What You Need to Know about Long-Term Care – Annapolis and Towson Estate Planning

The median cost of a private room in a nursing home was $105,850, and in-home care costs were $53,768 to $54,912 annually, according to Genworth’s 2020 Cost of Care Survey. CNBC’s recent article entitled “Most retirees will need long-term care. These are the best ways to pay for it” says these costs vary by location.

Although it is hard to predict a retiree’s needs, the chances of requiring some type of long-term care services are high, about 70% for the average 65-year-old. Men typically need 2.2 years of care, and women may require 3.7 years.

Long-term care insurance may cover all or a portion of services. The premiums depend on someone’s age, gender, health, location and more. However, there’s a 50% chance someone will never need their policy, the American Association for Long-Term Care Insurance estimates, and premium hikes can be costly. Premiums typically increase about 5%, every five years.

A hybrid long-term care policy is another option. These policies are part life insurance or an annuity and part long-term care coverage.

Seniors can buy a policy with an upfront payment, eliminating the risk of future premium increases and their heirs may receive a death benefit if they do not need long-term care. However, it may be harder to compare prices for a hybrid long-term policy than standalone long-term care coverage.

Low-income retirees with assets below certain thresholds may be eligible for long-term care services through Medicaid.

President Joe Biden also called for $400 billion in Medicaid funding for home and community-based care as part of the American Jobs Plan, and separately, House and Senate Democrats introduced bills supporting Biden’s agenda in June.

Reference: CNBC (Aug. 26, 2021) “Most retirees will need long-term care. These are the best ways to pay for it”

 

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Get Estate Plan in Order, If Spouse Is Dying from a Terminal Illness – Annapolis and Towson Estate Planning

Thousands of people are still dying from COVID-19 complications every day, and others are dealing with life-threatening illnesses like cancer, heart attack and stroke. If your spouse is ill, the pain is intensified by the anticipated loss of your life partner.

Wealth Advisor’s recent article entitled “Your Spouse Is Dying: 5 Ways To Get Your Estate In Order Now,” says that it is frequently the attending physician who suggests that your spouse get his affairs in order.

Your spouse’s current prognosis and whether he or she is at home or in a hospital will determine whether updates can be made to your estate plan. If it has been some time since the two of you last updated your estate plan, you should review the planning with your elder law attorney or estate planning attorney to be certain that you understand it and to see if there are any changes that can and should be made. There are five issues on which to focus your attention:

A Fiduciary Review. See who is named in your estate planning documents to serve as executor and trustee of your spouse’s estate. They will have important roles after your spouse dies. Be sure you are comfortable with the selected fiduciaries, and they are still a good fit. If your spouse has been sick, you have likely reviewed his or her health care proxy and power of attorney. If not, see who is named in those documents as well.

An Asset Analysis. Determine the effect on your assets when your partner dies. Get an updated list of all your assets and see if there are assets that are held jointly which will automatically pass to you on your spouse’s death or if there are assets in your spouse’s name alone with no transfer on death beneficiary provided. See if any assets have been transferred to a trust. These answers will determine how easily you can access the assets after your spouse’s passing.

A Trust Assessment. Any assets that are currently in a trust or will pass into a trust at death will be controlled by the trust document. See who the beneficiaries are, how distributions are made and who will control the assets.

Probate Prep. If there is property solely in your spouse’s name with no transfer on death beneficiary, those assets will pass according to his or her will. Review the will to make sure you understand it and whether probate will be needed to settle the estate.

Beneficiary Designation Check. Make certain that beneficiaries of your retirement accounts and life insurance policies are current.

If changes need to be made, an experienced elder law or estate planning attorney can counsel you on how to best do this.

Reference: Wealth Advisor (Jan. 26, 2021) “Your Spouse Is Dying: 5 Ways To Get Your Estate In Order Now”

 

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The Difference between Power of Attorney and Guardianship for Elderly Parents – Annapolis and Towson Estate Planning

The primary difference between guardianship and power of attorney is in the level of decision-making power, although there are many intricacies specific to each appointment, explains Presswire’s recent article entitled “Power of Attorney and Guardianship of an Elderly Parent.”

The interactions with adult protective services, the probate court, elder law attorneys and healthcare providers can create a huge task for an agent under a power of attorney or court-appointed guardian. Children acting as agents or guardians are surprised about the degree of interference by family members who disagree with decisions.

