Legal and Financial Considerations
Legal and Financial Considerations
One of the most important steps in planning to ensure you have quality of life should you need assistance is an advocate. This person knows you and understands how you want your care handled. This is particularly critical if you should become partially disabled and unable to fully act on your own behalf. He/she can be a family member, a close friend, your attorney or other trusted advisor. Ideally, this person should be legally empowered to assist you by being designated in your medical power of attorney and/or trust. An advocate is also critical in helping you avoid being taken advantage of by individuals, even family members. Elder abuse and exploitation is on the rise in our society. An advocate will help reduce the likelihood that it may happen to you.
A trust is the preferred legal document to ensure your care is handled in accordance with your desires. It can spell out in great detail how you want your care handled should you become disabled. Also, all of your assets that are included in the trust will someday bypass probate and save your estate on unnecessary taxes and fees. We strongly recommend that you consider a trust and include a detailed section on how you would want your care handled should you reach a stage where you need additional care to remain home. The better you prepare, the more likely your care will be handled in a manner acceptable to you.
Another document that can ensure your desires for care are implemented should you become disabled is a medical power of attorney. Again, you can specify how you want your care handled should you become partially disabled. Typically, a general power of attorney and a medical power of attorney are prepared along with a will or trust.
A will is less expensive to prepare. A will is nothing more than a legal document which specifies to probate court how you want your assets distributed at death. As opposed to a trust, which can go into effect if you are disabled, a will only goes into effect upon your death. Your assets that are specified in a will generally will go through probate court and be subject to additional fees and taxes.
A living will is another important legal document. It is your instructions to medical professionals regarding the degree of life saving measures you desire in the event of a serious or terminal medical condition.
Generally health insurance will not pay for chronic long-term care. That means that your health insurance will only pay for short term, recuperative home care. They will not pay for long-term assistance in the home for conditions which you will not improve from, i.e. chronic. Medicare may pay for limited, short duration care. An individual must be how homebound and the authorization for care is evaluated every 60 days.
Most people pay for long-term care through private means. Some people have long-term care insurance however, there are preconditions that must be met before it will pay. You must know these conditions. There are also a number of programs that pay for limited long-term care. They include the Older Americans Act, Senior Care Act and Medicaid. Of course with Medicaid, you have to be broke before they will pay for benefits.
Although fairly new in the market, long term care insurance has become a very important tool in the financial planning toolbox. A good long term care insurance policy provides equal coverage for home care, assisted living and nursing home. Additionally, it should have a cost of living rider to keep pace with the rapidly rising cost of medical expenses. It is wise to start shopping for long term care insurance in your early 50s. Waiting until your 70s may be too late as the costs of long term care is expected to continue to rise in the years to come.
Many seniors are no longer able to purchase long term care insurance due to their age, health and the cost of insurance. However, there is a benefit available to veterans through the Veterans Administration called the aid & attendance pension or benefit. This pension is available to a qualifying veteran and/or his/her widow who is housebound or in a nursing home. We can assist you in finding out more information regarding this benefit.
Many states are passing partnership laws regarding long term care insurance as well as Federal and State government passing tax incentives for long term insurance premiums.
Structuring your finances to support your retirement and home care needs is critical. Many seniors do not know how much they can spend or if their money will last long enough to support them. Many more seniors have their funds invested in investments that involve too much market risk, thereby risking their financial future if the market turns. This can be avoided by consulting with a financial advisor that specializes in retirement planning. Seniors who no longer actively manage their investments should seek assistance in handling their financial affairs. We can assist you if you have any questions in this area.