Some seniors simply want to downsize. They either can’t afford to live in a large home, or they don’t want the maintenance and upkeep. Or, they would like to move closer to family. In addition, as the multitude of Baby Boomers continue to age, there are oftentimes a shortage of traditional living facilities and care practitioners for seniors who find that they need extra help. As nursing home and assisted living facility costs continue to rise, some elders are finding creative ways to seek care. For whatever reason, some seniors are finding alternative living solutions.
Downsizing in Current Home
A trend for seniors who want to remain in their current home is to restructure the space so that they take up less of the home and rent out the other portions. Websites have popped up that facilitate these endeavors, making matches easier. Some seniors wish to rent to other seniors to foster companionship; others like to open up their doors to families, or invite their own family members to reside with them.
The benefits of home-sharing include sharing in expenses and the upkeep needed to maintain the property. Also, it is possible for two seniors who may need help with care to continue to live independently and stave off assisted living for a while. For example, maybe one senior can’t drive and needs help with grocery shopping. The other senior needs help with their medication or preparing meals. By sharing their strengths, they may be able to minimize their weaknesses.
Tiny Home Alternatives
Tiny homes can be a great alternative to large traditional homes because they are portable and can be placed on the property of caregivers for those seniors who still desire a bit of independence and privacy, but still need care. Or, a collection of tiny homes can make a community for seniors. Dr. Bill Thomas of New York has said “I spent my career trying to change the nursing home industry….now what I’ve got to do is make it so people don’t need nursing homes in the first place.” His idea was to create tiny houses and sell them for an affordable price. His first projects have been to create communities of tiny houses for seniors, affordable alternatives so that folks can age in their own communities and not have the upkeep of traditional homes.
MEDCottages are a mobile medical dwelling that can be temporarily placed on the property of a family member, to provide hospital-like care to a loved one for rehab or extended care. If a family member finds that a senior needs care beyond what the family member can provide, they can elect to have this structure erected on their property so their loved one is still near to them but has access to the medical offerings of the structure. The senior still has their privacy, and access to remote monitoring, but they are still close enough to participate in family activities and enjoy the proximity to their familiar surroundings. MEDCottage also has products that can transform a garage into a senior living space, or even an RV platform.
Adult Family Care
Adult family care is a term that describes a situation where friends or family will take in an elder to care for them. While this has been the norm for centuries, adult family care has also come to encompass taking in an elder that you don’t know. Families will take in unfamiliar seniors and provide care to them. The senior gets to live in a family environment, which is often preferred over an institutional setting, and the family gets paid for the care provided to the senior.
According to a recent article by NPR, adult family care in Vermont is on the rise. In Vermont, there are more seniors who need care than nurses to care for them. Because of this, nursing homes are selective and there can be a long wait for admission. Sometimes, seniors must spend this waiting period in a hospital setting. Adult family care has been a great solution for some seniors, to end their need for institutional care and enter back into the community.
Green House Home
Most of us have visited a traditional nursing home. Long, dark hallways lead to small rooms – sometimes containing two residents. It oftentimes feels like a hospital environment. The Green House Project has reimagined nursing homes. Instead of an institutional feeling, these Green House homes feel like a real home! There is a dining room, kitchen, common areas, bedrooms and private bathrooms. Each home is designed for about 10 residents. So instead of a more sterile, traditional setting, the Green House plan offers a more family-like environment.
According to an article by The New York Times, the writer was most impressed by the fact that there wasn’t a ridged schedule like there usually is in a nursing home. In a traditional nursing home, because there are so many residents, a strict schedule must be kept. Meals are served during specific times; doctors are on a schedule; help with bathing and dressing must be provided according to a set plan. At a Green House home, seniors are free to eat when they want, just like if they were at home. If a care provider comes to provide care and they find the senior asleep, they will come back at a later time.
In addition, there is four times more staff engagement with the seniors, as opposed to a traditional nursing home. Green House homes practice consistent assignment – the same staff is assigned to the same seniors on an on-going basis. Staff becomes familiar with the seniors, and can now find the time for more personalized care while the senior can enjoy more autonomy. To date, there are 284 Green House homes in the United States.
Many factors go into a senior’s decision on where to live. What can they afford? Do they want to be closer to family? What kind of care do they need? Some trends in senior living include renting out their own home, buying a tiny home, getting care in the community by others willing to share their homes, or finding a place that has reinvented what nursing homes look like.
The good news is that senior living may be finally getting the attention it deserves. Seniors are valuable members of our community, and deserve to live with dignity and respect. A wider array of senior living options means more choices for seniors. They can find a solution that works for their own needs, and not have to conform to traditional institutional care.
Technological innovations designed to help seniors live longer, more fulfilling lives are starting to catch on—everything from companion robots to smart devices that can help monitor, alert, track and support our growing senior community, whether they are living in smart senior communities or in their own homes.
It is important for elder law attorneys and elder care professionals to stay on top of this evolving technology so we’ve created a live program to take a deeper dive into these issues.
Why the Timing is Right
According to recent estimates, the population of adults 85 and older in the U.S. will roughly triple between 2015 and 2060, making it the fastest growing age group over this time period. At the same time, there is a projected decline in the working-age population, meaning there will be fewer people to support the growing elderly population, financially and otherwise.
