I was recently asked by a social worker what legal planning her client should do now that she has been diagnosed with cancer. My response applies not only to those with a cancer diagnosis but also to others who are experiencing other health issues as they age. There are four main areas to work on: selection of an agent to act on your behalf, create or review your plan to transfer your wealth, leave your family a road map to your financial affairs and plan on how to pay for your long term care at home or in a nursing home.
Selection Of An Agent With Authority To Act On Your Behalf
If you become incapacitated, your family members may need to deal with the following:
• Pension issues,
• Tax Issues,
• Real Estate Issues,
• Government Benefit Issues,
• Insurance Issues
• Medical and Surgical Treatment Issues
Neither your spouse nor your child have authority to act on your behalf unless they have authority given to them by a Power of Attorney, Health Care Proxy or a Guardianship Order.
1. Durable General Power of Attorney. You select an agent to act for you when you can’t do it yourself. The power survives your incapacity but not your death. The power permits your agent to deal with your property and personal issues. You can have multiple agents and successor agents.
2. Health Care Proxy. You select an agents to make medical decisions for you when you can’t communicate your wishes. You should discuss your medical philosophy with
your agent before you become incapacitated so they know as best as possible what you would want. You should name only one agent and one alternate agent.
3. Living Will. This permits you to state what type of care you want and how much or how little care you want at the end of your life. It can give your doctor permission to
“pull the plug” or instruct them to keep trying save your life no matter what. This provides relief to your family because they know what you want.
4. If there is no Power of Attorney or Health Care Proxy, your family may need to go to court to obtain an Order of Guardianship in order to have authority to act on your behalf. This is an expensive and cumbersome process. You will be part of this proceeding and will hear your family testify as to your competence or lack of competence. This may be upsetting to you.
Transfer of Wealth
If you pass away without a Will or a Living Trust, New York State has a statutory distribution plan for your assets. It may not be right for you and your family.
• For instance in a family where a decedent leaves behind a spouse and children the law provides a surviving spouse with the first $50,000 of the decedent’s assets and one half of the remainder of the assets. The other one half of the assets goes to the decedent’s children. The law will distribute funds outright to children at age 18;
• No tax planning is provided.
• There is no provision to protect assets for children or for beneficiaries with special needs.
• Estate Administration in the Surrogates Court can be expected to last at least one year start to finish.
Last Will and Testament or Living Trust
• Assets can be transferred by a Last Will and Testament. It requires that a probate proceeding in the Surrogates Court be started after the death of the testator. The probate process under the best circumstances lasts about a year.
• Living Trusts are another method to transfer assets. They do not require a court proceeding in order to transfer assets after the death of the grantor. Transfers can start to be made within a couple of weeks of the grantor’s death.
Issues to address for Wills or Living Trusts
1. If you already have a Will or a Trust, is your current plan up to date?
2. Are the beneficiaries that are named still those that you want?
3. Are the bequests in the correct amounts or percentages?
4. Are the agents that you have named Executor [Will] or Trustee [Trust] the people that you still want to act for you?
5. Do you have minor children that need a Guardian to be designated for them, if something were to happen to both you and your spouse?
6. Do you need to provide for special situations such as children with special needs who may receive government benefits [inheriting assets from you may disqualify them from receiving those benefits]?
7. Do you need to provide for children who cannot handle money?
8. Will your estate have a value over $4 million or your joint estate with your spouse have a value over $8 million? If so, tax planning may be needed.
9. Does your Will or Living Trust specify what is to happen with your online accounts and who has authority to access them [Facebook, Dropbox, Instagram, etc.]
Retirement Accounts, Bank Accounts & Brokerage Accounts
1. Are the after death beneficiaries who are listed up to date?
2. Named beneficiaries can get assets directly upon presentation of a death certificate and transfer forms.
3. Accounts listing beneficiaries who previously passed away or that list your estate will result in the assets being paid to your estate in a probate or administration proceeding in Surrogates Court.
4. Accounts listing beneficiaries who previously passed away or that list your estate may have income tax consequences.
5. If a listed beneficiary is receiving government benefits such as Medicaid or SSI the payments of these accounts may disqualify them from the benefits they have been receiving until the assets are spent down.
Provide A Road Map for Family Members
1. Create a list of your various accounts and account numbers
2. Create a list of the professionals that you use [lawyers, accountants, Financial Planners, Doctors, etc].
3. Identify where the original Will, Trust Agreement, Power of Attorney and Health Care Proxy are located.
4. Provide information as to any Life Insurance, Health Insurance, Disability Insurance, Catastrophic Health Insurance, Long Term Care Insurance, Property Insurance, Automobile Insurance, Umbrella Insurance that you may have.
5. Identify where your tax returns for the last 5 years are located.
6. Identify where your bank and brokerage statements for the last 5 years are located.
7. If you have a burial plot, identify where it is.
8. If you have pre-paid for your funeral, specify where the details for that are.
9. Specify where you keep your paid and unpaid bills.
10. Specify where the passwords to your online accounts are located.
11. Specify the location of all real property that you own.
12. Specify the location of all stock certificates.
13. Create a family tree going back to your grandparents and forward to the youngest generation.
Long Term Care
You may need long term care either at home or in a nursing home. Long Term Care can be expensive. Home care aides can cost approximately $30 per hour. A nursing home can cost $15,000 each month. The average nursing home stay is about 2.5 years. You should consider how this will be paid for.
1. Long Term Insurance, may cover your costs in whole or in part, if you were lucky enough to have purchased it before your were diagnosed.
2. Medicare is only a short term solution. It addresses your care as a rehabilitation issue and generally pays for 100 days at most. It will stop paying before 100 days have passed, if it is determined that you are not improving in your functioning. There may also be co-pays after day 20.
3. Your own assets may be used to pay for Long Term Care.
4. Medicaid will pay, if you meet asset and income levels needed to qualify.
An Elder Law attorney can help you determine if you qualify for Medicaid and can advise you as to which assets are exempt from a Medicaid claim. They can assist with asset transfers, even during the 5 year look back period for Nursing Home Medicaid in order to protect your family. There are also ways to protect income from Medicaid claims.
Medicaid rules are complex. Many nursing homes will prepare Medicaid applications as a courtesy. They are not going to advise you on the legal methods to minimize penalties for impermissible asset transfers or the timing of transfers. They are not going to advise you on which exempt transfers may be available to you. Think twice before you accept the assistance of a nursing home in making a Medicaid application. The penalties for impermissible transfers can be substantial. The Applicant can be disqualified from obtaining Nursing Home Medicaid for years.
care managers
Good evening. Great article.