As you age, you invariably find you do not have the same physical capabilities you once had. If you are like most people, you can take care of your day-to-day needs without assistance, even if you are in your 50s or 60s.
No one wants to rely on someone else, but things can be very different when you reach an advanced age. Living into your 80s may seem like an iffy prospect, but the statistics say you may likely experience life as an octogenarian.
If you visit the Social Security Administration website, you will find a longevity calculator and discover, for example, that the life expectancy for a 67-year-old woman is 87 years, and for a man is 85 years.
You became or will become eligible for full Social Security benefits between 66 and 67 depending on your birth year. If you live long enough to collect your full benefit, you will probably join the ranks of the octogenarians.
The Eventualities of Aging
The Alzheimer’s Association website is full of very useful information about this horrible disease. It shares facts and figures and one of them will capture your attention right away.
There are 6 million people in the United States living with Alzheimer’s. In all, 32 percent of those 85 years of age and older have contracted Alzheimer’s.
This is not the only cause of cognitive impairment. Most senior citizens in nursing facilities pass away with some form of dementia, of which Alzheimer’s is just one of many. In addition to their cognitive difficulties, many people sometimes find themselves unable to handle their affairs because of devastating illnesses.
Nursing Home Asset Protection
Over 70% of seniors will require nursing home care and you can expect to pay somewhere in the vicinity of $75,000 to $90,000 per year in an Oklahoma nursing home. A married couple may face two different sets of nursing home bills, so the costs can quickly add up.
If you pay taxes for at least 10 years, you qualify for Medicare when you turn 65. You can also qualify on your spouse’s work record. This provides a solid health insurance underpinning, but it does not pay for nursing home care.
This presents a significant challenge to most families. A widely embraced solution is the Medicaid program, which will pay for long-term care. Most seniors in nursing homes are Medicaid beneficiaries.
The problem is that you cannot qualify for Medicaid if you have more than $2000 in countable assets, which is virtually everyone you know. You can, however, fund an irrevocable Medicaid (0r VA) trust to help you achieve eligibility.
If you transfer your income-producing assets into such an irrevocable Medicaid trust, you are able to receive income from it, but you would surrender all access to the principal. Your home is not a countable asset for the first twelve months (or longer under special circumstances), but you probably will want to deed it into the Medicaid trust to protect it from Medicaid estate recovery.
You must establish and fund the trust at least five years before you apply for Medicaid in order to protect these assets, so timing is of the essence.
If you do not have a legally binding document designating someone to act on your behalf if you become incapacitated, the state can appoint a guardian to act for you. To avoid this, you should consider using durable powers of attorney, one for property and finance and another for health care.
In a durable power of attorney for property, you name someone to manage your financial resources. A durable power of attorney for health care empowers someone to make medical decisions on your behalf.
A HIPAA release should be included to give doctors the freedom to share medical information with those you name, such as family members and even close relatives and friends.
Finally, you should have an advance directive (often called a “living will”) authorizing your health care proxy to take action should you have a terminal illness or become persistently unconscious. In it, you outline your life support choices and you can add organ and tissue donation and comfort care medication preferences.
Schedule a Consultation Today!
If you are going through life without an estate plan that includes incapacity planning, you are vulnerable to state intervention and today is the day for action.
You can schedule an appointment at our Oklahoma City estate planning office by calling 405-843-6100, or you can reach out to us electronically by filling out our contact form and we will promptly get back with you.