People that plan for retirement think of it as an extension of the life that they have experienced previously without the work responsibility. This is understandable, and you should enjoy your golden years to the fullest while you are active and fully capable.
However, there is an unpleasant reality under the surface that a lot of people do not think about. If you were born in 1960 or any later year, you become eligible for Social Security when you are 67. Today your life expectancy is 87 years if you are a woman, and 85 years for a man.
Now you begin to understand why your estate plan should include preparations for your twilight years.
Prevent a Guardianship
According to the Alzheimer’s Association, the disease strikes 32 percent of elders that are 85 years of age and older. Often times people with dementia are unable to make decisions on their own. Unfortunately this disease is not the only underlying cause of cognitive impairment.
If you become unable to handle your affairs due to a cognitive impairment, family members could petition the state to appoint a guardian. Most people would rather choose their own decision-makers in advance.
You can do this if you work with an attorney from our firm. We will help you develop an incapacity plan that will be embedded in your broader estate plan. If it becomes necessary, a durable power of attorney for property can be used to name someone to manage your financial affairs.
The “durable” designation is important. It will allow the power of attorney to remain in effect if you become incapacitated. There is also a spring durable power of attorney that will only go into effect in the event of your incapacity.
A living trust is a very popular estate planning tool because you avoid probate when you use a living trust. This is a legal process that is time-consuming and expensive. Probate is required if you use a will as your asset transfer vehicle.
You are the trustee while you are living, so you would control the assets. To account for possible incapacity, you can name a disability trustee to manage the assets if you become incapacitated.
Advance Directives for Health Care
The financial part is half of the equation, and you also have to address medical issues. You can record your life support preferences in a living will, add comfort care medication choices, and make organ and tissue donation designations.
Your wishes stated in the living will be honored when it comes to life-support use, but other situations can arise when you are unable to communicate. To account for this possibility, you can name a representative in a durable power of attorney for health care.
This person would not be able to access your medical information because of protections that are included in the HIPAA law. You should add a HIPAA release to give doctors the permission to share your medical records with your representative.
Nursing Home Asset Protection
The United States Department of Health and Human Services has found that just over one third of seniors will live in a nursing home eventually. Medicare does not pay for nursing home care, and as you might imagine, it is very expensive.
Medicaid will cover these costs, but it is a need-based program, so there is a $2000 asset limit. You can transfer assets into an irrevocable trust, so they do not count if and when you apply for Medicaid.
While you are still capable of independent living, you could receive distributions of the trust’s earnings. If you apply for Medicaid at least five years after you transfer assets over to the trust, the resources will not count, and you would be able to gain eligibility.
Schedule a Consultation Right Now!
Today is the day for action! Don’t go through life without a plan for aging. Schedule a consultation at our Oklahoma City elder care planning office by calling us at 405-843-6100, or you use our contact form to send us a message.
- Understanding IRA Inheritance Planning: Key Considerations - September 14, 2023
- Irrevocable Trust Decanting Provides Flexibility - September 12, 2023
- Inheritance Planning Solution for a Spendthrift Heir - September 7, 2023