Just seven years ago, seven able adults were available for every senior in need of care. By 2030, AARP estimates that ratio is estimated to drop to 4:1 and by 2050, to just 3:1. AARP calls this the “caregiver cliff,” as mass numbers of Baby Boomer seniors who need care begin to outnumber those able to help them.
It is also estimated that the costs to provide health care may more than double between the ages of 70 and 90, depending on the region. With rising pressure on governments, payers and manufacturers to reduce healthcare costs, senior care needs solutions in order to be prepared for this impending rise in costs.
Virtual home assistants and portable diagnostic devices will be able to help provide better elder care, help control medical costs—and allow more seniors to stay in their homes longer.
How seniors will take to the technology may also be changing
A 70-year old may have first experienced some form of internet technology in middle age or later and may not be as accepting as someone who at age 50 is already far more comfortable with technology. As a result, there will be a growing interest and market for already available and maturing technologies to support physical, emotional, social and mental health.
The Internet of Things DefinedThe Internet of Things (IoT) is the name given to the expanding network of smart devices currently connecting together in the digital landscape. Just as the Nest camera system allows us to monitor our homes remotely, numerous new technologies promise to connect seniors to care teams and other life-saving processes that can make their lives easier, safer and more enjoyable.
7 Specific Ways Technology Can Help
Written by Robert Nickerson
"Why is this happening to me!? It isn't fair! Where's my moment?" If you’re a parent, you've probably been asked this by your child, especially if they have a sibling that received a little more attention. You might overhear from another parents that in order to be fair, you also had to be equal. The logic seems to be if both children are given and told the exact same thing, then nobody will be seen as a favorite over the other, thus killing any worry that one is getting special attention.
Let's be honest; treating multiple children equal is a lot harder then thought. No matter how we approach matters, we're going to feel guilty that perhaps we made the wrong decision.
You'd think that all children grow up. That's also rarely the case. When a parent dies, if certain children are left out or not given a supposed "fair" share, then the adult could still have a childish reaction. Let's say a younger sibling is chosen over the older to be lead in charge of moms estate. The older might say, "This is proof you were loved more".
Though it may appear so on paper, this doesn't prove anything (though if you have a favorite over the other, please don't tell) other then you think one might be better at managing or another does deserve a little more for one reason over the other.
Whose going to take the lead?
It always going to be a difficult choice o figure out whose going to handle your estate when your gone. Figuring out which child (if you've decided on that) is going to handle your estate could potentially put things on a freeze. Sometimes, mom and dad will just select all their children to be successor co-trustees.
Maggie was a grandmother who had three grandsons that were all in their twenties. She named all of them co-trustees, having the estate divided equally. When she died, rather then accepting the terms that were drawn upon, they all charged for the bank to empty everything before one could "get their share". This ended up being a legal nightmare.
I recommend that in order not go through the trouble of the kids fighting each other over who gets whatever, that unless you have a specific reason, that they need to work together in advance to help make plans. It can be sad with how far some people will go to get "their share" should something not be brought up sooner.
How about someone more responsible?
A lot of families will make the choice to let someone else manage one's estate, like the fathers brother or a friend of the mother. In order to deflect conflict, especially if the kids are not yet mature enough to understand, this is common. This can even be the better option if the person selected even has legal experience that can guide the adult children within the complex terminology and carefully explain why one receives something over the other.
Thinking about a professional?
Though this is only recommended for large estates, you make want to consider a professional trustee if you cant find someone responsible in the family. I'll warn you though that they can be very expensive and usually don't cater to all needs to beneficiaries.
I'd also think about a professional fiduciary. They'll still likely be expensive, they are more then willing to deal with a midsize estate.
Instead of "fairness", think about "results"
The cheapest way to have a trustee is to simply have one of your children take on that role. After all, the point of an estate plan to administer specific instructions on how beneficiaries are carried out. This is when you do need to think about who is most likely to follow your wishes and ensure it goes to plan, especially if someone in the family needs some kind of care.
If your having trouble figuring out which child to trust, I'd recommend discussing this with an attorney or a financial planner. They can give their recommendation, but you still have to make a final decision.
What about those that say, "What about me!"? The best strategy is to talk to them before hand to deflate the hard feelings that are inevitable. As long as your open with them, their going to understand your definition of "fairness" a lot more.
Written by Robert T. Nickerson
Todays the day! You've signed your last signature and your lawyer has sent you home with your estate plan. So what to do with them?
A lot of lawyers (including Jeffrey Nickerson) will hold your original documents at the office in locked, safe cabinets that clients can have access to anytime. If anything, it's recommended, in case copies of certain documents were needed for other family members, doctors, caregivers, etc…
People are given the option of having their documents being held onto by their attorney. If you decide to take the estate plan home with you, here are some tips on where to put it.
1. Don't put it in a safety deposit box
As tempting as the idea of it being locked away safe, this is something of a major mistake. The purpose of safety deposit boxes are a way to have access for you, not a lot of people. Should you die or find yourself incapacitated, then someone else will need to get them. Those that don't already have authorization to go into another's safety deposit box will have to get a court order to do so. This is going to be a long and bureaucratic process if this route is soughed out.
2. Think about getting a fireproof safe
This is a smart investment (especially if you live in the tinderbox that is Riverside County). Places like Amazon have a lot of options. Though you could keep an estate plan in a file cabinet or a important items bookshelf, a fireproof safe is the safest bet to make.
