Stapleton Elder Law

Planning in Advance: How to Help Your Aging Parents

 A longer lifespan is a wonderful blessing for many, but for others a longer lifespan doesn’t always translate into an enjoyable quality of life. Lengthy chronic illnesses lead to exponentially increased healthcare costs. This requires advanced planning.

It rarely comes the way that you expect it. One second your parents are planning their next trip in the RV, and then you mom breaks her hip in a serious fall and your dad is diagnosed with congestive heart failure.

How the devil did this happen? This is the basic question asked by Chicago Now in its recent article, “Getting Old Sucks: Why To Start Estate Planning With Your Parents.” As the article puts it: “you are officially on the rollercoaster ride to elder hell.”

Fortunately, there are things you can do on this bumpy ride to make it easier on you and your parents. While it’s uncomfortable at first discussing the topic of death with your parents, it’s necessary and important.

Talk to them about estate planning and make sure that they have wills, durable healthcare and medical powers of attorney (POA), and health care directives. If your parents don’t have these documents, you should make an appointment with a qualified estate-planning attorney and get this completed as soon as possible.

For example, what if your father has a debilitating stroke, doesn’t regain consciousness, and needs 24/7 medical support indefinitely? Without a health care directive, the hospital will keep him alive, even in a vegetative state, until he passes naturally.

You’ll be unable to have him removed from life support, unless you can show the physician and hospital administrators his legally valid health care directive and his medical POA that details his wishes. Without these estate planning documents, you and your mother will have limited control on how he should be treated.

From a financial standpoint, it is important to remember that the hospitals will continue to bill you even when your father is on life support and technically brain dead. After 100 days of Medicare coverage, your mom will be fully responsible for these care and treatment expenses, if there’s no supplemental insurance.

Your best and only defense: start talking with your parents about how they want to live, age and what kind of end-of-care life they want. Don’t hope that it resolves itself. This usually leads to emotional, legal and financial disaster.

Once you have your parent’s estate plan in place, start on your own. The same estate planning attorney who was able to help you with your parent’s estate, will be able to help you and your family too. Estate planning is necessary at every stage of life.

Reference: Chicago Now (March 7, 2017) “Getting Old Sucks: Why To Start Estate Planning With Your Parents”

Please visit our website to learn how we can assist you to encourage your aging parents to plan in advance.

Mid-Life Marriages, Money and Myths

Getting married after you’ve put a few miles on, is very different than when you are fresh out of the gate. Resolving legal issues before the wedding, can alleviate many common marital issues.

There are admittedly challenges when people decide to get married after fifty. There are also many myths, as reported by Forbes in “6 Money Myths About Marrying After 50.” If you or your intended has children from a prior marriage, there are added complications that need to be addressed.

1: Prenups Are Just for The Rich and Famous. This is not true. If you’ve been married before and have children from a previous relationship, a prenuptial agreement is important to ensure that your assets will pass to your children from the prior marriage. What about a first-time marriage? There still might be a need for a prenup, especially if you own significant assets. Don’t think of a prenup as preparing for divorce, but rather more like writing your will. If you don’t have your affairs in order, the state will decide for you—just like dying without a will. After age 50, the focus of a prenup should be on protecting your children and grandchildren. For instance, some states allow a surviving spouse to claim his or her “elective share”, instead what’s in the decedent's will. A prenup allows your spouse to waive the elective share. That means the odds are that your estate plan won’t be challenged by your surviving spouse.

2: Don’t Talk Estate Planning with Your Stepfamily. Estate planning is critical when you have children from an earlier marriage.  Otherwise, your entire estate could pass to your new spouse and not to your own children. Have a candid discussion about your estate planning and prenup with your adult children and your new spouse. This will alleviate some of the concerns adult kids may have about how it will affect their inheritance, when their parent gets remarried.

3: Holding Assets Jointly Is Always Preferable. Long before getting married, couples should decide on whether they want to have separate or joint accounts and if one will sell his or her current home. If one of you sells their home, will the deed to the house you live in be changed to reflect join ownership? It is best to have these discussions before the wedding ceremony.

4: Your New Spouse’s Debt Won’t Impact You. This is a big one. Marrying a person with a large amount of debt, whether it’s college loans or credit card debt, can be a major issue in second marriages. Therefore, spouses should be upfront and candid about their debts before marrying. That way they can plan how to address the debt.

