Garland Law Offices, P.A.

Alzheimer’s, Dementia and other Brain Diseases Require Special Estate Planning Steps

“Covid-19 or Coronavirus has created health worries and fear for everyone. For those with underlying health issues, which include multiple sclerosis, Parkinson’s disease, Alzheimer’s disease, or other brain diseases, those concerns are even more pronounced.”

There are certain steps that can be taken by individuals, loved ones and family members to make this challenging time safer and smarter, advises an article “Financial And Estate Planning Steps To Take Now: Special Considerations For Those With Brain Disease” from Forbes.

Anyone living with a neurologic condition needs to be sure their planning reflects not only their condition but their personal experience of the condition. The variability of each person’s experience of a brain disease, from symptoms and severity to the progression rate and future prognosis to the possibility of any recovery, affects how they need to plan.

For an Alzheimer’s patient, in early stages there may be no problems in signing legal documents and putting legal safeguards in place to protect finances. Most people are not aware that the degree of competency to sign legal documents varies, depending upon the complexity of the documents to be signed and the circumstances. A relatively low level of competency is required to sign a will. This is known as “testamentary capacity.” A higher level of competency is required to sign something like a revocable trust, investment policy statement, etc. Therefore, a person who may be legally able to sign a will may not have the legal capacity to sign other documents. Alzheimer’s patients need to get their entire estate plan in order, as soon as a diagnosis is received. Safeguards are extremely important, including having an independent person, like a CPA or trusted family member, receive copies of all monthly bank and brokerage statements, in case abilities decline faster than anticipated.

Patients living with peripheral neuropathy may experience issues with balance, burning sensations, dizziness, hypersensitive skin and pain that make wearing socks or shoes impossible. If the condition becomes so severe that the person becomes homebound, they need to make changes: set up accounts, so bills can be paid online, have income streams set to automatic deposit and simplify and consolidate accounts. It is important to have a Power of Attorney (POA) that is effective immediately or a revocable living trust with a co-trustee. In this way, you do not have to leave home to conduct your business.

Parkinson’s disease may not be well understood by professional advisors. You’ll need to explain that your facial expression—Parkinsonian masked face—does not mean that you are not responding to a conversation. They need to know that your handwriting may change, becoming small and cramped. This can result in a bank or other financial institution refusing to accept your signature on documents. Your attorney can prepare a document that confirms you are living with Parkinson’s disease and that micrographia is one of your symptoms. The document should include three or four different signatures to reflect the variations. Have each signature witnessed and notarized.

People living with MS (multiple sclerosis) face the possibility of an exacerbation that could leave them incapacitated at any time. A revocable trust to coordinate financial management, with trusted individuals as co-trustees should be in place.

For people with these and other brain illnesses, an emergency financial and legal road map needs to be prepared. It should include monthly recurring bills, non-recurring bills like life insurance, property taxes, etc. Contact information for key advisors, your estate planning attorney, CPA, financial advisor, banker, insurance agent, etc., needs to be shared. Your estate plan should be updated, if you haven’t reviewed it in three or four years. If you don’t have an estate plan in place, now is the time to have one created.

Reference: Forbes (May 17, 2020) “Financial And Estate Planning Steps To Take Now: Special Considerations For Those With Brain Disease”

Requests for Estate Plans Reflect Fears about Coronavirus

“Lawyers are being bombarded with requests to write wills, update estate plans and prepare health surrogate or "pull the plug" documents, as people are confronted by the realization that they could be diagnosed with COVID-19 and dead within days.”

Estate planning lawyers have always known that estate planning is not about “if,” but about “when.” The current health pandemic has given many people a wake-up call. They realize there’s no time to procrastinate, reports the article “Surge on wills: Fearing death by coronavirus, people ask lawyers to write their last wishes” from InsuranceNews.net. Legal professionals urge everyone, not just the elderly or the wealthy, to put their end-of-life plans in writing.

The last time estate planning attorneys saw this type of surge was in 2012, when wealthy people were worried that Congress was about to lower the threshold of the estate tax. Today, everyone is worried.

