Planning for the Eventualities of Aging

How simple it would be to drift lazily into our senior years, ignoring the possibility of prolonged illness or disability and the inevitability of death. Unfortunately, such denial can be legally and financially catastrophic, for individuals and their loved ones. Whether for your own future or for aging parents, the key is to plan. “Plan. Plan early, plan thoroughly, and plan to review and update your plan regularly,” says Sheryl Herndon, Esq., partner with White & McCarthy LLC.

REVIEW ASSETS

Herndon says organization is key. “I encourage clients to compile a list of their assets with relevant information – value, account numbers, location and written confirmation of beneficiaries. Once you know what you have, you can determine who will manage the assets if you are unable to do so, who will distribute the assets and who will be entitled to the assets.”

An asset review defines what’s in an estate, denoting what is disposed of in a last will and testament. Edward Barnes, CEO of Barnes & Diehl, P.C., says, “Some people think that life insurance is part of their estate; but when you die, your will does not determine where your life insurance goes – it goes to your beneficiary.” Keeping beneficiary designations current for insurance and qualified retirement plans ensures the benefits go where you want them to go.

CHOOSE AGENTS

If you become incapacitated and when you die, other people will make decisions for you – make sure these are decision makers of your choosing. You’ll need a durable power of attorney (POA) to serve as surrogate decision maker should you become incapacitated; an executor (and an alternate) for your will to administer the estate, collect and manage assets, file tax returns, pay debts and distribute assets and bequests; and a trustee for trusts.

COMMUNICATE HEALTHCARE DECISIONS

What measures do you want doctors and nurses to take – or not take – to prolong your life? In an advanced medical directive (AMD), you can share your wishes and appoint a health-care power of attorney to make specific decisions on your behalf if you’re unable to do so.

While an AMD spells out specific wishes, a do-not-resuscitate (DNR) order is more specific. A DNR states, “If I’m on life support or I code, then don’t revive me,” Barnes explains.

Barnes emphasizes the need to update POA designations, citing the case of a divorcing couple. “The husband was in a serious accident. The doctor called the wife and said he didn’t think the husband would make it, and asked if he had permission to pull the plug. The wife did the honorable thing, saying that she had the authority to decide but would like to consult with her husband’s parents. Together they decided to end life support.” An AMD is not made null and void until a divorce is filed.

LOOK LONG-TERM

“Purchasing a long-term care insurance policy is one of the simplest and most effective strategies to ensure that if you need long-term care, whether at home, in an assisted living facility or in a nursing home, you can afford it,” Herndon suggests.

However, “If [long-term-care insurance] is not an option, an effective plan can allow you to obtain good care while protecting your assets.” Such a plan involves Medicaid and, when applicable, veterans’ benefits.

A Medicaid recipient is limited to $2,000 of “countable” assets. The look-back period in Virginia is five years, meaning any assets held in the past five years will be considered. An elder law professional can help navigate the complexities of counting assets, reducing assets and ensuring that a spouse maintains sufficient assets.

An honorably discharged veteran who served at least 90 consecutive days, one of which was during a qualified wartime, may earn a veteran’s pension of up to about $2,000 per month of tax-free income. This can be used for in-home care or assisted living care, and for a surviving spouse. “The veteran’s benefit is different from Medicaid,” Herndon explains, “as the eligibility looks at the veteran’s assets, age and their care expenses or those of their spouse, and if they will have enough money to pay for their care or their spouse’s care for the rest of their life. There is no look-back period.” The care expense has to exceed the veteran’s income.

The application process for VA benefits is complex and can take six to nine months. Many veterans are told their income is too high or their assets are too great so they don’t apply. “There are significant care expenses that aren’t captured – for example, if a child is helping with grocery shopping, doctors’ appointments, bill pay, lawn care, house cleaning, we can put a contract in place where the veteran pays their child for their service. No child wants to charge their parents for helping them, but it can result in the veteran getting additional income,” says Herndon.

It’s vital to work with an attorney who will contemplate both VA and Medicaid planning so Medicaid is not jeopardized. The application time is long, so a denial due to a poorly completed application can be costly. A qualified law firm can help establish eligibility and refer clients to companies experienced with the VA filing process, for quicker turnaround times and higher approval rates.

Medicaid does not typically cover assisted living facilities (ALF). Some use VA benefit for the ALF stay, until the patient’s funds are diminished or nursing home care is necessary, at which point they can file a Medicaid application.

When beginning to plan or for in-depth answers to these and other questions, consult with qualified legal and financial experts. With careful planning, you and your loved ones can help ensure that the golden years maintain their shine.

Janet Faraone founded a non-medical, senior home care company in 2000 – back before “home care” was a household word. As a pioneer in the industry, she learned the intricacies of helping families navigate the needs of seniors and opened a care management division, selling her business a decade later.