Doctors and healthcare providers do not always recognize the decision-making power of an agent or guardian. Guardians or agents may find themselves fighting the healthcare system because of the difference between legal capacity and medical or clinical capacity.

A family caregiver accepts a legal appointment to provide or oversee care. An agent under power of attorney is not appointed to do what he or she wishes. The agent must fulfill the wishes of the principal. In addition, court-appointed guardians are required to deliver regular reports to the court detailing the activities they have completed for elderly parents. Both roles must work in the best interest of the parent.

Some popular misperceptions about power of attorney and guardianship of a parent include:

  • An agent under power of attorney can make decisions that go against the wishes of the principal
  • An agent cannot be removed or fired by the principal for abuse
  • Adult protective services assumes control of family matters and gives power to the government; and
  • Guardians have a responsibility to save money for care, so family members can receive an inheritance.

Those who have a financial interest in inheritance can be upset when an agent under a power of attorney or a court-appointed guardian is appointed. Agents and guardians must make sure of the proper care for an elderly parent. A potential inheritance may be totally spent over time on care.

In truth, the objective is not to conserve money for family inheritances, if saving money means that a parent’s care will be in jeopardy.

Adult protective services workers will also look into cases to make certain that vulnerable elderly persons are protected—including being protected from irresponsible family members. In addition, a family member serving as an agent or family court-appointed guardian can be removed, if actions are harmful.

Agents under a medical power of attorney and court-appointed guardians have a duty to go beyond normal efforts in caring for an elderly parent or adult. They must understand the aspects of the health conditions and daily needs of the parent, as well as learning advocacy and other skills to ensure that the care provided is appropriate.

Ask an experienced elder law attorney about your family’s situation and your need for power of attorney documents with a provision for guardianship.

Reference: Presswire (Jan. 14, 2021) “Power of Attorney and Guardianship of an Elderly Parent”

 

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How to Be an Effective Advocate for Elderly Parents – Annapolis and Towson Estate Planning

Family caregivers must also understand their loved one’s wishes for care and quality of life. They must also be sure those wishes are respected. Further, it means helping them manage financial and legal matters, and making sure they receive appropriate services and treatments when they need them.

AARP’s recent article entitled “How to Be an Effective Advocate for Aging Parents” says if the thought of being an advocate for others seems overwhelming, take it easy. You probably already have the skills you need to be effective. You may just need to develop and apply them in new ways. AARP gives us the five most important attributes.

  1. Observation. Caregivers can be too busy or tired, to see small changes, but even slightest shifts in a person’s abilities, health, moods, safety needs, or wants may be a sign of a much more serious medical or mental health issue. You should also monitor the services your family member is getting. You can take notes on your observations about your loved one to track any changes over time.
  2. Organization. It is hard to keep track of every aspect of a caregiving plan, but as an advocate, you must manage your loved one’s caregiving team. This includes creating task lists and organizing the paperwork associated with health, legal, and financial matters. You will need to have easy access to all legal documents, like powers of attorney for finances and health care. If needed, you might take an organizing course or work with a professional organizer. There are also many caregiving apps. You should also, make digital copies of key documents, such as medication lists, medical history, powers of attorney and living wills, so you can access them from anywhere.
  3. Communication. This may be the most important attribute. You need communication for building relationships with other caregivers, family members, attorneys and healthcare professionals. Be prepared for meetings with lawyers, medical professionals and other providers.
  4. Probing. Caregivers need to gather information, so do not be shy about it. Educate yourself about your loved one’s health conditions, finances and legal affairs. Create a list of questions for conversations with doctors and other professionals.
  5. Tenacity. Facing a dysfunctional and frustrating health care system can be discouraging. You must be tenacious. Here are a few suggestions on how to do that:
  • Set clear goals and focus on the end result you want.
  • Keep company with positive and encouraging people.
  • Heed the advice of experienced caregivers’ stories, so you understand the triumphs and the challenges.
  • Be positive and be resilient.

Reference: AARP (Sep. 24, 2020) “How to Be an Effective Advocate for Aging Parents”

 

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How to Tell If Mom or Dad Need Caregiving Help – Annapolis and Towson Estate Planning

A 2016 AARP article entitled, “5 Signs Your Loved One May Need Caregiving Support,” provides some great tips on what to look for when determining if an elderly loved one needs caregiving.

