How Does Elder Law Differ From General Estate Planning?
Elder Law differs from estate planning, as it relates to the issues that begin to occur when a person starts to get older and their needs change. What most people think of is diminished capacity. A person with diminished capacity has specialized needs that must be met. Should they live in their home or be moved to assisted living where there’s more support, meals served, and social activities that they can involve themselves without having to go out of their home and find it themselves. It’s a way of trying to assist people with resources not just with their estate planning. You also to think about their living arrangements and long-term care needs for when their capacity becomes so diminished that they can’t handle their daily needs. Things like nursing homes.
When you start dealing with issues of social security, Medicaid, and the state laws that revolve around them. Then there’s that tension about how they preserve assets for their heirs and pay for the care needed. That is what’s involved in elder law, working with clients in those situations, and finding results for them.
At What Age Should I Contact An Elder Law Attorney And Start Looking At Planning?
There’s no given age to contact an elder law attorney but we suggest around 60 years of age. You should start looking at your assets, your family history, and health history and then determining if you should stat. It’s not a science because sometimes people look at their genes and decide that those things are coming and having a conversation about it. They’ll start to think if their estate is arranged in a way that will preserve assets both for their care and for their family? Then a person might have a child who has special needs or a child who isn’t making ends meet and they want to make sure assets are preserved. Finding ways to do that which are legal but are not impoverishing for the person to a point where they can’t function in their own life.
You never want to put anyone at risk. There is not a given age but somewhere around 60. Even at 55 you can start thinking in these terms and have a conversation with an elder law attorney to determine if there’s something that needs to occur. You can also look at retirement ideas. We often bring in assistance from financial advisors. We offer seminars for clients to come in and talk about these things as well. I’m working on a Medicaid seminar right now.
What Components Constitute An Effective Elder Law Plan?
There are certain components that help make an effective elder law plan. Spending down is one method that most people are aware of. With a married couple for example, there are ways to rearrange their assets in such a way that that you can help preserve them. There is also the Medicaid Trust that we provide which is one of the best ways to do it if you start early enough. Most people know about the five year look back on those trusts. There can be some downsides to it but if handled properly with the rest of your planning the Medicaid Trust can come into play. In Massachusetts it can be a pretty powerful tool to assist in making sure that not all your assets are spent on a nursing home.
You can to think about purchasing long term care insurance. We have good brokers we work with, there’s a type that I like which is a hybrid whole life policy that provides for long term care benefits on day one of owning the policy. For example, if someone has money in a CD they’re not even beating inflation, thus they’re losing money every year on that CD. However, if you have it and your finances are pretty good then you can take $100,000 and put it in this type of policy and on day one it gives you $300,000 in long term care coverage. That policy grows over time, the long-term care component can increase in value and you can utilize that or not. If you don’t, the beauty is that you haven’t lost all the money that you’re paying in for long term care because you still have a whole life policy.
There are different degrees in these policies to the amount of long-term care versus cash value appreciation of the policy. Those that give you more long-term care coverage don’t increase as fast in terms of the cash value component. Then you have some that are more equalized where you’ll build up more cash value in the policy. One of the beautiful things about these policies is if you decide that you don’t need it and you’re never going to use it, you can actually get your premiums back. The whole entire amount. That’s not an investment because it didn’t grow in value that much but at least you know you can do that and you can leave that asset for your heirs; you haven’t lost there either. It gives you the best of several choices where that $100,000 would appreciate by 2 percent in a CD but now you’ve gotten a lot of value in the long-term care without breaking the bank at all. You’ve probably gotten at that 2 percent benefit in the policy as well. For people who have relatively good health and that money is sitting there I often suggest that as an option to help them protect it. Long term care insurance is what I’m talking about but buying with whole life gives you another bang for your buck.
Health care proxy, durable powers of attorney, living trusts can also come into play where you can name in the trust someone to do planning for you should you get older. If you have a younger person who has an accident and becomes disabled, incapable of handling things, and they need care then you can name a person in the trust who can do the crisis planning for you in that event so that you don’t lose everything.
Various types of annuities can be used there. It really depends on what the couple own and the ways we can think of to protect them. The one thing we want to balance in all cases, is to make sure that other family members have enough to live on too. To make sure a spouse is not left impoverished by someone going into a nursing home. Those are all the things that we look at. We have certain types of services that we offer. The main one is the Medicaid Trust that we still use.
For more information on Elder Law Planning In Massachusetts, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (617) 924-0300 today.
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