5: It Always Makes Financial Sense to Get Married. This is not always true. It depends on your personal and financial circumstances. Tying the knot may reduce your Social Security benefits, especially if you didn’t work while you were married the first time and can claim spousal benefits that are much higher than your own Social Security benefits. If you have an ill or disabled partner on Medicaid, then you might want to stay unmarried so he or she can to continue to qualify for benefits. The combined marital income might make your partner ineligible for Medicaid.

6: Being Married Means Your Spouse May Automatically Make Medical Decisions on Your Behalf. This is one of the things you really want to take care of before you need it. The only way to be sure that your new spouse can make medical decisions for you, is by having a Health Directive drafted and executed that details your wishes regarding end-of-life care. This is something to address when you don’t need it, and both of you should have this. It’s part of a number of documents that you should have prepared by an experienced estate planning attorney when you sit down to update your wills and other legal documents.

One final note: blended families do better when there is a lot of communication between parents, step-parents, kids and step-kids, whether the kids are in elementary school or grown adults with kids of their own.

Reference: Forbes (February 13, 2017) “6 Money Myths About Marrying After 50”

Please visit our website to learn how you can ensure your estate plan meets the needs of your family.

Paying for Elder Care Costs Nearly $7,000 for the Average American Family

How much Americans pay for elder care may be surprising, but there are sources that can help. Another surprise: millennials spend the largest percentage of their income on caregiving. Is it because their income is that much less, or are they more generous?

According to a recent CBS MoneyWatch article, “How to ease the pain of paying for elder care,” the cost of caregiving for parents, spouses or partners is shared by members of all generations, although the percentages vary. Baby Boomers spend 13% of their annual income on unpaid caregiving, and members of the Silent Generation, ages 71 to 91, spend about 25%, mostly on spouses or partners. The GenXers—ages 35 to 50—spend about 24% of their annual income on caregiving for parents, and millennials (ages 18 to 34) spend the largest percentage, at 27%. If you thought that millennials were still living off of their parents, it’s time to change that stereotype!

To address the impact that this cost has on the household, have a family meeting to assess your family’s financial and aging status and to plan for what may be required throughout the year. These types of discussions can help you plan for future elder care expenses in order to place them into a budget, along with your own retirement savings and savings for children’s education.

One source: ease the financial burden of caring for a loved one by investigating government programs. Many advocates are currently anticipating coming legislation that will aid family caregivers. State and local governments may also offer tax breaks and other aid programs for seniors, particularly those individuals needing home renovations to stay in their homes. Those tasked with caregiving should also look into neighborhood religious and community groups for support. There may be senior- and disabled-specific funding programs, along with able-bodied volunteers who can help lighten the load.

Depending on the family’s financial situation, including time constraints due to work schedules, it might make sense to look into professional help. An elder law attorney should be able to recommend an aging life-care professionals (formerly known as “geriatric care managers”) who will be able to help the family delve into elder care resources, including financial help. These professionals are usually social workers, gerontologists or other health care professionals with a focus on helping the elderly. They will be able to help you and your family plan for medical emergencies. Your elder care attorney will also work with your family to make sure that important documents, including power of attorney, health care proxies and other important documents are in place. Doing the planning in advance of an emergency is advised, since you will have more options and avenues of assistance.

Reference: CBS MoneyWatch (December 23, 2016) “How to ease the pain of paying for elder care”

To learn about planning in advance or planning for a loved one, please visit our website.

 

Will You Need to Apply for Medicaid?

Applying for Medicaid is not for the faint of heart, and the level of care covered by Medicaid may be far lower than what most middle-class Americans have come to expect.

People put off thinking about or planning to apply for Medicaid because there is nothing pleasant about it, from coming to terms with being ill and impoverished to sharing a nursing home room with a stranger, according to USA Today in "Navigating Medicaid for elder care can be as painful as the ailments." Depending on the policies of your state, you may not be able to spend your final days or years at home.

Up to 30% of Medicaid funding covers long-term care, which is roughly $100 billion annually. More than two-thirds of older adults will require some personal assistance before they pass away, and nearly 50% will need care to such a level that they'd be eligible for private long-term care insurance or Medicaid.

If you want to explore sheltering assets so you can qualify for Medicaid sooner rather than later, then you should talk to a qualified Medicaid attorney. You don't want to be without expert counsel, especially when making hard decisions on how to allocate money you've saved all your life.