  1. Fall hazards. Does your parent have stairs without railings or poor lighting and other clutter that has caused a fall? You need to evaluate fall hazards in the home. A certified aging in place specialist (CAPS), an aging life care specialist, or a physical or occupational therapist can assist you in evaluating your parent’s needs, abilities and the home environment. They can also make recommendations for home modifications or exercises for balance and strength.
  2. Unfinished business. Piles of unopened mail and unpaid bills and financial and legal documents that have not been addressed can be a sign that your loved one may be cognitively, physically, or emotionally unable to deal with them. Examine the extent of the problem and whether it is temporary or ongoing. One solution may be to just help your parent sort and prioritize the mail. You can also offer to help with complicated matters and help him or her open another checking account that can be used for cash and basic needs. This lets the adult child pay bills from the primary account. You should also make certain that your loved one has her advanced directives and other legal documents in place, so you will be able to help manage his or her affairs in an emergency.
  3. Motor vehicle accidents and tickets. If you see that your parent has had multiple accidents—even fender benders or several warnings or citations, scrapes or dents on the car—you should discuss your parent’s continued driving. You can ride along with your parent and observe. You might suggest that he or she refresh his or her driving skills by taking a driver safety course. However, if it is time to hang up the keys, offer other viable transportation options, so they do not feel that they are giving up their independence.
  4. Isolation and disconnection. If your loved one appears to be disconnected from friends, family and the community, their support system may be deteriorating, and their physical and mental health are at risk. See if he or she is lonely and look for potential activities they would enjoy. Regular phone or video calls can also help them connect, as well as using social media. You should also check for health issues, such as untreated hearing impairment, which can hinder communication.
  5. A change in appearance. A weight change, wearing the same clothes every day or dirty clothes, or issues with personal hygiene are signs that something is off. You can suggest a thorough medical and psychological evaluation to see what’s normal for your parent because there may be several causes for these changes, such as depression or anxiety. You may find that changes in vision, sense of smell, or mobility are restricting the ability to care for himself or herself.

Start these discussions with love, concern and a supportive attitude. Emphasize that you are not trying to take over your parent’s life, but rather to help them be as independent as possible for as long as possible.

Reference: AARP (Dec. 12, 2016) “5 Signs Your Loved One May Need Caregiving Support”

 

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What Should I know about Financial Powers of Attorney? – Annapolis and Towson Estate Planning

A financial power of attorney is a document allowing an “attorney-in-fact” or “agent” to act on the principal’s behalf. It usually allows the agent to pay the principal’s bills, access her accounts, pay her taxes and buy and sell investments. This person, in effect, assumes the responsibilities of the principal and can act for the principal in all areas detailed in the document.

Kiplinger’s recent article from April entitled “What Are the Duties for Financial Powers of Attorney?” acknowledges that these responsibilities may sound daunting, and it is only natural to feel a little overwhelmed initially. Here are some facts that will help you understand what you need to do.

Read and do not panic. Review the power of attorney document and know the extent of what the principal has given you power to handle in their stead.

Understand the scope. Make a list of the principal’s assets and liabilities. If the individual for whom you are caring is organized, then that will be simple. Otherwise, you will need to find these items:

  • Brokerage and bank accounts
  • Retirement accounts
  • Mortgage papers
  • Tax bills
  • Utility, phone, cable, and internet bills
  • Insurance premium invoices

Take a look at the principal’s spending patterns to see any recurring expenses. Review their mail for a month to help you to determine where the money comes and goes. If your principal is over age 72 and has granted you the power to manage her retirement plan, do not forget to make any required minimum distributions (RMDs). If your principal manages her finances online, you will need to contact their financial institutions and establish that you have power of attorney, so that you can access these accounts.

Guard the principal’s assets. Make certain that her home is secure. You might make a video inventory of the residence. If it looks like your principal will be incapacitated for a long time, you might stop the phone and newspaper. Watch out for family members taking property and saying that it had been promised to them (or that it belonged to them all along).

Pay bills. Be sure to monitor your principal’s bills and credit card statements for potential fraud. You might temporarily suspend credit cards that you will not be using on the principal’s behalf. Remember that they may have monthly bills paid automatically by credit card.

Pay taxes. Many powers of attorney give the agent the power to pay the principal’s taxes. If so, you will be responsible for filing and paying taxes during the principal’s lifetime. If the principal dies, the executor of the principal’s will is responsible and will prepare the final taxes.