Top priorities are creating a living will stating your wishes if you become incapacitated, designating a surrogate or a proxy to make medical decisions on your behalf, granting power of attorney to someone who can make legal and financial decisions and preparing advance directives, such as “Do Not Resuscitate” orders.

An estate plan, including a last will and testament (and often trusts) that detail what you want to happen to assets and who will be guardian to minor children upon your death, spares your family the fights, legal costs and hours in court that can result when there is no estate plan.

The coronavirus has created a new problem for families. In the past, a health care surrogate would be in the hospital with you, talking to healthcare providers and making decisions on your behalf. However, now there are no visitors allowed in hospitals and patients are completely isolated. Estate planning attorneys are recommending that specific language be added to any end of life documents that authorize a surrogate to give instructions by phone, email or during an online conference.

Any prior documents that may have prohibited intubation need to be revised, since intubation is part of treatment for COVID-19 and not necessarily just an end-of-life stage.

Attorneys are finding ways to ensure that documents are properly witnessed and signed. In some states, remote signings are being permitted, while other states, Florida in particular, still require two in-person witnesses, when a will or other estate planning documents are being signed.

There are many stories of people who have put off having their wills prepared, figuring out succession plans that usually take years to plan and people coming to terms with what they want to happen to their assets.

Equally concerning are seniors in nursing homes who have not reviewed their wills in many years and are not able to make changes now. Older adults and relatives are struggling with awkward and urgent circumstances, when they are confined to nursing homes or senior communities with no visitors.

Reference: InsuranceNews.net (April 3, 2020) “Surge on wills: Fearing death by coronavirus, people ask lawyers to write their last wishes”

How Much Will Long-Term Care Cost?

“Many people are frightened of long-term care costs—for good reason.”

The recent article from MarketWatch, “This is how much long-term care could cost you, and don’t expect Medicare to help,” reports that most people over 65 will eventually need help with daily living tasks, like bathing, eating, or dressing. Men will need assistance for an average of 2.2 years, and women will need it for 3.7 years, according to the U.S. Department of Health and Human Services’ Administration on Aging.

Many will rely on unpaid care from spouses or children, but over a third will spend time in a nursing home, where the median annual cost of a private room is now more than $100,000, according to insurer Genworth’s 2018 Cost of Care Survey. Four out of ten will choose paid care at home; the median annual cost of a home health aide is more than $50,000. Finally, more than 50% of people over 65 will incur long-term care costs, and 15% will incur more than $250,000 in costs, according to a study by Vanguard Research and Mercer Health and Benefits.

Note that Medicare and private health insurance typically don’t cover these “custodial” expenses. This means that such costs can quickly deplete the $126,000 median retirement savings for people age 65 to 74. People who exhaust their savings could wind up on Medicaid, the government health program for the indigent that pays for about half of all nursing home and custodial care.

People who live alone, are in poor health, or who have a family history of chronic conditions are more likely to require long-term care. Women face special risks, since they typically outlive their husbands and, as a result, may not have anyone to provide them with unpaid care. If husbands require paid care that erases all of the couple’s savings, women could have years or even decades of living on nothing but Social Security.

The earlier you start planning, the more choice and control you’ll have. Let’s look at some of the options:

Long-term care insurance. The average annual premium for a 55-year-old couple was $3,050 in 2019, according to the American Association for Long-Term Care Insurance. Premiums are higher for older people, and those with chronic conditions might not be eligible. Policies typically cover part of long-term care costs for a defined period, like three years.

Hybrid long-term care insurance. With life insurance or annuities with long-term care benefits, money that isn’t used for long-term care can be left to your heirs. These products typically require you to commit large sums or are paid in installments over 5 to 10 years, although some now have “lifetime pay” options.

Home equity. People who move permanently into a nursing home may be able to sell their houses to help fund the care. Reverse mortgages may be an option, if one member of a couple remains in the home. This type of loan lets them use their home equity. However, it must be repaid if the owners die, sold, or they must move out.

Contingency reserve. People with a great deal of investments could plan on using some of those assets for long-term care. Their investments can produce income, until there’s a need for long-term care, and then can be sold to pay for a nursing home or home health aide.

