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Planning Considerations

My wife Cindy & I are attorneys who practice primarily in the areas of elder law and estate planning. I mention this to give credence to our topic of discussion today: The danger of waiting too late to plan.

On a regular basis, we see adult children bring parents into our practice who have lost the capacity to plan. In these cases, neither they nor we can do anything to help craft a proactive estate plan. Plausible options become much more limited. Instead of an estate plan, we may have to discuss the possibility of a guardianship. Crisis planning may be necessary to help plan and qualify for Medicaid to pay for a Nursing Home stay.

Are reading this and know that your cognitively sound (but declining) parent has not done their estate planning? My sincere hope is that you will pass this message along to them. Encourage them to set an appointment with their attorney as soon as possible to get a plan in place.

AND by the way, if you have not done your estate plan, now is the time. If something happened to you without a plan in place, it could create issues that your remaining family would not want to face.


We are covering some legal topics. As always, I want to emphasize that (1) the law is different in every state, so what I say herein may be totally different in your state. (2) Your situation is unique and one size doesn’t fit all. What we discuss herein may not be right for you. (3) We have purposely over-simplified many of the topics below. (Otherwise this would be 85 pages long and unreadable because of all of the legalize). It is imperative that you meet with your attorney and get a plan that will work for you. Don’t try to plan based on what you read in this (or any) article AND don’t try to go it alone. Yes, planning with an attorney will cost some money – but this is important.

Please think about this, choose your attorney wisely and take action.

Prior to Setting the Appointment

The purpose of this section is to give you a few things to consider before going into your attorney’s office. No, this is not an excuse to put it off. Get in as soon as possible! It’s only too late to plan if you wait. If your appointment is tomorrow, you may want to discuss these things with your family tonight!

We will discuss some of the documents that are sometimes used to help resolve some of the issues that may exist in your life. You may be aware of some of these issues. However, you may not be aware of other dangers that may be looming in the future. Hence the need for an appointment with your attorney as soon as possible. Just know that sometimes there is no quick fix to the issues that you may be experiencing.

Some of the reasons for this are:

  1. Your parents may have waited too late to plan. If they are suffering from Alzheimer’s, other dementia or diminished capacity they may have waited too long to plan. Capacity is a slippery slope. If capacity issues are a concern, then their doctor may need to make a determination as to whether the Senior can make reasoned decisions and if so, plan accordingly.
  2. In cases where they have waited too late and are “leaning heavily” on the kids for help, the plan may be more of what is beneficial for the kids and less of what the parents would have chosen if they had planned a few years earlier in life. If you are reading this and you are functioning well cognitively and physically, don’t take this for granted! Now is the time to plan.
  3. Some are looking for the “silver bullet” which may not exist. For example, they may want a plan so that they have access to all of their assets – while at the same time protecting everything from nursing home spend-down. Typically if you have access to your assets, then they are considered “available” to be used for Nursing Home expenses.

Trust Planning

There are several types of trusts. We will discuss two broad categories here. Just know that in some states, with more advanced planning, different results can be achieved than are discussed herein. The important thing finding the right one by not waiting too late to plan!

Revocable Living Trusts

With a revocable living trust a person can: (1) Designate who they want to manage their assets upon their incapacity or death. (2) They can also designate how they want their assets distributed at death. And (3), they can plan to avoid probate. If the trust is drafted so as to allow it, they continue to control all assets that they have placed in a revocable living trust and can use them any way they want.

A big advantage of a revocable trust is that it is flexible. If drafted properly, it can allow either spouse to act on behalf of the trust and or to reposition assets in the future if and when needed to to help pay for long term care expenses or to more easily facilitate Medicaid planning.

The thing that people wish they could accomplish with a revocable living trust is to have all of the above benefits AND have their assets “protected from the Nursing Home”. This is generally not true.

Again the general rule of thumb is that if the assets are available to you, then they are available (and must be spent-down to a point) before you can qualify for Medicaid assistance to pay for long term care care expenses.

Irrevocable Trusts

Certain Irrevocable Trusts can protect assets if properly funded more than five years prior to applying for Medicaid benefits. But again the general rule applies – if the assets are available to you, they are available to them. So to protect assets from nursing home spend-down, the assets must not be available to the Grantor (you). What we are glossing over here involves very advanced estate planning. Your attorney in your state may have ways of using these tools to get different results. We are just stating broad general principles.

Power of Attorney

This is a very important document that is often overlooked. Almost every week we encounter a Senior who needs a Power of Attorney to authorize a person to manage their affairs – but it is too late to plan accordingly. They may have lost capacity and can no longer sign documents. In these cases, a guardianship may be required.

We typically do two different types of powers of attorney. We do this because they are governed by two different provisions of our state’s laws and practically speaking, they go to different places and are used for different purposes.

  1. A statutory property or financial power of attorney. This one is used by the agent when dealing with banks, brokers, insurance companies or other financial institutions.
  2. A health care power of attorney when dealing with doctors, medical clinics, nursing homes, hospices or other medical facilities.

Again this is a very important document that needs to be done while a person has capacity. Failure to do this can result in the need for a guardianship so that you can be authorized by a court to act on behalf of a Senior who has lost capacity.

There are many other documents available in addition to the ones discussed herein. Again, have this discussion with your attorney to determine what is most appropriate in your situation. We wish you the best as you do planning for yourself and assist your loved ones with this important step.

Best wishes as you work to craft your plans and communicate your planning wishes to your family.

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