So often we are asked, why do I need to have a Will? Or a Power of Attorney? Or a Community Property Agreement? Everything passes to my spouse or children anyway, right? And if so, why do we need do life and estate planning anyway?
The reason we plan is so that we will have in place the legal documents that will work the way they are supposed to, and most importantly, when we need them to. And when is that? When you or a loved one find yourself in a pickle and need them the most. A spouse has a stroke and you need to access funds for a rehab facility deposit that are only in your spouse’s name. You need to speak with Mom’s pharmacist about her ‘meds’ but the pharmacist refuses unless you can show you have the authority or right to do so. The examples go on and on.
There are five (5) basic documents we all need regardless of whether we have little or are millionaires.
Those Five Documents Are:
Keep in mind not all documents are created equal. Words matter a lot in these. Work with someone who knows what they are doing when preparing these documents for you and your family. After all, the purpose is to have documents that will work for you regardless of the situation. If you don’t have them, things can get messy very fast.
Which of these documents is the most important when we are alive?
Without hesitation the Durable General Power of Attorney and Health Care Power of Attorney. These documents empower someone to act for you legally as if they were you. We all need someone to be empowered on our behalf, because at some point we may find ourselves unable to speak or act for ourselves. Unfortunately, many things are still very unequal. Wives needing to act on behalf of their husband are still told, “I’m sorry but the account is in your husband’s name and we can only speak with him.” Frustrating. A Durable General Power of Attorney eliminates this problem. It’s also important to note that words matter on this document, so we highly recommend utilizing a professional to assist you in putting it together. If what you are trying to do for someone through that person’s Power of Attorney is not clearly spelled out in the document, you basically, “do not have the power to act.”
What about a Last Will and Testament?
Yes, an important document to have—when we die. This document will name who will administer your “estate.” This document will provide the person acting for your estate to do so without posting a bond or intervention of the court. Your Will provides who gets what (or who does not get anything). Your Will should identify whether you wish to be buried/cremated and whether your organs can be donated. Without a Will, you leave a mess that may have to be cleaned up through the Courts. Remember a Will does not transfer anything, it is only a set of instructions as to what happens when you pass.
Why have a Community Property Agreement if you are married?
The simple answer is that property of a marriage does not automatically transfer to the surviving spouse upon the first spouse’s death. Even though Washington is one of eight Community Property states, it is still possible for a person in Washington to have separate property. So, to eliminate a legal process known as “probate” should the one spouse die, get a Community Property Agreement which will, by law, vest all property to the surviving spouse without Court intervention.
Finally, if you have ever had surgery or been admitted to a hospital, you know what a Living Will or Health Care Directive is. Hospitals/doctors want to know your wishes should you become permanently unconscious or in a persistent vegetative state. This is an “end of life” document that applies to specific circumstance while being cared for. Additional end of life planning with “POLST” or “DNR” should also be undertaken.
At Tacoma Elder Care we understand the importance of having your affairs in order. Life has a way of throwing curve balls at us when we least expect it.
Here at Tacoma Elder Care we always say, Leave a Plan. Not a Mess!”
Contact us today to set up your Free Consultation, so we can help you prepare you five basic documents – and answer any other questions you may have. We are Elder Care experts, and we’re here for you and your loved ones.
One of the things that concerns people most about nursing home care is how to pay for that care. There are basically four ways that you can pay the cost of a nursing home:
1. Long Term Care Insurance - If you are fortunate enough to have this type of coverage, it may go a long way toward paying the cost of the nursing home. Unfortunately, long term care insurance has only started to become popular in the last few years and most people facing a nursing home stay do not have this coverage.
2. Pay With Your Own Funds - This is the method many people are required to use at first. Quite simply, it means paying for the cost of a nursing home out of your own pocket. Unfortunately, with nursing home bills averaging $10,000 to $12,000 per month, or more, in Washington, there are few people who can afford a long term stay in a nursing home.
3. Medicare - This is the national health insurance program primarily for people 65 years of age and older, certain younger disabled people and people with kidney failure. Medicare provides short term assistance with nursing home costs, but only if you meet the strict qualification rules.
4. Medicaid/COPES - This is a federal and state-funded and state administered medical benefit program which can pay for the cost of the nursing home if certain asset and income tests are met.
What About Medicare?
Medicare is the federally funded and state administered health insurance program primarily designed for individuals over age 65. There are some limited long-term care benefits that can be available under Medicare. In general, if you are enrolled in the traditional Medicare plan, and you’ve had a hospital stay of at least 3 days, and then you are admitted into a skilled nursing facility (often for rehabilitation or skilled nursing care), Medicare may pay for a while. (If you are a Medicare Managed Care Plan beneficiary, a 3-day hospital stay may not be required to qualify.)
