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Written by Thomas Upchurch
As parents age and face deterioration in physical health and mental capacity, estate planning and long-term care planning issues become all the more pressing. Unfortunately, many Americans delay this type of planning until problems arise. At that point, the aging parent may be unable to manage the process alone, or may even lack the capacity to execute legal documents.
While study and survey data varies somewhat, the general conclusion is consistent: far too many U.S adults have neglected estate planning. In 2017, Caring.com concluded that fewer than half of adults have a will or living trust. The numbers improve somewhat with age, but not nearly enough. Just 60% of those aged 53-72 had made such provisions.
Somewhat surprisingly, the study revealed that more people had some sort of medical directive or power of attorney than had wills and trusts. Still, 47% of adults had not granted anyone authority to make medical decisions if they were incapacitated. 83% of those over the age of 72 reported having made such arrangements. While that number is encouraging compared with rates among younger adults, that remaining 17% could include hundreds of thousands of older adults in Florida alone.
The sooner adult children take steps to assist their elderly parents in creating a comprehensive estate plan, the better. Thorough preparation can alleviate everything from stress and family conflict to serious financial pitfalls.
Some of the pitfalls associated with failure to create a comprehensive estate plan include:
While many elders and their family members are aware of the importance of estate planning, including long-term care planning, many simply don’t know where to start. Do-it-yourself solutions such as will forms and online power of attorney generators are only useful if you know what you’re looking for, and can create more problems than they solve if you aren’t familiar with the underlying legal issues and technical requirements.
In addition, many adult children are uncomfortable raising issues of the estate planning provision for medical care and long-term care planning with their elderly parents. Some simply don’t want to discuss end-of-life issues and contemplate their aging parents passing on or becoming incapacitated—or fear that such topics will upset older loved ones. Others may come from families in which finances were not discussed openly, and so feel that raising many of the necessary questions is somehow inappropriate. Some may even fear that parents will mistake their concern for self-interest and assume that they are suggesting estate planning to ensure that they get their inheritance.
Whether you are unsure how to assist your aging parents with estate planning, uncertain about how to handle the discussion, or both, an experienced elder law attorney can help. An attorney who is experienced in estate planning for elderly parents can guide adult children and their aging loved ones through the process of protecting assets, determining how to pass property after death, ensuring that the right decision-makers are appointed for both medical and financial issues, and preserving access to long-term care.
The attorney can not only assist in the creation of documents and resolution of issues you raise, but also ask questions and provide information to help ensure that you haven’t overlooked important aspects of the estate plan. And, in this process, the lawyer can take some of the pressure off of family members by being the one who guides the discussion and asks the questions some adult children find difficult or awkward.
Elderly parents who haven’t already made provisions face the same estate planning issues as any adult. The key difference is that the risk of delay is more significant, and increases rapidly as the parent grows older and medical conditions or cognitive challenges develop or worsen. Core estate planning issues include:
While most adults are aware that they should have a will or living trust and certain other estate planning documents such as an advance healthcare directive, long-term care planning is often entirely overlooked. In part, that’s because few of us anticipate living out our final days in a nursing home, dependent on Medicaid. But, according to the Kaiser Family Foundation, Medicaid picks up the tab for 4 in 7 Florida nursing home residents—more than 57% of those in long-term care facilities.
For most people, the alternatives are to pay the bill directly or to prepare with some type of private long-term care insurance. The median cost of a semi-private room in a Florida nursing home is nearly $90,000 per year, putting private pay out of reach for most people. But, Medicaid eligibility depends in part on the patient’s assets, and the limit—with the exception of some protected equity in the family home—is low. And, by the time the family realizes that long-term care is required, it is typically too late to engage in the most effective types of long-term care planning. That’s because in assessing a Medicaid application, the state will look at transfers dating back five years from the date of the application.
If uncompensated transfers such as gifts to adult children are discovered, the state will essentially treat eligibility as if the elderly person still had those funds. So, if the applicant transferred $45,000 to his adult daughter to help her make a down payment on a house one year prior to applying for Medicaid for long-term care, he will be disqualified for as long as it would take to exhaust those funds at the average Florida nursing home—in this example, about five months.
A skilled elder law attorney may be able to minimize the damage if your family is already in this situation, or you know that long-term care is likely to be needed soon. However, planning well in advance is the best way to avoid the transfer penalty and ensure access to the care your loved one needs.
The exact concerns and necessary measures vary somewhat from person to person. However, regardless of whether your elderly parent has no estate plan, has some documents but is lacking other protections, is thinking ahead or is already facing a crisis, one thing is consistent: talking with an experienced elder law attorney is your best first step.