern estate planning goes beyond wealth protection to create a roadmap for the future. It encompasses health care decisions, financial management and a delicate balance between independence and security. Kiplinger’s article, “Estate Planning for Your Aging Parents: A Delicate Balance,” helps us discuss estate planning strategies to care for aging parents. An estate plan with these strategies provides clarity and guidance to loved ones on aging parents’ wishes, while retaining control for aging parents over financial and health-related matters.

Estate Planning for Aging Parents – How to Balance Independence and Care

Balancing a parent’s independence and care as they age is challenging. Declining cognition and physical health increase the need for legally documented healthcare wishes and appointed representatives to manage financial affairs.

Aging adults value autonomy and may be reluctant to relinquish control over their daily lives. Open and honest communication is the key to finding this balance. Conversations should be encouraged about medical wishes and future goals with an aging parent or parents. An estate plan can then be created that honors their decisions.

Consider how a trust can protect a parent’s wealth, with a trustee overseeing their estate’s administration and asset distribution. A will is another vital estate-planning component, naming beneficiaries to simplify the distribution of assets after a parent passes away.

Plan for long-term care and Medicaid. An irrevocable trust can preserve your parents’ assets during Medicaid approval, while income-producing investments supplement their income.

Incapacity Planning to Respect an Aging Parent’s Health Care Preferences

As parents age, their healthcare needs may become more complex, necessitating careful planning for incapacity. Advanced directives and health care proxies empower parents to designate trusted individuals to make medical decisions, ensuring that their preferences for medical treatments and end-of-life care are honored with dignity and respect.

Tax Planning: Minimizing Burdens for Heirs

Tax planning is another central element in a comprehensive estate plan. Aging parents passing their wealth to the next generation look for ways to minimize the tax burden on their beneficiaries. Gifting, establishing trusts and utilizing tax-advantaged accounts can reduce taxes, maximize inheritance and transfer their wealth more efficiently.

Key Takeaways:

Aging Parents: We can choose estate planning strategies that support aging parents in their journey to retirement and beyond.
Balance Independence and Care: Encourage conversations about medical wishes and future goals with an aging parent or parents. An estate plan can then be created that honors their decisions.
Incapacity Planning: Advanced directives and health care proxies empower parents to designate trusted individuals to make medical decisions,
Tax Planning: Gifting, establishing trusts and utilizing tax-advantaged accounts can reduce taxes, maximize inheritance and transfer their wealth more efficiently.

Conclusion

Caring for aging parents in estate planning is practical and necessary. It is also a profound expression of love and gratitude. Embracing this responsibility with compassion, empathy and diligence helps our parents navigate this stage of life with dignity, security and peace of mind.

If you’re ready to embark on this estate planning journey for your aging parents, our experienced legal team guides you every step of the way. Contact us today to learn more and confidently start planning.

Reference: Kiplinger (February 2024) “Estate Planning for Your Aging Parents: A Delicate Balance.”

Paying for Nursing Home Costs: A Guide to Medicare, Medicaid and More

Navigating the myriad of ways to pay for nursing home care can be overwhelming. However, with a clear understanding of nursing home costs and the options available, it becomes manageable.

Understanding Nursing Home Costs

Nursing home costs nationwide can be daunting. In 2021, a semi-private room in a nursing home averaged $7,908 per month, with private rooms at $9,034. Even assisted living facilities, which offer a lesser level of care than nursing homes, can run upwards of $4,500 a month. Most people who enter nursing homes start by paying for their care out-of-pocket by using their savings or accessing equity from large assets like real estate. It’s clear that understanding these costs is crucial for anyone considering nursing home care.

What are the Nursing Home Care Private Pay Options?

Private pay remains a choice for those who either don’t qualify for Medicaid or prefer not to use it. This method involves tapping into personal assets or savings to pay for nursing home care. It provides more flexibility in terms of choosing the facility or level of care. However, it can quickly deplete one’s assets.

