PLANNING FOR AGING

“Aging Care Plan” refers to the broad spectrum of medical and support services provided to persons who have lost some or all capacity to function on their own due to a chronic illness or disabling condition and who are expected to need such services over a prolonged period of time. Long-Term care can consist of care in the home by family members (assisted by voluntary or employed help), adult day health care, or care in assisted living facilities or nursing homes.

Approximately 60% of us will need Long-Term care at some point in our lives. When this statistic is put in perspective with the relatively low likelihood of making an automobile or homeowner’s insurance claim, the risk that you or I will need Long-Term care at some point in the future is shocking. Unfortunately, the majority of Americans are either unaware of these statistics or refuse to plan for the often-catastrophic costs of Long-Term care.

In the following sections, we will discuss the most essential documents found in a good Long-Term Care Plan.

General Power of Attorney

A General Durable Power of Attorney (POA) containing Asset Protection Powers is the first essential document. Not all POAs are created equal; it is crucial that this document be prepared by a knowledgeable and experienced Elder Law Attorney.

A POA (always “durable” when used in connection with estate planning and Long-Term care planning) authorizes your “Agent,” sometimes called an “Attorney in Fact,” to act on your behalf and sign your name to legal and financial documents. It is an essential tool in the event that, due to age, illness, or injury, you are unable to carry on your legal and financial affairs. Asset Protection Powers written into the POA are essential in order for your Agent to protect your assets from the often catastrophic expenses of Long-Term care. Attorneys who are not experienced Elder Law Attorneys often fail to put these essential Asset Protection Powers into the POA.

A properly drafted POA is designed to avoid the need to go through a court supervised Guardianship proceeding, which is a time consuming, expensive, and publicly embarrassing process whereby someone goes to court to have you declared incompetent and to be appointed as your Guardian. A Guardian is subject to all the requirements of State Law, including the onerous requirement of filing annual accountings with the Court. State laws vary regarding the use and acceptance of a power of attorney.

Advance Medical Directive (AMD)

An AMD (also called a Medical Power of Attorney or Health Care Power of Attorney) authorizes another person (called your “Medical Agent”) to make decisions with respect to your medical care in the event that you are physically or mentally unable to do so. This document includes the type of provisions that used to be in what was commonly called a “Living Will,” allowing you to indicate your wishes concerning the use of artificial or extraordinary measures to prolong your life in the event of a terminal illness or injury. In the AMD, you will also appoint a “Medical Agent” and give that person the power to consent to medical and health care decisions on your behalf with regard to providing, withholding, or withdrawing a specific medical treatment or course of treatment when you are incapable of making or communicating an informed decision on your own.

A properly-drafted AMD is designed to avoid the need to go through a court supervised guardianship proceeding, which is a time consuming, expensive and publicly embarrassing process whereby someone goes to court to have you declared incompetent and to be appointed as your medical Guardian, typically at the same time they are requesting appointment as your Guardian for legal and financial purposes.

Aging Care Plan

Another essential document is an Aging Care Plan. The Aging Care Plan identifies your specific needs, desires, habits and preferences and incorporates all of this information into a document that your future caregiver can use to provide you with the best possible Long-Term care.

As an example, Alice wrote in her Aging Care Plan that if Alzheimer’s disease or some other type of dementia inhibited her mental abilities to communicate or recognize her surroundings, she wished to be in a respectable facility and only asked that she be visited and brought chocolates. To her children, this request seemed silly at the time, but when her mental capacities did diminish, the instructions were there. No one had to wonder if they should try to take care of Alice at home and how they would do it. Without guilt or question, they placed her in a respectable facility that took care of her needs. All they had to do was make loving visits, and, of course, they brought chocolates.

Trusts

A good Long-Term Care Plan will always include the documents mentioned above, and will typically also include a Trust – either a Revocable Living Trust (RLT) or our trademarked Family Trust Plus © (FTP) Asset Protection Trust.