Medicaid spend-down. Those who don’t have much saved or who face a catastrophic long-term care cost that cleans out their entire savings, could wind up applying for Medicaid. Ask an elder law attorney about ways to protect, at least some assets for your spouse.

Reference: MarketWatch (July 19, 2019) “This is how much long-term care could cost you, and don’t expect Medicare to help”

What Should I Know About the MERP (Medicaid Estate Recovery Program?

“Americans should know about the MERP (Medicaid Estate Recovery Program).”

An adult child may get a bill from the state for his mother’s Medicaid nursing home care.

You’ll never get a notice that Medicaid (let’s say in the State of Texas) is calculating a bill for mom’s entire healthcare tab that Medicaid paid. However, you may get a notice that says the state wants mom’s house. That’s because Medicaid is asking to be reimbursed for over $125,000 that was spent for the mother’s care and her prescriptions.

The document may come from the Medicaid Estate Recovery Program (MERP) that says the state Medicaid program wants the money used for her care, because his mother owned the house.

The Houston Chronicle’s recent article, “Is Medicaid a good long-term care option?” emphasizes that we should all know about the MERP (Medicaid Estate Recovery Program), especially if it seems that our aging parents may need to apply for Medicaid for long-term care.

A Medicaid attorney can answer questions from adult children who are shocked when they find out the state has put a lien on their parent’s house because of long-term care health-care cost for which the specific state paid. Medicaid long-term care can be care can be provided at home, at an assisted living facility, or personal care at home or in a nursing home. It also doesn’t matter when the Medicaid system has paid for the mom’s care.

Medicaid can recover any and all medical expenses, which include any hospital services, prescription drugs and even Medicare cost sharing expenses which are Medicare premiums (Part A—hospital insurance, Part B—medical insurance), deductibles and coinsurance amounts that the state’s Medicaid has paid.

Any claims against an estate—including MERP claims—must be paid prior to the property being distributed to heirs or beneficiaries, as instructed in mom’s will. The state doesn’t require an heir to sell the deceased recipient’s house, if the Medicaid claim can be paid with other funds. However, if it can’t, then the adult child may have to sell the house, or the state will file a lien against the house. That may be the case, even if he’s still living there.

Talk to a Medicaid or elder law attorney for assistance with proper Medicaid planning.

Reference: Houston Chronicle (May 29, 2019) “Is Medicaid a good long-term care option?”

Do I Need Long-Term Care?

“Premiums keep rising, but you may need a policy more than ever.”

An effective way to safeguard your retirement savings from the high price of assisted living, in-home care or the cost of a stay in a nursing home is a long-term-care insurance policy. However, recent premium hikes have many baby boomers concerned that this type of coverage is no longer affordable.

Kiplinger’s recent story, “The Long-Term-Care Insurance Dilemma,” reports that the median cost of one year in a private room in a nursing home was $97,500 in 2017, according to Genworth's Cost of Care Study. A year of assisted living was $45,000, and 44 hours per week of home care–which most people prefer–was $49,000. Care costs have been rising by 3-4% per year over the past five years.

Rising costs have put pressure on long-term-care insurers, and the rates have spiked by at least 50% for most policies purchased between the mid-1970s and 2005. Some price increases are more than 100%. Almost every long-term-care insurer has raised rates at least once, and more rate increases are coming.

Insurers say they made major mistakes when pricing these policies: they thought more people would drop coverage, they overestimated the interest rates they'd earn on their investments and they underestimated the size and length of claims.

But there are ways to make long-term-care insurance more affordable.

First, don't drop your policy if you're hit with an increase. This is because a new policy will cost much more. If you can't afford the higher premiums, your insurer will generally give you several options. If you haven't bought a policy yet, you can still find coverage that protects a significant part of your retirement savings with affordable premiums.

You can reduce your premiums by purchasing a policy with less inflation protection and by getting a shorter benefit period.

The insurance companies have learned from their pricing mistakes and shouldn't have to increase premiums on new policies as much in the future. We hope.