Does Medicare Pay for Nursing Home Costs?

Medicare is a federal program and primarily focuses on medical care, not long-term care. Medicare will not pay for long-term care in a nursing home facility. It will pay for a limited amount of time for skilled nursing care following a hospital stay but not for extended nursing home stays. Seniors also still need Medicare coverage for hospital care, doctor services and medical supplies while living in the nursing home. Understanding the specifics of what Medicare covers can help families plan better.

What kind of nursing home care does Medicare cover? Medicare primarily covers skilled care, which is care that can only be delivered by trained professionals. It doesn’t typically cover custodial care, which is personal care, like bathing or dressing.
How much does Medicare pay for skilled nursing home care? Medicare will cover the first 20 days of skilled nursing care at 100%. Beyond that, up to 100 days, a co-payment is required. After 100 days, Medicare will no longer pay for skilled nursing care.

Using Medicaid to Pay for Nursing Care

Medicaid is a popular option for many seniors needing nursing home care. It caters to those with limited income and assets. It is the primary payer for long-term care coverage nationwide.

Who’s eligible for Medicaid nursing home coverage? Medicaid is a joint federal and state-run program. Eligibility varies by state but generally requires meeting specific income and asset limits. Most states also have a look-back period of five years to ensure that assets weren’t sold or given away to qualify for Medicaid.
How does one apply for Medicaid, and what does Medicaid cover? Applying requires detailed financial documentation. Medicaid can cover a large portion of nursing home care costs. However, it might limit the choices of facilities. Working with an experienced elder law attorney to apply for Medicaid is not required. However, it can increase your chances of success by providing guidance, ensuring accurate documentation, and addressing any issues or appeals that may arise.
Do all nursing homes accept Medicaid? Not all nursing homes accept Medicaid. It’s essential to research and find facilities that both provide the level of care needed and accept Medicaid as a payment option.

Long-Term Care Insurance: Is It Worth It?

Long-term care insurance is designed to cover long-term care costs that Medicare and private health insurance don’t cover. This might include nursing home care, assisted living, or home care. However, the coverage depends on the policy details, and premiums can be high. In addition, the older one is, the harder it is to be considered insurable.

If long-term care insurance is an option, be sure to start planning early. Insurance companies are known to reject more applicants the older they get. Reviewing insurance plans each year to ensure that the policy still meets anticipated needs is essential. Make changes if necessary, and never stop paying the premiums so that the insurance does not lapse.

The Role of VA Nursing Homes in Elder Care

For veterans, VA nursing homes can be an option. These facilities are dedicated to providing care to veterans and may be more affordable than private facilities.

Making the Right Decision: Private Pay vs. Medicaid vs. Medicare

The decision often comes down to personal finances, care needs and eligibility. Understanding the differences between these payment methods can lead to more informed choices. As the demand for senior care services grows, it’s predicted that the cost of nursing home care will continue to rise. Planning ahead becomes even more essential.

Working with an Elder Law Attorney: The Best Way Forward

Consulting with an elder law attorney can provide invaluable insights and assistance in navigating the complexities of nursing home costs and payment options.

Planning ahead is crucial. The more you know, the better decisions you can make for yourself or your loved ones.

How Do I Make a Care Plan for Mom?

Medicare typically doesn’t pay for basic assistance, and families often don’t try to determine how to provide this care until there is a health crisis, which can lead to unnecessary stress, conflicts and escalating costs.

Nerd Wallet’s recent article, “Create a Care Plan for Older Parents (or Yourself),” says that making a care plan well in advance lets families organize, locate appropriate resources and determine ways to pay for care before a crisis hits.

A care plan is thinking through the logistics of what you’ll need as you age, so that you are prepared when the poop hits the fan with aging. A way to cope is to plan for temporary rather than permanent disability. Ask what kind of help you or your loved one might need after a hip or knee replacement. How well is the home set up for recovery? Who would help with household tasks? Contemplating a two- or three-month disability with an eventual return to health is less daunting but involves much of the same planning as a more lasting decline.