A year of nursing home care can run upwards of $90,000, which means savings are going to run out quickly. Some folks start to transfer assets to their children earlier so they can have an inheritance. These transfers may be subject to a "lookback" or penalty period if they happen within the five years before the elderly parent's application for Medicaid.

Medicaid is governed by both state and federal laws, so there are some variation depending where you live as to what it covers and what you can keep. Here are a few general tips to consider:

• Medicaid rules say that to qualify, an elderly widow or widower can't have more than $2,000 in "countable" resources.
• Most Medicaid recipients can still receive Social Security benefits; however, nursing homes can access these funds to pay for the cost of the room in addition to Medicaid coverage.
• The elderly can retain their homes for six months in the event they recover (unless it's worth more than $520,000), then they can either apply for a six-month extension or sell the house to pay the nursing home.
• For a senior couple, a house and a car for the spouse and certain items of personal property, like wedding rings, are exempt when calculating eligibility for Medicaid—the spouse can also keep half of countable resources up to $119,220.

Applying for Medicaid benefits is a complex task that requires the help of an experienced elder law attorney. Families need to be involved with their spouses or parent's finances and medical records, which can be voluminous. Like many of the issues concerning severe illness or end of life care, it is best to have a plan in place, discuss the situation with the family and with the help of an elder law attorney.

Reference: USA Today (March 26, 2016) "Navigating Medicaid for elder care can be as painful as the ailments"

To learn more about Medicaid and your estate plan, please visit our website. 

Get Ready for the 2016 Medicare Mess

2016 has the potential to become a disaster if our government does not act soon. Picture this: nearly one third of all Medicare beneficiaries will face a 50% – you read that right – increase in their Part B premiums in 2016. More than two thirds will have ZERO premium increase. That is, beneficiaries will have the same monthly premium in 2016, while others will see a $50 monthly increase. That's a big bite out of a fixed monthly income. Two expected results: more seniors will apply for Social Security benefits earlier than they had originally planned and state Medicaid programs will see bigger than usual bills.

As a direct result of complex relationships between Social Security and Medicare and a number of other issues, 2016 may be an expensive year for some seniors, according to Forbes' recent article, "Untangling the Medicare Premium Mess -- And What It Means For You." Medicare laws require it to increase premiums annually to cover increases in per capita costs. This would typically be about $16, which most seniors can manage.

Except that 2016 will not be a normal year. Most retirees have their Medicare premiums deducted from their Social Security benefits, but because inflation was so low this year, there won't be a cost-of-living increase in 2016 for Social Security. And the law says that if Social Security benefits don't rise—you guessed it—neither can the Medicare premiums. That's at least not for most people who get Social Security benefits.

That means about 70% of Medicare beneficiaries won't see the premium hike. However, that leaves the entire burden of this year's Medicare cost increases on the remaining 30%. Those guys are going to be hit with 50% premium hikes.

This list of those who are unprotected is a bit curious. It includes high income seniors, new enrollees, those enrolled in Medicare but not getting a Social Security check, and the so-called "dual eligibles" (who receive Medicare and Medicaid benefits; their premiums are paid by state Medicaid programs).

For high-income people, those premium hikes are hefty: for a single making more than $214,000, Part B premiums are will increase from $335.70 to $509.80. For some of these folks, it'd be cheaper to buy insurance through Affordable Care Act exchanges than to buy Part B plus Part D drug coverage and a Medigap policy. But they also might be better off with Medicare long term. It's complicated.

Seniors with more typical incomes also have some tough choices to make. For years, we've heard how the government and many financial experts encouraged seniors to wait to take their Social Security benefits for as long as they could. However, the special circumstances in 2016 may give some the exact opposite message, like those age 67, single, making less than $85,000, and enrolled in Medicare but not yet taking Social Security. The rule is that you must pay a large increase if your premiums are not being deducted from your Social Security check. If you claim Social Security now and start having premiums deducted, you can save more than $500 in Medicare premiums in 2016, and you start getting Social Security benefits.

But it's a trade-off, because you would also receive less in lifetime Social Security benefits. You'll need to do some math and the answer will depend on how much money you make, your best guess about how long you will live, and whether you're married. To learn more about long term planning, please visit our website.

Reference: Forbes (October 9, 2015) "Untangling the Medicare Premium Mess -- And What It Means For You"