Nonetheless, you should factor in potential increases, when calculating how much insurance you can buy. Plan for a 20% increase every 10 years.

Reference: Kiplinger (April 4, 2018) “The Long-Term-Care Insurance Dilemma”

Picking the Right Retirement Community

“Moving into a retirement community can be one of the biggest decisions seniors have to make. For many people, it means leaving a home they've lived in for decades.”

Lancaster Online’s recent article, “It's never too early to start retirement planning,” says that before you make the move to a retirement community, look at these tips for selecting the best option:

Give yourself plenty of time. It is never too early to start looking for a retirement community. Begin looking long before you need to move. That will give you ample time to research all of the many options for retirement living.

Evaluate the types of services offered. Some offer only independent living. Therefore, if someone needs additional care in the future, they’d have to relocate again. Other homes offer a full range of care from independent living to skilled nursing.

Look at the cost. Calculate all the fees, such as those associated with assistance with activities of daily living or nursing care, as well as any entrance fees. Ask to review a standard community contract.

Plan ahead. Take the time to do estate planning long before you plan to move. If you do some estate planning at least five years before you may need to enter a nursing home, you may be able to protect more of your assets from having to be spent on your care. Talk to an elder law attorney about specific strategies.

Look at the community’s location. Figure out transportation issues and whether you want to live in an apartment or a separate home. Look at how far it is to stores, medical care and other off-site places.

Thoroughly evaluate the community. Before meeting with people from different communities, create a checklist to complete for each one. Get your answers in writing to aid with accountability.

Plan a surprise visit. Show up unannounced, when you want to visit a community. The staff will be on its best behavior, if they know when you're coming. See how well they can adapt to accommodate you,  when you aren’t expected.

Speak with other residents. When you take a tour, talk to the residents and ask their opinions of the place.

Inquire about current occupancy. If you know how full the home is, you may have negotiating room on the cost.

Check the reviews. Research any online reviews of the retirement community, along with inspection reports.

Trust your gut. And your nose. If things don't smell right,  and it smells like urine, that's a bad sign.

Reference: Lancaster Online (November 29, 2017) “It's never too early to start retirement planning”

Do You Have Any of These Financial Skeletons in Your Closet?

“Chances are you spotted some cute little skeletons dressed up for Halloween that didn’t give you too much of a fright on Tuesday. But, there may be some others that should be cause for a great scare.”

The Kansas City Star says in its recent article, “Financial skeletons to clean out of your closet,” that regardless of your income, the paycheck to paycheck pendulum can hover over anyone, posed to knock you off track at any time. Even one financial skeleton in your closet, could affect your financial security.

First, you may want to track your spending for a few months to get an idea of what you spend. See if there are luxuries posing as necessities, and then look at each item as a need vs. a want. Next, create a budget that works with your income. Include savings and build an emergency fund of at least three months of living expenses.

The U.S. Census Bureau data shows that the average American household owes more than $16,000 in credit card debt.  If you add student debt and mortgages, that debt may really be suffocating some families. Determine your net worth, check your credit report, don’t take on more debt and create a repayment plan.

Most Americans will have to fund their own retirement, or at least contribute significantly to it. However, many aren’t saving enough to cover their future needs. See if you can get an employer match and save at least that much in your 401(k) account. You can consider an IRA or other savings/investment vehicle.

Estate planning lets you consider the legacy you’d like to leave to your family and addresses who gets your property when you die. It also covers the best legal transfer methods for leaving your property, designating a guardian for your minor children and naming who should make medical and financial decisions for you, if you’re incapacitated. Partner with an estate planning attorney to create a sound estate plan.

As baby boomers get older, more of our nation’s seniors will need home care or care at a long-term care facility. The cost of long-term care can range from $30,000-$70,000 a year or more, depending on the needs. Long term care insurance may be an option, so talk to your attorney about this.

Many of these skeletons would be addressed, if you had a proper financial plan in place. A financial plan isn’t just about money, but should also address insurance and estate planning.

Reference: Kansas City Star (October 27, 2017) “Financial skeletons to clean out of your closet”