Many seniors would like to stay in their current homes as they age, something called “aging in place.” That typically means relying on family members for care, using paid workers, or both. However, if family members will be tapped, discuss the logistics, including whether and how much they will be paid. If home health aides will be hired, consider who will supervise the process.

Look at any savings that can be tapped and whether the senior may qualify for government help, such as veterans benefits, Medicaid, or state programs. Families may want to consult an elder law attorney for personalized advice.

It is important to look at the current home as “aging friendly.” An occupational therapist can suggest adaptations allowing the older person to remain in the home if they’re disabled. The sooner you get this evaluation, the more time you’ll have to prepare. Even if the home supports aging in place, the neighborhood might not. Consider how the older person will socialize, get groceries, and make it to health appointments if they can no longer drive.

An independent living or senior living facility could provide more amenities. However, these typically don’t provide long-term care. Therefore, see if the senior is okay with moving again later or whether they should begin with an assisted living or continuing care facility that can provide more help.

Once you have a plan, capture the details and share it with family members or others who may be involved. Revisit the document periodically as circumstances change. Aging planning is an ongoing process.

Reference: Nerd Wallet (Aug. 24, 2023) “Create a Care Plan for Older Parents (or Yourself)”

Can a Dementia Patient Sign Legal Documents?

Once a diagnosis of dementia has been received, families need to immediately begin advance care planning, as explained in a recent article titled “Can Someone With Dementia Sign Legal Documents” from Health News. Depending on their medical condition, some patients with dementia, particularly in early stages, may be capable of making their own decisions regarding legal decisions. However, discussions must begin early, so the person can be involved and understand the planning process.

When family members don’t know the wishes of their loved ones, they are more likely to experience distress and difficulties in making decisions. Families report feelings of guilt, self-doubt and stress while making advance care decisions with no input from their loved ones.

Laws concerning advance care vary from state to state. An elder law attorney can help older adults interpret state laws, plan how their wishes will be carried out and understand financial options.

Advance care planning focuses on both long-term care and planning for funeral arrangements. These documents typically include a durable power of attorney for healthcare, a living will and Do-Not Resuscitate orders, often called a DNR. Depending on state law, there may also be a MOLST document, short for Medical Orders for Life-Sustaining Treatment.

The durable power of attorney for healthcare names another person who can serve as a proxy for the person with dementia, if and when the person is not able to make informed healthcare decisions for themselves.

A living will states a person’s wishes for end-of-life treatment. This documents their views about specific medical procedures including but not limited to dialysis, tube feeding or blood transfusions. If the person should become unconscious, then families may make treatment decisions based on what their loved one wanted.

A Do-Not-Resuscitate order is placed in a patient’s medical chart if the person does not want to receive CPR (cardiopulmonary resuscitation) if their heart stops or breathing ceases. This must be signed by a doctor before it is placed in the chart.

Planning for a funeral is a difficult task. However, it will alleviate stress and possible guilt in the future. People with dementia can tell their loved ones in advance what they want regarding a funeral or memorial service, burial, or cremation. If any arrangements are already in place, such as the purchase of a burial plot, providing details to family members will make it easier to manage.

Advance care planning can be a sensitive topic but seeking legal advice early on is useful so the family can focus on making sure their loved one has the care they want. Involving the person with dementia in the process is respectful. An elder lawyer attorney will be able to guide the family to ensure planning is done properly.

Reference: Health News (Jan. 11, 2023) “Can Someone With Dementia Sign Legal Documents”

Top 10 Success Tips for Estate Planning

Unless you’ve done the planning, assets may not be distributed according to your wishes and loved ones may not be taken care of after your death. These are just two reasons to make sure you have an estate plan, according to the recent article titled “Estate Planning 101: 10 Tips for Success” from the Maryland Reporter.