3. Make sure you have copies
I've said this before and I'll say it again; make sure copies of your estate plan are made available. But it's also important to have copies in other locations. Do you have an office where you work? That’s a good spot. Do you have a storage facility? That's a good spot. Even a safety deposit box is a good spot for copies (BUT NOT THE ORIGINAL). Your attorney should even have a copy so that the family can go to them in any case.
4. Don't forget your digital records
Like the Law Offices of Jeffrey C. Nickerson, your lawyer should give you a digital copy of your estate plan. This is something that not only you should have on your computer or your cloud account (a place where you can access your estate plan information from other computers or smart phones), but this is something that can also go into a fireproof safe.
5. Don't worry if the original gets lost
This is why having copies made are essential. Your family can still carry through your plans with photocopies as long as their updated and the attorney can verify they were made. Otherwise, the attorney is likely to have an on file copy. Otherwise, talk to your attorney and he can have another one printed for you.
6. Just because their done doesn't mean you can put them away forever
As much as you want to forget about it, this is another mistake that people make. An estate plan will reflect the current path for a family. But that's the keyword; current. Plans could easily change in ten or even five years. Take some time to read it to be sure the estate plan is still the way you want to proceed. Grandma may want to do something different from her estate plan that was written in 1987.
Written by Robert T. Nickerson
Estate planning doesn't just affect the people you want to address like your family; it can affect the family for generations in the long run. A good example of this is from the founding father and first president, George Washington. According to his will and last testament of 1799, George Washington granted "use, profit, and benefit" of his property to his "dearly beloved wife Martha Washington." He also set up to finance the creation of an orphan school, forgive many debts from family members, had set aside accounts for the creation of the Washington & Lee University and had arrangements made for those close to him to be cared for.
It was the goal of Washington to use what he's built to provide for the people he cared for, deal with any business debts, and be charitable to the needy. Even after 200 years, Washington's estate plan holds up and can apply for the modern era in the way families should consider with their own plans.
Washington was open about the displeasure of creating such a document, one that reads at over 5,500 words… which is about nine pages, single spaced. But it's still impressive to at least see how close modern estate plans cone to it.
Admittedly, creating an estate plan is no Disneyland vacation; it can be expensive and time consuming. We can still take a history lesson from Washington, as he wrote it. This gives us a glimpse into his thoughts and where he wanted his legacy to go when he was gone.
Every estate plan should cater to yourself and the people you care about. A good estate plan should be reflective about your own legacy and what it's going to mean to everyone else. This could mean setting something up for someone with special needs or even setting aside assets to go to your heirs.
In order to ensure a lasting legacy and ease of mind, a good estate plan should consider three focal points in order to have something as effective as Washington had planned; Communication, clarity, and customization.
The first involving communication is meant for your family. Don't get me wrong; a proper estate plan will have a lot of language that will come off as technical and is meant to follow the rule of the law and court, ensuring that on paper, things are going without trouble. But who is the estate plan for? Your lawyers or your family? If you answered family, your correct!
Before walking into an office to declare you want an estate plan, its important for both spouses to have the right information about their families. Both people need to be involved in drafting the documents and being in contact with those that their responsible for. By talking to get all sides of the story, a family can understand what needs to be addressed and put within an estate plan before it's too late.
Where does the role of clarity come in? For the second recommendation, I refer to the words "will" and "last testament". For some people, this is all their going to need to fufil their legacy needs. But what about families where things are not as clear? Are they going to need more? Probably. Clarity refers to the idea of having all areas that need addressing down on paper. This is when I would refer to other documents like "personal statement of intent" or "letter of wishes". While a will is a registered document under specific probate laws, a personal statement of intent can be accessible to the people set up under it.
Something like a personal statement of intent can do a lot of things. For example, if your dividing your assets unequally, this can be a chance to clarify your not favoring one heir or the other, but rather have a good reason for doing so. This could prevent a family battle in court in probate. Another example could deal with vacation homes. A statement of intent could say that you want your family to continue using it for generations rather then selling it.
Clarity is important for families with nontraditional structures or are involved in situations that could appear unfair.
The last, which applies for everyone is customization. No estate plan is the same as each family is going to have several factors play a part; Your assets, your property, your family, any disabilities, and even the nature of your death. All of these things are yours and an estate plan will revolve around most of it. It's important to work with a lawyer or advisor who is experienced with such matters.
Let's say you have someone in the family who has special needs. Their going to worry about whose going to care for that person once the parents are gone. If someone doesn't want the responsibility, then a fiduciary is usually hired to ensure the guardianship and their financial position. An estate plan needs to verify this kind of setup with a customization that a lawyer can take care of.
George Washington was a founding father who was wise in a lot of things. His estate plan was one of them, and is something people in 2019 can take a lot of lessons from.
Written by Robert Nickerson
Estate Planning becomes a greater challenge when a loved one like a spouse or an offspring has a chronic illness like Parkinson's, senile dementia or multiple sclerosis.
