Preparing an estate plan without considering elder law issues is like purchasing tires without considering winter weather. By all intents and purposes, the tires serve their purpose. They grip the road on sunny days and even rainy days, but come that first snow fall, you find yourself with a white-knuckle grip on the steering wheel – cursing Manny, Moe, and Jack for not educating you about the benefit of snow tires.
Elder law, at its very foundation, is the representation of the elderly and their families concerning legal issues. When I was in law school in the 70’s, we never even heard of elder law. People were simply not living as long as they are today. The need for, and therefore, the existence of elder law attorneys were limited at best. This area of law encompasses issues such as capacity, how to pay for long term care in an assisted living facility or nursing home, basic estate planning, asset protection, public benefits (like Medicaid and VA benefits), and special needs trusts.
Unfortunately, many estate planners are not prepared to address these issues simply because they are unaware or because they underestimate the importance of “putting on the snow tires.” The elder law pitfalls, into which they and their clients may find themselves, can be avoided if the attorney is aware of the most common missteps estate planners take. Learning the complexities of elder law is no small task, so it is imperative that estate planning attorneys seek the advice of a knowledgeable elder law attorney. Regardless, possessing a certain level of knowledge, yourself, will serve you and your clients well.
If you are an estate planning attorney and are looking to provide your client with the optimal plan at age 45, no one, neither you nor your client, may be thinking about long term care or how her plan may affect her Medicaid or Veteran’s Benefits eligibility. After all, who wants to think about such things? Our clients assume that we are the experts who see the full, Technicolor picture. Because we, as estate planning attorneys, were not trained to resolve elder law issues, we may be limited in our knowledge, but knowing the options that are available can help the majority of clients preserve their assets yet be eligible for Medicaid or Veteran’s Benefits.
You may be surprised to learn that elder law, with its unique approach to long term planning and public benefits, is designed for the middle class. Since the poor automatically qualify, there is little use for a proactive asset protection plan. For those with one million dollars or less, however, they will likely find themselves facing the Medicaid or VA maze in a very short period of time. With the average yearly cost of long term care hovering around the one hundred thousand dollar mark, it’s no wonder our clients’ life savings are drained so quickly. Because people are living longer these days, the focus of concern is shifting away from estate taxes and onto long term care needs. Out-of-date estate plans or plans that don’t consider the possibility of long term care can jeopardize our clients’ Medicaid or Veteran’s Benefits eligibility.
A good estate planning attorney should also be aware of the nuances and repercussions of various Powers of Attorney. A Durable Power of Attorney or Advance Medical Directive that is not in compliance with current laws, can be the cause of unnecessary grief if the client becomes incapacitated. A standard durable power of attorney, for instance, can be too limiting for an elderly client. There should be language included which allows for Medicaid and/or VA planning. A power of attorney that limits the agent’s gifting powers to the annual exclusion amount can prove to be a crippling issue when Elder Law attorneys attempt to help clients use a gifting strategy in order to become Medicaid or Veteran’s Benefits eligible. Additionally, an agent for an elderly loved one should be allowed, through a power of attorney, to enter into a personal services contract or establish a variety of trusts on behalf of the principal.
It is crucial to the long term well-being of our clients to ask the right questions, to know the options available and to understand the ramifications when advising our clients. It is just as crucial to find a reputable elder law attorney who can give sound and wise counsel. We are responsible for advising our clients about all of the issues that are relevant to their situation. If we don’t embrace this responsibility, we will find that, just like the white-knuckled driver without snow tires, they will be cursing us for not advising them about the benefits of a solid estate plan that considers long term planning.
Mindy Felinton is a principal of the law firm of Felinton Elder Law & Estate Planning Centers. She practices in Medicaid and VA Benefits planning.