Slide background
M. Franklin Parrish
Published Articles

Estate Planning Elderly And Disabled

One of the largest growing segments of our population is that group over the age of sixty-five (65). A recent study in the United States defined “old-age” or the elderly as only individuals over eighty-five (85) years of age. Likewise, it is not uncommon to know someone approaching one-hundred (100) years of age. By the year 2010, nearly ninety thousand (90,000) Americans will be centenarians, many having lived at least some time in three (3) centuries.However wonderful the marvels of modern medicine are at extending life, these achievements bring with them the potential of many unpleasant consequences, if proper estate planning is not employed. In a recent initial conference, I inquired of an eighty-two (82) year old client: “What is your primary estate planning goal?” He responded: “To out live my one-hundred and four (104) year old mother.” This client not only has the responsibility of providing for his own care, but that if his parent.

In another case, I received a call from a concerned daughter, who advised that her elderly mother (i.e. my client) while cooking a holiday meal, accidentally set her condominium on fire. The client who is legally blind now wants to sell the condominium and move to a care center. Unfortunately, the client never followed my instructions for the transfer of her condominium into her Trust. Likewise, when I prepared her estate plan seven (7) years ago, she insisted on having a Durable Power Of Attorney naming two (2) daughters as Co-Attorneys in Fact (i.e. her agents). Likewise, her Trust also names both daughters as Successor Co-Trustees. I discouraged both co-fiduciary arrangements. While granting children equal authority may sound appealing, it is frequently an administrative nightmare. As a general rule, both children must sign all documents, and if they disagree, a dispute resolution method must be found. In this case, each daughter lives in different states, and one daughter changed her name several years ago, as the result of a divorce. Now the title company has refused to honor the Durable Power Of Attorney, thus stopping the condominium sale, because of the name change. The client and her daughters now realize that estate plans, as everything else become unworkable if they are not reviewed on a regular basis.

Finally, during an initial conference with a “forties-something” couple, they stated “We have a teenager and our time is never our own… We are lucky to have made it to this conference…” I heartedly agreed, and said “I can identify with that, my daughter is sixteen (16), a year around swimmer, with practices from 5 to 7 o’clock, six (6) days a week, morning and night…” The clients then said, “Our son has Downs Syndrome…..” Suddenly, the weariness of early morning swim schedules seemed a blessing, and paled in comparison to the lifetime care and long term estate planning responsibilities this couple must assume.

The above case summaries illustrate the broad variety of personal problems, asset management issues, and agonizing decisions elderly clients, disabled clients and their care-givers (i.e. children and/or parents) must become involved in.

Most cases involving elderly and disabled clients revolve around any one or more of the following estate planning areas:

  1. Creating an effective estate plan to provide for adequate asset management and health care needs. Such documentation may include, but not be limited to the following:
    1. Revocable Living Trust should be established, and retitle most, if not all assets into the name of the Trust. If done in advance of incapacity, many lifetime and post-mortem asset management problems can be avoided. For example, if properly drafted, the elderly or incapacitated client can resign in favor of an already named Successor Trustee. In addition, assets titled in the Trust generally avoid the need for a court supervised Conservatorship, and at date of death, avoid probate. However, not every Trust is alike and each must be tailored to a client’s exact needs.
    2. Pour-Over Will should be prepared to make certain that any assets not otherwise retitled into the Revocable Living Trust during lifetime, will “pour-over” into it following death.
    3. Durable Power Of Attorney should be established for financial assets not retitled or incapable of being retitled in the Trust. Such assets may include retirement plans. While retirement plans have beneficiary designations and generally avoid probate, their investments may become frozen if the plan participant becomes incompetent and does not have a properly drafted Durable Power Of Attorney.
    4. Advance Health Care Directives are a must for all clients, irrespective of age. This issue revolves around the traditional rule that health care providers must do all things possible to preserve life (i.e. heroic measures). Without a properly drafted Durable Power Of Attorney For Health Care, you or a loved one may become attached to life support with no legal remedy available.
  2. Providing for long term health care needs through available governmental benefits and private insurance.

Many clients irrespective of age, believe that Medicare covers most medical needs. This is far from the truth. Likewise, it is not the purpose of this article to review in detail all governmental or private insurance benefits. However, it is sufficient to say “Do your homework now!” As a general rule, Medicare is divided into Part A (Hospital Insurance) and Part B (Supplemental Medical Insurance). Part A coverage is automatic for all Medicare beneficiaries, and covers certain expenses of hospitals, and skilled nursing facility care. By comparison, Part B requires enrollment, premium payments and covers certain charges for services not covered by Part A.

However, please understand there are a variety of medical charges which Medicare does not generally cover. Such charges not covered may include: prescription medicine, dental care, eyeglasses, hearing aids and routine physicals. Likewise, Medicare does not cover nursing home services, unless the patient has a post-hospitalization condition that demands skilled nursing care. However, this added care is limited to one-hundred (100) days per illness. More importantly, custodial care in a long-term nursing home is not covered. Therefore, it is important for you to review all medical insurance coverage. Major medical, Medigap and/or long-term care insurance may be advisable. As a general rule, major medical insurance policies cover most stays in hospitals and skilled nursing facilities after Medicare runs out. By comparison, Medigap policies cover Medicare’s deductibles, co-payments and some services not covered by Medicare. Finally, long-term care insurance policies pay for a certain amount, if not all of the custodial care costs in a nursing home.
In future issues, we will continue our discussion regarding different aspects of estate planning for elderly and disabled clients including additional governmental “needs” programs (i.e. Medicaid/MediCal/ Supplemental Security Income), as well as “Special Needs” Trusts established to shelter assets for the disabled.