Chronic Illness is Not a Rare Situation
If we were to look at the numbers, there are over a 120 million Americans that suffer with a chronic illness. It's bound to go up even higher by 2030. In fact, over twenty-five percent of those over sixty five have had their lives changed by a chronic illness. As with new generations and increasing age, it's likely the number will continue to climb. Since this is essential to estate plans, it's not only important to have something in place, but something prepared that will handle potential chronic illness; something that that covers a large umbrella.
Estate Plans for Those Already Living with Chronic Illness
Though those with chronic illness will need similar documents in an estate plan that regular people use, the difference here is that they need to be modified to serve your needs. This is why it's important to get them done as soon as you get a prognosis. Putting off too long could result in the illness impairing your ability to understand or even sign the right papers. This is understandably a hard and difficult decision, perhaps as much as the medical diagnosis. This is an important note to think about when searching for an advisor that can empathize with what your going though and can help.
Here are some documents that should be able to help you out when getting an estate plan together.
HIPAA stands for Health Insurance Portability and Accountability Act of 1996. This law prevents an unauthorized person from altering with your personal healthcare plans and protects your confidentiality of your healthcare information and insurance. The purpose of a HIPAA Release is that it assigns someone your know (family member or friend) to have access to your private health information. This is important for whoever your going to trust when communicating with doctors and insurance companies. Let's say you've become too sick to make any decisions and cannot take your medicine. The person on the HIPAA Release will then take that responsibility as instructed.
When making this decision, it needs to be in writing and that whoever is being assigned is doing so on a voluntary basis. It also needs to show how much medical information is available. Sometimes its everything and sometimes it's only what needs to be known. It should say where and what needs to be provided in order to care for an illness. It could be medical care professionals or the names of hospitals. It's doesn’t need to be specific, as it could just refer to a category.
Does it make sense to have an expiration date for a HIPAA Release? Not if you have a progressive illness. What does make sense is having the right to revoke any access to prevent abuse. This could be an explanation for them to be replaced if needed. This is why this is only necessary if your electing someone that isn't as close. This is why you should probably look to a close family member or friend.
Watch out for the standard form. Some law practices will simply hand you’re a "standard form" that looks like any typical document. You might be told it'll cover the loved one, even though there's no one better who understands their problem then you. Only look for a lawyer who will cater to ones specific needs and can get it all in writing.
Living Wills and Chronic Illness
A living will exemplifies one's health care requests. It's common for end of life wishes, but it can cover a lot of things. It's something that can be altered based on other medical requirements or religious beliefs that could affect them. It's language can be rewritten to suit about anything. But don't assume that just because you have one ailing illness doesn't mean you won't have another. Be sure to include similar instructions, but vague enough that more information can be put in later. But for the original illness, clarify what disease you have, what stage it's in and what course it's set to go in. Don't forget to add what and how it needs to be treated. Are you open to experimental treatments? Then you may want to add your more then willing to go through experimental treatments. But also add whether the one responsible for financial power of attorney is paying for this or if it's being covered with something else.
Health Care Proxy and Chronic Illness
What a health care proxy does is legally assigns a person to your medical power of attorney. This is called your "agent" who will make your medical decisions when your no longer in a position to do so. Be sure to discuss with them what you want even before you get it on paper. This also includes guardianship should you have children. Do you want them as guardians or someone else? That’s another matter that goes into ones estate plan.
Physician Order for Life-Sustaining Treatment
This is a specific document that's given to your doctor once completed by whoever is your agent in your health care power of attorney. This purpose is normally for end of life decisions, so this is not meant for broader medical information. This is also important for those that have no family to name.
Revocable Trust and Chronic Illness
This is one of the most common documents used in an estate plan. This is to prevent major trouble in probate court later on. This helps avoid those high costs and drawn out court proceedings. For someone with a chronic illness, this will help a lot when figuring out the successor and their management of finances. For example, if you want someone who will keep watch over the accounts, you can have them complete a review each year. You can even have an independent CPA to serve as a monitor, to at least have more protection and a safeguard.
This article examines the unique planning requirements of families with children, grandchildren or other family members (such as parents) with special needs. There are numerous misconceptions in this area that can result in costly mistakes when planning for special needs beneficiaries. Understanding the pitfalls associated with special needs planning is a must for all of us who assist families who have loved ones with special needs.
Tip #1: Avoid disinheriting the special needs beneficiary. Many disabled persons receive Supplemental Security Income (“SSI”), Medicaid or other government benefits to provide food, shelter and/or medical care. The loved ones of the special needs beneficiaries may have been advised to disinherit them - beneficiaries who need their help most - to protect those beneficiaries' public benefits. But these benefits rarely provide more than basic needs. And this solution (which normally involves leaving the inheritance to another sibling) does not allow loved ones to help their special needs beneficiaries after they themselves become incapacitated or die. The best solution is for loved ones to create a special needs trust to hold the inheritance of a special needs beneficiary.
Planning Note:It is unnecessary and in fact poor planning to disinherit special needs beneficiaries. Loved ones with special needs beneficiaries should consider a special needs trust to protect public benefits and care for those beneficiaries during their own incapacity or after their death.
Tip #2: Procrastinating can be costly for a special needs beneficiary. None of us know when we may die or become incapacitated. It is important for loved ones with a special needs beneficiary to plan early, just as they should for other dependents such as minor children. However, unlike most other beneficiaries, special needs beneficiaries may never be able to compensate for a failure to plan. Minor beneficiaries without special needs can obtain more resources as they reach adulthood and can work to meet essential needs, but special needs beneficiaries may never have that ability.
