|Aging Parent Tip Sheet
Taking proactive steps before incapacity arises can save you and your family grief and expense
by Jim Schuster, Certified Elder Law Attorney
You cannot make legal decisions for parents without their permission. If your parent suffers incapacity and has not given you authority to act then the only you can get the authority is through “living probate”. The probate court will need to hold a public hearing to decide whether your parent is legally incapacitated and if so who should be appointed as guardian or conservator. It may not be you. From that point on all of the parent’s property will be under court supervision and control. Costs may run into the thousands of dollars. That is an entirely needless loss of control, privacy and money. Elder law planning will not only avoid this fate but put you in a better position with more options to save money and retain family control.
Parents often add children to bank accounts so that the children can pay bills in case of incapacity and the account can avoid probate on death. In general joint accounts do avoid probate but can cause many problems. Being joint on a parent’s bank account merely gives authority to access the account. It does not give authority to act for a parent. For example, a child joint owner can pay a bill that the parent incurs, but the child does not have authority create the bill. For example, being joint on an account does not give the child authority to sign a contract. In addition the account can cause probate court battles if the account is not distributed according to a parent’s last Will and Testament.
Every aging person should have their affairs in order. They need to have an up to date Will, complete durable power of attorney, healthcare power of attorney and advance directive. The Will dictates how the property should be shared upon death. The healthcare power of attorney allows a patient advocate to receive confidential medical information and make decisions for the parent as patient. The advance directive designates a patient advocate gives instruction on end of life healthcare treatment decisions. In addition an estate plan may not be complete without a trust or a quit claim deed and coordination of all beneficiary designations on accounts and insurance contracts. An elder law attorney should be consulted to determine what documents will be needed to complete an elder’s estate plan.
If one picks up an article on financial elder abuse, one will read that family members are the number one abusers. Full-time caregivers may keep a parent out of a nursing home. Caregivers who forego employment to assist parents often run into serious financial difficulty. They may turn to a grateful, but incompetent, parent for financial help. Taking money from an elder under these circumstances can be a crime against a “vulnerable adult.” The law presumes that a child caring for a parent does so for free – no matter how valuable the service is. It is better to have a “caregiver contract” from the outset so that compensation is settled. The contract should identify the need for the services provided and include a record of services performed. There should be a family meeting so that all family members are “on board.” Otherwise children may hire attorneys and “fight it out in court.”
The Improved Pension benefit is available to active duty wartime veterans or surviving spouses who need assistance with activities of daily living. The benefit can pay over $2,000 per month to a veteran and spouse. The program is net worth or asset limited. Excess assets can be sheltered with the help of an elder law attorney with VA experience. The attorney would help the Veteran set up an “estate plan” that would meet both the requirements of the VA program and the Medicaid program as well as the other necessary items of elder law planning.
Medicaid, the nursing home payment program, looks back five years prior to application. Any money or property transferred within this period will need to be paid back before Medicaid will pay the nursing home. However, any transfers more than five years are not considered by Medicaid. That means an applicant could transfer one million dollars, wait five years and have Medicaid pay the nursing home bills. The problem is how does a person live without money? Five year Medicaid planning is very complicated, which requires the uses of trusts and agreements to ensure that the parent is well cared for and the transferred funds not wasted.
There are many schemes to avoid probate that backfire. A poorly written will can guarantee not only probate but an inheritance battle. Joint owners on property may not agree to share with all children and fight it out in court. A poorly drafted quit claim deed can cause serious property tax problems.
A nursing home is inevitable for some elders. Nursing homes are state licensed and regulated medical facilities that are also homes for the residents. “Dementia care” assisted living facilities are not nursing homes. Nursing homes are very expensive – the average is over $7,600 a month. Medicare will pay for up to, but often less than, 100 days of post-hospital skilled care. Medicaid will pay for long term care in a “certified bed,” which are found in almost all nursing homes. Medicaid will not pay until a person is “eligible.”
Medicaid is not automatic but must be applied for after the resident has “spent down” to $2,000. That does not mean financial ruin for the family since Medicaid, like the income tax, has many credits, exemptions and allowances. It is possible for a married applicant to save everything and a surviving spouse may save over half. These actions may be taken after entry into the nursing home. These savings are only available if the applicant gets expert legal help since the Medicaid office and the nursing home do not advise families how to get all of their savings.
All of the above expensive problems can be avoided if the elder and assistants get timely advice and get affairs in order. Do it now for there will come a day when it will be too late.