An RLT generally provides for the creator (Grantor) of the trust to have full use of the trust income and principal for life. On the death of the Grantor, the assets may continue to be held in trust or the assets may be distributed for the benefit of the named beneficiaries, such as the grantor’s children. Although the most important benefit of the RLT is to avoid probate, a well-drafted RLT also can help protect from incapacity and can therefore be an important part of a Long-Term Care Plan.  Similar to a General Power of Attorney, an RLT can provide uninterrupted management of your assets by your trustee if you become incapacitated, sparing you and your family from having to go through the expense and complexities of a court-appointed Guardianship. It is important to note that an RLT does not protect your assets from the expense of Long-Term care. On the contrary, the assets in an RLT must be spent, if necessary, in providing Long-Term care, even if that means spending down all of the assets in the RLT to provide such care.

Our trademarked Family Trust Plus Trust © (FTP) is a trust that is designed to protect your assets from probate PLUS lawsuits PLUS nursing home expenses. In other words, the FTP protects your assets from the complications and hassles of probate and from other financial risks, including the threat of lawsuits, auto accidents, creditor attacks, extended hospitalizations – and most importantly – the catastrophic expenses associated with nursing home care.

You Can’t Afford to Ignore Long-Term Care Expenses

Whether you are rich, poor, or somewhere in between, you cannot afford to ignore the potentially devastating costs of nursing home care and other types of Long-Term care. Nursing homes are one of the most likely creditors (and one of the most expensive creditors) that most Americans will face in their lifetimes. Here are some of the statistics:

• About 70% of Americans who live to the age of 65 will need some Long-Term care at some time in their lives, over 40 % in a nursing home.
• The cost of a private room in a nursing home is over $120,000 per year.
• The average person age 65 today will need some Long-Term care services for about three years. Women need care for longer (on average 3.7 years) than do men (on average 2.2 years). Twenty percent of them will need care for more than five years.
• Long-Term care is not just needed by the elderly. A recent study found that 46 percent of group Long-Term care claimants were under the age of 65 at the time of disability.

Contrast the above Long-Term care statistics with statistics for automobile accident claims and homeowner’s insurance claims:

• Only 7.2% of people per year filed an automobile insurance claim.
• Only 6.15% of people per year filed a claim on their homeowner’s insurance.

Revocable Living Trusts Don’t Help

A revocable living trust is a wonderful tool to protect your assets from the expenses of probate, but it does not protect your assets from the expenses of Long-Term care while you’re alive. Because you have 100% unlimited access to the funds in a revocable living trust, so do your creditors, including nursing homes and State Medicaid programs.

In response to this limitation of revocable living trusts, I developed a unique solution – a special type of irrevocable trust called the Family Trust Plus© that protects your assets from the expenses and difficulties of probate PLUS lawsuits PLUS the expenses of nursing home care while you’re alive, in addition to a multitude of other financial risks during your lifetime. Our proprietary and trademarked Family Trust Plus © protects your assets from lawsuits, auto accidents, creditor attacks, medical expenses, and – most importantly for the 99% of Americans who are not among the ultra-wealthy – from the catastrophic expenses often incurred in connection with nursing home care.   Family Trust Plus© is the only type of self-settled asset protection trust that allows a Grantor to retain an interest in the trust while also protecting the assets from being counted by State Medicaid agencies.

The Family Trust Plus© has no effect on your income or your income taxes.

For a complete list of upcoming seminars, visit our website at www.davidwingate.com.

Peace of mind is only a call or click away! For an Initial Consultation call The Elder Law Office of David Wingate at (301) 663-9230 or visit www.davidwingate.com

David Wingate is an elder law attorney at the Elder Law Office of David Wingate, LLC. The elder law office services clients with powers of attorneys, living wills, Wills, Trusts, Medicaid and asset protection. The Elder Law office has locations in Frederick, Washington and Montgomery Counties, Maryland.

Notice: this Blog is published as a free service of the Elder Law Office of David Wingate. The information is for general informational purposes only and does not constitute legal advice. For specific questions, please consult with one of our experienced attorneys. We encourage you to share this newsletter with anyone you think may be interested.