Planning Note:Parents, grandparents, or any other loved ones of a special needs beneficiary face unique planning challenges when it comes to that child. This is one area where families simply cannot afford to wait to plan.
Tip #3: Don’t ignore the special needs of the beneficiary when planning. Planning that is not designed with the beneficiary's special needs in mind will probably render the beneficiary ineligible for essential government benefits. A properly designed special needs trust promotes the comfort and happiness of the special needs beneficiary without sacrificing eligibility.
Special needs can include medical and dental expenses, annual independent check-ups, necessary or desirable equipment (for example, a specially equipped van), training and education, insurance, transportation and essential dietary needs. If the trust is sufficiently funded, the disabled person can also receive spending money, electronic equipment & appliances, computers, vacations, movies, payments for a companion, and other self-esteem and quality-of-life enhancing expenses: the sorts of things families now provide to their child or other special needs beneficiary.
Planning Note: When planning for a beneficiary with special needs, it is critical that families utilize a properly drafted special needs trust as the vehicle to pass assets to that beneficiary. Otherwise, those assets may disqualify the beneficiary from public benefits and may be available to repay the state for the assistance provided.
Tip #4: A special needs trust does not have to be inflexible. Some special needs trusts are unnecessarily inflexible and generic. Although an attorney with some knowledge of the area can protect almost any trust from invalidating the beneficiary's public benefits, many trusts are not customized to the particular beneficiary's needs. Thus the beneficiary fails to receive the benefits that the parents or others provided when they were alive.
Another frequent mistake occurs when the special needs trust includes a pay-back provision rather than allowing the remainder of the trust to go to others upon the death of the special needs beneficiary. While these pay-back provisions are necessary in certain types of special needs trusts, an attorney who knows the difference can save family members and loved ones hundreds of thousand of dollars, or more.
Planning Note: A special needs trust should be customized to meet the unique circumstances of the special needs beneficiary and should be drafted by a lawyer familiar with this area of the law.
Tip #5: Use great caution in choosing a trustee. Loved ones or family members can manage the special needs trust while alive and well if they are willing to serve and have proper training and guidance. Once the family member or loved one is no longer able to serve as trustee, they can choose who will serve according to the instructions provided in the trust. Families or loved ones who create a special needs trust may choose a team of advisors and/or a professional trustee to serve. Whomever they choose, it is crucial that the trustee is financially savvy, well-organized and of course, ethical.
Planning Note: The trustee of a special needs trust should understand the trustmaker’s objectives and be qualified to invest the assets in a manner most likely to meet those objectives.
Tip #6: Invite others to contribute to the special needs trust. A key benefit of creating a special needs trust now is that the beneficiary's extended family and friends can make gifts to the trust or remember the trust as they plan their own estates. For example, these family members and friends can name the special needs trust as the beneficiary of their own assets in their revocable trust or will, and they can also name the special needs trust as a beneficiary of life insurance or retirement benefits. Unfortunately, many extended family members may not be aware that a trust exists, or that they could contribute money to the special needs trust now or as an inheritance later.
Planning Note: Creating a special needs trust now allows others, such as grandparents and other family members, to name the trust as the beneficiary of their own estate planning.
Tip #7: Relying on siblings to use their money for the benefit of a special needs child can have serious adverse effects. Many family members rely on their other children to provide, from their own inheritances, for a child with special needs. This can be a temporary solution for a brief time, such as during a brief incapacity if their other children are financially secure and have money to spare. However, it is not a solution that will protect a child with special needs after the death of the parents or when siblings have their own expenses and financial priorities.
What if an inheriting sibling divorces or loses a lawsuit? His or her spouse (or a judgment creditor) may be entitled to half of it and will likely not care for the child with special needs. What if the sibling dies or becomes incapacitated while the child with special needs is still living? Will his or her heirs care for the child with special needs as thoughtfully and completely as the sibling did?
Siblings of a child with special needs often feel a great responsibility for that child and have felt so all of their lives. When parents provide clear instructions and a helpful structure, they lessen the burden on all their children and support a loving and involved relationship among them.
Planning Note: Relying on siblings to care for a special needs beneficiary is a short-term solution at best. A special needs trust ensures that the assets are available for the special needs beneficiary (and not the former spouse or judgment creditor of a sibling) in a manner intended by the parents.
Bonus Tip: Stay up to date on changes in the law. The rules applicable to special needs trusts are constantly changing. Most recently, the Social Security Administration changed the rules on special needs trusts that are created using assets of the special needs beneficiary (called a “self-settled special needs trust”). The new Social Security regulations require certain provisions to be present in any self-settled trust drafted after January 1, 2000 that allows for early termination of the trust (termination prior to the death of the special needs beneficiary).
If these required provisions are not in the trust, the special needs beneficiary could lose SSI or Medicaid eligibility. The new regulations go into effect October 1, 2010. Please contact us if you have questions about the new regulations or if you would like more information on the changes.
Planning Note: A recent change in the Social Security Administration regulations governing self-settled special needs trusts could render some existing trusts invalid for SSI or Medicaid purposes. It is imperative to stay up to date on changes in the rules that apply to special needs trusts to ensure the benefits received by a special needs beneficiary are not jeopardized as a result of changes in the law.