Ask about estate planning. See if there is an estate plan and ask a qualified estate planning attorney for help. If the principal resides in a nursing home paid by Medicaid, talk to an elder law attorney as soon as possible to save the principal’s estate at least some of the costs of their care.

Keep records. Track your expenditures made on your principal’s behalf. This will help you demonstrate that you have upheld your duties and acted in the principal’s best interests, as well as for reimbursement for expenses.

Always act in the principal’s best interest. If you do not precisely know the principal’s expectations, then always act with their best interests in mind. Contact the principal’s attorney who prepared the power of attorney for guidance.

Reference: Kiplinger (April 22, 2020) “What Are the Duties for Financial Powers of Attorney?”

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How Do I Protect Property If I Need Long-Term Care? – Annapolis and Towson Estate Planning

Nearly 90% of those over age 65 would say they would prefer to stay in their home and live independently as they age. However, even if you are one of those people, you need to make certain that you have a plan in place to ensure your assets can go toward the things you want, rather than unexpected healthcare costs.

The Observer-Reporter’s recent article entitled “Protecting Your Assets is Only Half of Your Long-Term Plan” explains that there are many factors, like chronic conditions and lifestyle choices, that can increase healthcare expenditures as you get older. Understanding and planning for the potential costs now, could be the difference between spending your savings on health care expenses, instead of on the things you want.

You may be concerned about being a burden to family and friends as you age. That is common since nearly three-quarters (72%) of parents expect their children to become their long-term caregivers. However, just 40% of those children are aware they were tapped for that role!

Research shows that when family and friends assume the role of primary caregivers, they have a 60% chance of exhibiting clinical signs of depression—six times more than the general population. Having your family and friends become your caregivers may be best for you financially, but it probably is not in their best interest.

You should have a sound understanding of the cost and burden that long-term care can put on your family and friends. This is the first step to preparing your long-term plan. It is important to understand that there are a few different long-term planning options available, with varying levels of care coverage. One is Medicaid, which is a means-tested government health insurance plan that can cover some or all of the care you may need in a skilled nursing facility. However, what it covers is income- and asset-based. Medicare may cover some limited long- term care for rehabilitation but typically not custodial care.

There is also long-term care insurance which can fill many of the gaps that Medicare and Medicaid may leave. Most plans are customizable and have options for full or partial coverage for all of the types of long-term care. However, there may still be gaps in your coverage.

Ask an elder law attorney about other options and resources.

Reference: (Washington, PA) Observer-Reporter (Feb. 17, 2020) “Protecting Your Assets is Only Half of Your Long-Term Plan”

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What are the Blind Spots in Social Security? – Annapolis and Towson Estate Planning

The SimplyWise survey also found that there are five areas that are especially confusing to people. Only one in 300 of those who took a five-question quiz answered all the questions correctly, reports Think Advisor in the article entitled “5 Common Blind Spots on Social Security.”

Here are some Social Security questions that might be relevant and not knowing the answers could cost you thousands of dollars a year in income.

  1. What age do I claim to maximize my monthly earned Social Security benefit? The age is 70, although 62 years is when an individual can first make a claim. However, your benefits grow each year you wait—up to age 70. According to SimplyWise, only 42% of quiz takers got this answer right.
  2. What is the earliest age non-disabled people can get survivor benefits? A mere 9% answered this correctly. It is age 60. Many think it is age 62, the age people can begin claiming Social Security.That is correct for earned benefits and spousal benefits.
  3. Is a current spouse required to be getting Social Security benefits, for the other spouse to qualify for spousal benefits? Yes. Just 20% of respondents got this answer correct. It is important to understand that if both spouses are claiming Social Security, one can either receive their own benefit or 50% of their spouse’s amount, whichever is more.
  4. Is a divorced spouse able to get survivor benefits? Yes, and just 38% of people got this answer right. The criteria is somewhat different than for married people. The marriage must have lasted at least 10 years, and there are certain rules that apply to remarrying. However, divorced spouses can collect survivor benefits under a deceased ex-spouse.
  5. Can divorced spouses get spousal benefits? Yes, and 67% got this answer correct. Divorced spouses who were married for at least 10 years and have not remarried can claim spousal benefits.