Create a list of your assets. This should include all of your property, real estate, liquid assets, investments and personal possessions. With this list, consider what you would like to happen to each item after your death. If you have many assets, this process will take longer—consider this a good thing. Don’t neglect digital assets. The goal of a careful detailed list is to avoid any room for interpretation—or misinterpretation—by the courts or by heirs.

Meet with an estate planning attorney to create wills and trusts. These documents dictate how your assets are distributed after your death. Without them, the laws of your state may be used to distribute assets. You also need a will to name an executor, the person responsible for carrying out your instructions.

Your will is also used to name a guardian, the person who will raise your children if they are orphaned minors.

Who is the named beneficiary on your life insurance policy? This is the person who will receive the death benefit from your policy upon your death. Will this person be the guardian of your minor children? Do you prefer to have the proceeds from the policy used to fund a trust for the benefit of your children? These are important decisions to be made and memorialized in your estate plan.

Make your wishes crystal clear. Legal documents are often challenged if they are not prepared by an experienced estate planning attorney or if they are vaguely worded. You want to be sure there are no ambiguities in your will or trust documents. Consider the use of “if, then” statements. For example, “If my husband predeceases me, then I leave my house to my children.”

Consider creating a letter of intent or instruction to supplement your will and trusts. Use this document to give more detailed information about your wishes, from funeral arrangements to who you want to receive a specific item. Note this document is not legally binding, but it may avoid confusion and can be used to support the instructions in your will.

Trusts may be more important than you think in estate planning. Trusts allow you to take assets out of your probate estate and have these assets managed by a trustee of your choice, who distributes assets directly to beneficiaries. You don’t have to have millions to benefit from a trust.

List your debts. This is not as much fun as listing assets, but still important for your executor and heirs. Mortgage payments, car payments, credit cards and personal loans are to be paid first out of estate accounts before funds can be distributed to heirs. Having this information will make your executor’s tasks easier.

Plan for digital assets. If you want your social media accounts to be deleted or emails available to a designated person after you die, you’ll need to start with a list of the accounts, usernames, passwords, whether the platform allows you to designate another person to have access to your accounts and how you want your digital assets handled after death. This plan should be in place in case of incapacity as well.

How will estate taxes be paid? Without tax planning properly done, your legacy could shrink considerably. In addition to federal estate taxes, some states have state estate taxes and inheritance taxes. Talk with your estate planning attorney to find out what your estate tax obligations will be and how to plan strategically to pay the taxes.

Plan for Long Term Care. The Department of Health and Human Services estimates that about 70% of Americans will need some type of long-term care during their lifetimes. Some options are private LTC insurance, government programs and self-funding.

The more planning done in advance, the more likely your loved ones will know what to do if you become incapacitated and know what you wanted when you die.

Resource: Maryland Reporter (Sep. 27, 2022) “Estate Planning 101: 10 Tips for Success”

How Does Medicaid Count Assets?

For seniors and their families, figuring out how Medicaid works usually happens when an emergency occurs, and things have to be done in a hurry. This is when expensive mistakes happen. Understanding how Medicaid counts assets, which determines eligibility, is better done in advance, says the article “It’s important to understand how Medicaid counts your resources” from The News-Enterprise.

Medicaid is available to people with limited income and assets and is used most commonly to pay for long-term care in nursing homes. This is different from Medicare, which pays for some rehabilitation services, but not for long-term care.

Eligibility is based on income and assets. If you are unable to pay for care in full, you will need to pay nearly all of your income towards care and only then will Medicaid cover the rest. Assets are counted to determine whether you have non-income sources to pay for care.

Married people are treated differently than individuals. A married couple’s assets are counted in total, regardless of whether the couple owns assets jointly or individually. The assets are then split, with each spouse considered to own half of the assets for counting purposes only. Married couples have some additional asset exemptions as well.

Not all resources are considered countable. Prepaid funeral expenses, a car used to transport the person in the care family and qualified retirement accounts may be exempt from Medicaid’s countable asset limits.