Conclusion. Planning for a special needs beneficiary requires particular care and knowledge on the part of the planning team. A properly drafted and funded special needs trust can ensure that special needs beneficiary has sufficient assets to care for him or her, in a manner intended by loved ones, throughout the beneficiary's lifetime. Please contact us if you have any questions or would like to discuss any information in this newsletter further.
The benefits of a highly detailed, comprehensive power of attorney are numerous. Unfortunately, many powers of attorney are more general in nature and can actually cause more problems than they solve, especially for our senior population. This issue of theElderCounselore-newsletter is intended to highlight the benefits of a comprehensive, detailed power of attorney. A proper starting point is to emphasize that the proper use of a power of attorney as an estate planning and elder law document depends on the reliability and honesty of the appointed agent.
The agent under a power of attorney has traditionally been called an "attorney-in-fact" or sometimes just "attorney." However, confusion over these terms has encouraged the terminology to change so more recent state statutes tend to use the label "agent" for the person receiving power by the document.
The "law of agency" governs the agent under a power of attorney. The law of agency is the body of statutes and common law court decisions built up over centuries that dictate how and to what degree an agent is authorized to act on behalf of the "principal"--the individual who has appointed the agent to represent him or her. Powers of attorney are a species of agency-creating document. In most states, powers of attorney can be and most often are unilateral contracts--that is, signed only by the principal, but accepted by the agent by the act of performance.
Much has been written about financial exploitation of individuals, particularly seniors and other vulnerable people, by people who take advantage of them through undue influence, hidden transactions, identity theft, and the like. A prior issue of the ElderCounselor addressed guardianships and conservatorships and discussed the benefits of court supervision of care of vulnerable people in such contexts. Even though exploitation risks exist, there are great benefits to one individual (the principal) privately empowering another person (the agent) to act on the principal's behalf to perform certain financial functions.
A comprehensive power of attorney may include a grant of power for the agent to represent and advocate for the principal in regard to health care decisions. Such health care powers are more commonly addressed in a separate "health care power of attorney," which may be a distinct document or combined with other health topics in an "advance health care directive."
Another important preliminary consideration about powers of attorney is "durability." Powers of attorney are voluntary delegations of authority by the principal to the agent. The principal has not given up his or her own power to do these same functions but has granted legal authority to the agent to perform various tasks on the principal's behalf. All states have adopted a "durability" statute that allows principals to include in their powers of attorney a simple declaration that no power granted by the principal in this document will become invalid upon the subsequent mental incapacity of the principal. The result is a "durable power of attorney"--a document that continues to be valid until a stated termination date or event occurs, or the principal dies.
Having covered the explanation of what a durable power of attorney is, let's look at the top 10 benefits of having a comprehensive durable power of attorney.
1. Provides the ability to choose who will make decisions for you (rather than a court).
If someone has signed a power of attorney and later becomes incapacitated and unable to make decisions, the agent named can step into the shoes of the incapacitated person and make important financial decisions. Without a power of attorney, a guardianship or conservatorship may need to be established, and can be very expensive.
2. Avoids the necessity of a guardianship or conservatorship.
Someone who does not have a comprehensive power of attorney at the time they become incapacitated would have no alternative than to have someone else petition the court to appoint a guardian or conservator. The court will choose who is appointed to manage the financial and/or health affairs of the incapacitated person, and the court will continue to monitor the situation as long as the incapacitated person is alive. While not only a costly process, another detriment is the fact that the incapacitated person has no input on who will be appointed to serve.
3. Provides family members a good opportunity to discuss wishes and desires.
There is much thought and consideration that goes into the creation of a comprehensive power of attorney. One of the most important decisions is who will serve as the agent. When a parent or loved one makes the decision to sign a power of attorney, it is a good opportunity for the parent to discuss wishes and expectations with the family and, in particular, the person named as agent in the power of attorney.
4. The more comprehensive the power of attorney, the better.
As people age, their needs change and their power of attorney should reflect that. Seniors have concerns about long term care, applying for government benefits to pay for care, as well as choosing the proper care providers. Without allowing the agent to perform these tasks and more, precious time and money may be wasted.
5. Prevents questions about principal's intent.
Many of us have read about court battles over a person's intent once that person has become incapacitated. A well-drafted power of attorney, along with other health care directives, can eliminate the need for family members to argue or disagree over a loved one's wishes. Once written down, this document is excellent evidence of their intent and is difficult to dispute.
6. Prevents delays in asset protection planning.
A comprehensive power of attorney should include all of the powers required to do effective asset protection planning. If the power of attorney does not include a specific power, it can greatly dampen the agent's ability to complete the planning and could result in thousands of dollars lost. While some powers of attorney seem long, it is necessary to include all of the powers necessary to carry out proper planning.
7. Protects the agent from claims of financial abuse.
Comprehensive powers of attorney often allow the agent to make substantial gifts to self or others in order to carry out asset protection planning objectives. Without the power of attorney authorizing this, the agent (often a family member) could be at risk for financial abuse allegations.
8. Allows agents to talk to other agencies.
An agent under a power of attorney is often in the position of trying to reconcile bank charges, make arrangements for health care, engage professionals for services to be provided to the principal, and much more. Without a comprehensive power of attorney giving authority to the agent, many companies will refuse to disclose any information or provide services to the incapacitated person. This can result in a great deal of frustration on the part of the family, as well as lost time and money.