Reference: Think Advisor (Feb. 13, 2020) “5 Common Blind Spots on Social Security”

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Do I Really Need a Health Care Proxy? – Annapolis and Towson Estate Planning

The Pauls Valley Democrat’s recent article entitled “Advance directives and living wills” explains that an Advance Directive has three parts:

  •  A living will
  •  Naming of your health care agent; and
  •  Your directions for anatomical gifts.

The individual that you name as your Health Care Proxy will make decisions for your treatment and care, if you are unable to do so. These decisions may extend to all medical issues and are not limited to end-stage, life determining decisions that are mentioned in your living will. This is a form of power of attorney that authorizes your agent to act in your behalf to address issues like these:

  1. Accessing your medical information
  2. Discussing your treatment options with your healthcare providers
  3. Getting second opinions on your diagnosis
  4. Selecting and authorizing various medical tests
  5. Your placement in a hospital or care facility
  6. Transferring your care to a new physician; and
  7. Communicating your wishes on life support in terminal or unconscious situations.

For end of life decisions, your health care proxy is bound by your written wishes as expressed in your living will. Life support can be terminated, only if you so authorize in writing. Your healthcare proxy cannot make that decision for you, because that is “personal” to you. You may select one or more persons to act as your proxy, although if two are selected, you should predefine what to do in the event of a conflict.

A best practice is to choose a person who is younger than you and who is geographically close. A person with time to assist you and with whom you are willing to share in advance your wishes, likes and dislikes as to medical care. This person should be trusted to act and honor your wishes.

Because many decisions relate to your very personal concerns about religion, death and dying, these feelings should be shared with your health care proxy before any serious situation.

The Advance Directive is a very important document that pertains to your wishes, as they relate to medical care, end-of-life and death.

Parts I and II can discuss your wishes for care treatment, as well as your choice of a person to represent your wishes. These are two very important issues. Take the time to consider the advance written expression of your own wishes.

Reference: Pauls Valley Democrat (Feb. 12, 2020) “Advance directives and living wills”

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What Medicare Mistakes can Ruin Retirement? – Annapolis and Towson Estate Planning

Healthcare expenses can loom large in retirement. Therefore, failing to totally understand Medicare could be a costly mistake. The Motley Fool’s recent article entitled “3 Medicare Mistakes That Could Wreck Your Retirement” warns that these three mistakes could throw a wrench in your retirement plan.

  1. Thinking that Medicare will cover all your healthcare costs. It is critical that you understand that Medicare will help cover some of your medical expenses in retirement—but it does not cover everything. You will still be liable to pay all your premiums, deductibles, co-insurance, and co-pays. Medicare Part A usually does not have a premium, but you will have a deductible of $1,408 per benefit period. Part B’s standard premium is $144.60 per month with a deductible of $198 per year. Note that Medicare Parts A and B do not cover prescription drugs or routine vision and dental care. For those things, you will have to purchase Medicare Part D or a Medicare Advantage plan at an additional cost.

It is also important that you understand that Medicare typically does not cover long-term care, a major expense. Prior to retirement, it is a good idea to add these costs into your plan.

  1. Failing to research your plan options each year during open enrollment. Medicare open enrollment is from October 15th until December 7th each year. In this period, retirees can make changes to their plans, such as switching from Original Medicare (Parts A and B) to a Medicare Advantage plan or vice versa. You can also change from one Advantage plan to another or add Part D coverage. After you have been on Medicare, you should look into options available to you and shop around to save money.
  2. Failing to enroll in Medicare when first eligible. When you become eligible for Medicare, you must enroll during your initial enrollment period (IEP). This begins three months prior to the month you turn 65 and ends three months after the month you turn 65. Failure to enroll could mean a penalty of 10% of your Part B premium. The longer you go without enrolling, the higher your penalty will be, and you usually must continue paying the penalty for as long as you have Part B coverage.

Note that if you are not ready to enroll in Medicare at 65, you may qualify for a special enrollment period. Say, for example, if you (or your spouse) are still working at age 65 and are covered by insurance through your employer, you can delay your Medicare enrollment until after you quit your job.

Medicare can be confusing. The better educated you are about the program, the wiser decisions you will be able to make sure your retirement fund lasts longer.

By avoiding these common mistakes, you can save money and prepare for your senior years.

Reference:  The Motley Fool (March 20, 2020) “3 Medicare Mistakes That Could Wreck Your Retirement”

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