For married couples, their residence for a “Community Spouse”—the spouse still living at home, and a large sum of liquid assets, are also excluded. Many non-countable assets are very specific to the individual situation or current events. For example, stimulus checks were exempt assets, but only for a limited time.

Medicaid sets a “snapshot” date to determine asset balances because some assets change daily. For unmarried individuals, all asset protections and spend-downs must happen prior to submitting the application to Medicaid. A detailed explanation must be included, especially if any assets were transferred within five years of the application.

For married couples, a Resource Assessment Request should be submitted to Medicaid before any action is taken. This document details all resources Medicaid will count and specifies exactly how much of these resources must be “spent down” by the institutionalized spouse for eligibility.

In many cases, assets are preserved by turning the countable asset into a non-countable income stream to the spouse remaining at home.

Medicaid application is a complicated process and should be started as soon as it becomes clear that a person will need to enter a facility. Understanding options early in the process makes it more likely that property and assets can be preserved, especially for the spouse who remains at home.

Reference: The News-Enterprise (Oct. 5, 2021) “It’s important to understand how Medicaid counts your resources”

How to Avoid Medicaid Estate Recovery

Medicaid is a government program that helps seniors and others pay for long term care. However, it’s not always free, explains the article “What Is Medicaid Estate Recovery?” from AOL.com. The Medicaid Estate Recovery Program (MERP) is used by states to recover costs from estates with funds. The goal of Medicaid estate recovery is to make the program affordable for the government, but it can have a severe impact on the beneficiaries of Medicaid recipients. An estate planning elder law attorney should be contacted, if you believe you or a loved one may need Medicaid.

Seniors are eligible for Medicare when they turn 65. This program pays for many healthcare expenses, but not for long-term care in a nursing home. Medicaid is used when someone does not have long term care insurance or enough money to pay for long-term care out of pocket. Medicaid can also be used for long-term or nursing home care, if steps have been taken to protect assets. This usually includes strategies, like trusts and Medicaid Asset Protection Trusts (MAPT).

A federal law passed in 1993 (the Omnibus Budget Reconciliation Act) requires states to attempt to seek reimbursement from a Medicaid beneficiary’s estate after they have died. Some of the costs that the state will try to recover include:

Nursing home costs
Home and community-based services
Medical services received through a hospital where the recipient is a long-term care patient
Prescription drug services for long-term care recipient

The recovery program lets Medicaid pursue any eligible assets owned by the estate. While this depends upon where you live, any assets that are part of the probate estate could be attached, including:

Bank accounts
Your home or other real estate
Vehicles or other real property

In addition, some states allow Medicaid to recover assets that are not subject to probate, including jointly held accounts, Payable-On-Death (POD) bank accounts, real estate owned in joint tenancy with right of survivorship, living trusts and any other assets that the Medicaid recipient had a legal interest in.

An estate planning elder care attorney in your state will know what types of assets your state tends to pursue and will help you understand what can and cannot be used for Medicaid benefit recovery.

Note that while Medicaid cannot take the primary residence while the recipient is still living, they can place a lien on the home. If the recipient passes away and a beneficiary inherits the home, they will not be able to sell the property until the lien has been satisfied.

For beneficiaries, Medicaid recovery means a smaller inheritance. However, that’s not the only thing to be mindful of. There are laws known as “filial responsibility laws” that allow healthcare providers to sue the children of long-term care recipients to recover nursing care costs. This is not commonly done as of this writing, but the costs of COVID may change this in the near future.

Strategic planning can help you or loved ones avoid the financial impact of Medicaid estate recovery. If you are eligible and can afford to buy a long-term care policy, that may help to cover most of the cost of care. Another option is to remove as many assets from the probate process as possible. An estate planning attorney will be able to help you create a plan to protect your assets.

Reference: AOL.com (February 5, 2021) “What Is Medicaid Estate Recovery?”

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