9. Allows an agent to perform planning and transactions to make the principal eligible for public benefits.
One could argue that transferring assets from the principal to others in order to make the principal eligible for public benefits--Medicaid and/or non-service-connected Veterans Administration benefits--is not in the best interests of the principal, but rather in the best interests of the transferees. In fact, one reason that a comprehensive durable power of attorney is essential in elder law is that a Judge may not be willing to authorize a conservator to protect assets for others while enhancing the ward/protected person's eligibility for public benefits. However, that may have been the wish of the incapacitated person and one that would remain unfulfilled if a power of attorney were not in place.
10. Provides peace of mind for everyone involved.
Taking the time to sign a power of attorney lessens the burden on family members who would otherwise have to go to court to get authority for performing basic tasks, like writing a check or arranging for home health services. Knowing this has been taken care of in advance is of great comfort to families.
This discussion of the Top 10 Benefits of a Comprehensive Power of Attorney could be expanded by many more. Which benefits are most important depends on the situation of the principal and their loved ones. This is why a comprehensive power of attorney is so essential: Nobody can predict exactly which powers will be needed in the future. The planning goal is to have a power of attorney in place that empowers a succession of trustworthy agents to do whatever needs to be done in the future. Please call us if we can be of assistance in any way or if you have any questions about durable powers of attorney.
Long-term care is becoming an important issue for our nation to address. We have 78 million aging baby boomers. The costs of long-term care to these baby boomers can be catastrophic and few people have sufficient resources to pay for needed long-term care.
In an effort to deal with this growing concern, the Long-Term Care Financing Collaborative (the “Collaborative”) began meeting informally in 2012 for the purpose of finding a solution. They have since become a formalized group made up of a variety of national experts and stakeholders with varying ideological stances. Their common goal is to improve the way Americans pay and prepare for non-medical care (Long-term supports and services) needed by the elderly and those living with disabilities. On February 22, 2016, the Collaborative announced its third and final set of recommendations.
ABOUT THE COLLABORATIVE
The diverse groupis made up of policy experts, consumer advocates and representatives from service providers and the insurance industry. In addition, the group consists of senior executive branch officials in both the Democratic and Republican administrations, former congressional aides, and former top state health officials.
THE COSTS INVOLVED
The statistics surrounding long-term care or long-term supports and services (“LTSS”) are eye opening. According to the Collaborative, there are between 10 and 12 million adults today who require LTSS and that number is expected to double by the year 2030. More than two-thirds of older adults will need some assistance before they die and nearly half will have a high enough need that they will be eligible for private long-term care insurance or Medicaid to pay the bill. More than 6 million older adults need that level of care today and nearly 16 million will need it in 50 years.
The Collaborative defines Long-term supports and services (“LTSS”) as non-medical assistance. This would include help with such things as food preparation, personal hygiene, assistive devices and transportation, bathing, eating and the like.
Cost to the Elderly or Disabled:
The elderly or disabled persons who find themselves in need of LTSS try to pay for it out of their savings or income from their retirement along with help from family members. Often, this is insufficient to cover the costs and many people have to turn to Medicaid for help. The overall spending on LTSS is expected to double by 2050, which will cause even more people to depend on Medicaid to pay for it.
Few people have saved sufficiently for LTSS. In fact, the Collaborative reports that a typical American between the ages of 65 and 74 has financial assets of $95,000 and about $81,000 in home equity. This does not include retirement savings, which vary widely across the country. To pay for one’s lifetime medical expenses with a 90% certainty requires savings of about $130,000 and an additional $69,500 for LTSS costs. With this in mind, it is easy to see how people are running out of money.
Over all, individuals pay for about 55% of LTSS expenditures; Medicaid pays about 37%; and Private LTSS insurance pays for less than 5%.
Cost to Family and Friends:
In addition to the financial stress this places on the elderly and disabled, it also significantly affects their families. The Collaborative estimates that in 2013, family and friends provided 37 billion hours of uncompensated LTSS to adults. This care calculates to up to $470 billion, which is three times the amount Medicaid spent on LTSS the same year.
When family members provide caregiving to a loved one, it often comes at the cost of their job or a portion of their job. On average, the Collaborative reports, a woman in her 50s who leaves a job to care for her aging parents does so at a cost of $300,000 of income over her lifetime. The Collaborative states that “unpaid family caregivers lose an estimated $3 trillion in lost lifetime wages and benefits.”
Cost to Employers of Family and Friends:
The Collaborative reports that employers experience a loss of $17.1 to $33 billion in productivity due to absenteeism alone. In addition, they state that “costs of turnover and schedule adjustments for caregiving workers add an additional $17.7 billion in costs.”
THE COLLABORATIVE’S RECOMMENDATIONS
The Collaborative was able to agree to five key recommendations in three key areas. This final set of recommendations focused significantly on: 1) A need for universal catastrophic insurance; 2) Private market initiatives and public policies to revitalize the insurance market to help address non-catastrophic LTSS risk; and 3) Enhanced Medicaid LTSS for those with lower lifetime incomes.