If you qualify, traditional Medicare may pay the full cost of the nursing home stay for the first 20 days and can continue to pay for the next 80 days, but with a deductible that’s about $100 per day. Some Medicare supplement insurance policies will pay the cost of that deductible. For Medicare Managed Care Plan enrollees, there is no deductible for days 21 thru 100, if the strict qualifying rules continue to be met. So, in a best-case scenario, the traditional Medicare/Medicare Managed Care Plan may pay up to 100 days for each “spell of illness.” In order to qualify for this, “100 days of coverage,” however, the nursing home resident must be receiving daily “skilled care” and generally must continue to “improve.” (Note: Once the Medicare and Managed Care beneficiary has not received a Medicare covered level of care for 60 consecutive days, the beneficiary may again be eligible for the 100 days of skilled nursing coverage for the next spell of illness).
While it’s never possible to predict at the outset how long Medicare will cover the rehabilitation, from our experience, it usually falls far short of the 100-day maximum. Even if Medicare does cover the 100-day period, what then? What happens after the 100 days of coverage have been used?
At that point, in either case, you’re back to one of the other alternatives... long term care insurance, paying the bills with your own assets, or qualifying for Medicaid.
Contact us today to discuss your individual situation and to find out how Tacoma Elder Care can help you and your loved ones.
Q: Once I qualify for Medicaid, will the quality of care I receive be sub-standard?
A: No. It is illegal for a facility to discriminate against someone receiving Medicaid benefits. By law, Medicaid patients are to receive the same level of care as private-pay residents.
Q: Is a married couple always required to spend down one-half of their assets before qualifying for Medicaid?
A: Not always. In fact, often time’s couples have over $123,600 and qualify for Medicaid benefits without spending a penny. Although there are income and asset criteria a couple must meet before one of them qualifies for benefits, federal and state laws were written to protect individuals from becoming impoverished if their spouse needs nursing home care. Medicaid planning is like tax planning in that legislation has provided legal exceptions to the general rules that, with good advice from a knowledgeable professional, can save Medicaid applicants and their families thousands of dollars.
Q: Is it true that under current Medicaid laws, a parent cannot make financial gifts to their children once they have entered the nursing home?
A: No. In fact, a proper gifting program is a great Medicaid planning technique. At the time an applicant applies for Medicaid, the state will “look back” up to 5 years to see if any gifts have been made. Any financial gifts or transfers for less than fair market value during the up to five year look back, may cause a delay in an applicant’s eligibility. A proper gifting program requires calculating the penalties prior to making gifts.
Q: Is $15,000 per year the maximum an individual can give away if they are going to apply for Medicaid?
A: No. The $14,000 per year gift people ask about when discussing Medicaid Planning is a tax law figure and not relevant with respect to Medicaid’s specific asset transfer rules. The maximum monetary figure Medicaid applicants need to concern themselves with is the “penalty divisor” for their state. The penalty divisor is the state assessed average daily cost for nursing home care by which the state assesses Medicaid penalties. The penalty divisor is $248 in Washington.
Q: A Medicaid applicant’s house is considered “exempt” up to $500,000 equity under Medicaid laws. Can an applicant give their house away without incurring penalties?
A: No. Any assets which are given away (personal property or real property) are considered gifts. If an applicant gives their house away, the state will assess a penalty based on the fair market value of the house at the time it was transferred.
Q: Once my spouse is approved for Medicaid, can I gift my assets away?
A: It depends. Currently, in Washington, once the “institutionalized” spouse has been approved for Medicaid, the “community” spouse’s assets are no longer a part of the ongoing continuing eligibility and therefore the community spouse could make gifts of their assets. There are a number of steps a Medicaid applicant can take to preserve their assets, ranging from gifting strategies, personal care contracts, private annuities, raising the Community Spouse Resource Allowance, etc... What you need to remember is that the laws are constantly changing and the planning your neighbor did for their mother six months ago may not be proper for your mother tomorrow. Consult a knowledgeable elder law attorney for advice.
We recommend you contact us Today to schedule a Consultation. We can discuss your personal situation in detail and determine the best options for you and your loved ones.
Call or contact us today!
How Elder Law Attorneys Can Help You Get The Assistance You Need For Estate And Long-Term Care Planning
Here at Tacoma Elder Care we assist individuals and families in developing estate and long-term care plans to avoid depleting their assets should they become ill and need long term care. For those individuals who are already in a nursing home, elder law attorneys help them qualify for Medicaid benefits while maximizing the amount of money they are able keep.
Here are three examples of families we were able to assist this year (names have been changed for their privacy):
Please keep in mind that Medicaid planning is very fact-specific and not all the above planning techniques work in every situation. Before, “spending down all of your assets,” we recommend contacting Tacoma Elder Care, experts in Elder Care law.
Contact us today! Or call for a consultation!
Here are some important questions to consider!
• When was the last time your trust/estate planning documents were reviewed?
• Do they still reflect your intentions?
• Do they comply with the current laws?