The Collaborative calls for a strong government role in the solution. The group considered voluntary and universal insurance programs and came to the conclusion that universal was the only viable, long-term solution as it spread the risk across the entire population and avoided challenges of adverse selection. The Collaborative noted in the report, “As a result, universal insurance appears to offer broad-based insurance at a comparatively low lifetime cost.”
In addition to recommending universal catastrophic insurance, the Collaborative also recommended taking some actions to revitalize the private insurance market. These included suggestions of employers offering long-term care insurance as part of their benefits packages. In addition, the group suggests that regulatory changes in the insurance industry, creating more standardization in policies, would save costs to consumers. The specifics of the regulatory change suggestions include increasing premiums and benefits as the individual ages. There is also a suggestion that this type of insurance be sold in conjunction with Medicare supplemental programs. Finally, the group suggests that policymakers continue to encourage and support efforts by the insurance industry to experiment with more hybrid products, combining long-term care insurance with other products.
Another recommendation given by the Collaborative was to encourage increased private savings for retirement. This encouragement might come in the form of ease of enrollment through employers’ benefits programs, expanded retirement products, tax subsidies and education.
Of note was a recommendation made by the Collaborative was to modernize Medicaid financing and eligibility. This recommendation is really one to expand Medicaid coverage to include more people, in more settings, for more care. Eligibility would be based on a functional assessment and a needs assessment rather than requiring an institutional level of care.
The Collaborative leaves us with a final recommendation to provide more education about LTSS. Many people are in denial about the possibility that they may need it some day and do not plan. While it is encouraging that the nationwide issue is being studied more and taken more seriously now, the problem is far from resolved. Until there is a firm solution, individuals must take responsibility and plan ahead.
If you or someone you know has questions about how to plan for the costs of long-term care, please feel free to contact our office.
ABOUT THE COLLABORATIVE
The diverse groupis made up of policy experts, consumer advocates and representatives from service providers and the insurance industry. In addition, the group consists of senior executive branch.
Written by Robert Nickerson
In the case of wills, documents, and full estate plans, there have been plenty of sad, badly timed, and simply weird situations that have affected clients in ways that were not considered. The good news is that everyone makes mistakes. It's a matter of just not repeating those mistakes. Badly written estate documents & files can lead to a lot of missteps with the rest of the family including paying outrageous tax bills and accidently cutting a loved one out of a beneficiary. Here are ten things that people tend to do wrong with their estate plan.
1. Beneficiary Blunders
Not being able to name a beneficiary to be responsible for retirement accounts and insurance policies or even reviewing old ones already signed before is the most common. With no one selected, then the default will usually mean the estate, which can be surrounded by probate, delays, complicated court matters and more. It’s a good idea to see where your beneficiary is now. A beneficiary can be stretched in expectancy, but an estate plan can last forever. This could lead into an ex-spouse as a beneficiary, even though you don't want them there now.
2. "Selling" Property for $1
This practice used to be very popular until the government stepped in and caught on with the theory. The idea is that a piece of land could be sold for a low price so that the taxes on the gain (whatever the land is worth compared to when the original person bought it) would not need to be paid and thus, be removed from the estate plan. It's a part of an idea that by doing this, taxes don't need to be paid, but the IRS will find it and still ask those doing this to pay even more.
3. Naming Specific Investments in your Will
If the person who died no longer owns a specific investment, his estate might be forced to buy it back at a higher price, even if the beneficiaries are not interested. Check to see if the specific investments still belong to the original party. If not, and it's not updated, then a ton of the assets could be used to pay the higher price.
4. Not Thinking all the way Through for a Well-Intended Gift
Let's say we had a father has three boys and he wanted to make sure his house became theirs after he died. What if it was stated that the home could not be sold unless everyone was also living in that town. It might be fine, but what if one of the sons did not have a home. Then the brothers would be stuck in court for a while before finally being able to sell the home. Check the estate plan to be sure that assets and their beneficiaries are set in stone to be transferred in a easy manner.
5. Leaving Assets Directly to a Minor Without Settling Guardianship Issues
So grandpa wants to leave little Billy a Babe Ruth signed baseball and $90,000. Who's going to handle all of this? If this isn't figured out, there is a chance for financial abuse.
6. Not Planning for the Death of a Beneficiary
What should happen if a beneficiary isn't alive when it's time for them to receive their benefit? Will it go the surviving heirs? Will it go into another account or foundation? There are a lot of people that will think of the future, but not everyone else's future. It may not be their fault, but anything is always possible. Consider having an alternate plan laid out just in case.
7. Ownership mistakes and Imbalances
Who owns the house? Business? Collection that's worth a lot? This could be troubling if too many of these are under one spouses names rather then a joint. It leads to an increase in taxes, both in life and in death. A more balanced account of assets will appear equal and reduces a chance of owing too much in taxes.
8. Not Having a Residuary Clause
What a Residuary Clause in an Estate Plan does is remembering everything else not stated in your will, which includes assets not owned yet, but eventually does, before death. This is common and people will not consider this.
9. Not Planning for Your Own Mortality
Yep, we are all going to die someday. Whether you want to face that or not, it's going to happen. It's unfair to let your family deal with no plans just because you don't want to face the consequences. It's be better then litigation.
Jeffrey C. Nickerson - Estate Planning Attorney - My Passion is Special Needs Planning!