Nursing homes are never the ideal place that you want yourself or your loved one to be in. Ideally you will remain healthy enough to not need any form of care, but unfortunately that is not the case for many people who are now living much longer than before. In our current climate this option is even less ideal and can be a very scary reality for some.
Caring for a loved one who has physical or mental limitations can be very emotional. Often, we find that the caretaker ends up sicker than the one they are caring for due to the high levels of stress and emotional strain that comes from being a caretaker. If you are in this position, know you are not alone.
Our Northern California clients, especially those living in the Bay Area, understand that everything is expensive here, and medical care is no exception. We want to make sure that you are aware of your options regarding facilities and payment options.
First, it is important to ensure that your estate plan is up to date and fits your current needs. However, this is often something that gets pushed to the back burner for a myriad of reasons. ElderCareMatters.com walked through some of the common excuses that people put off estate planning, and they are reasons that we hear all the time. I cannot count the number of times someone comes to us and says, “I have been putting this off for years and finally forced myself to make an appointment.” Every time I hear this, I am thankful that they did come in, but am also thankful that nothing went wrong in the time they were unprotected. If you are one of the people who is putting estate planning off, I would strongly encourage you to force yourself to make an appointment. Those same clients that put the appointment off all say after their documents are signed that they feel more relaxed knowing that not only is this checked off the to-do list finally, but that they and their family are protected now even if things go awry.
Common Excuses to Put Off Estate Planning
“I do not want to think about death.”
Thinking about death is never an enjoyable topic. It can be emotional and bring up uncomfortable topics. However, failing to plan can cause you and your family significant consequences. While we know that no one lives forever, with a customized estate plan, you can be sure to take care of yourself and your family during each phase during and after life; you can even establish a legacy so that you carry on long after you have passed away.
“My family won’t fight over my assets.”
I wish this statement was true. You remember that fight you had with your siblings, or that your kids had when they were growing up? It is amazing how many of those will come back once someone passes away. That toy truck has now become the house, and the fight has grown with the size of the asset. An estate plan can help avoid fights over your assets, but also can help avoid fights over your minor children. It can provide a plan for your minor’s child’s care and avoid custody battles and will determine how your assets are ultimately distributed.
Not only can you establish a Trust for you, but you can provide both minor’s trust provisions and even trusts once your children reach adulthood.
“My Estate is Not Large Enough”
Your estate plan does not revolve around your wealth. While that is a factor, there are other incredibly important things to plan for. We discussed that you should plan for minor children and your adult children, but a vitally important element of your plan is what happens if you become incapacitated. If you have not planned for who determines whether you are still capable of
“I Don’t Need Long Term Skilled Nursing Now”
We always advocate pre-planning. The last thing you want to do is wait until you or a loved one is in the middle of an emergency to plan. Planning in the middle of an emergency is increases stress significantly and can increase the cost of the planning. You can also wait until it is too late to plan and miss out on protections you could have otherwise had available to you.
“I Don’t Need Long Term Care Planning – I have Insurance”
If you have long term care insurance that is fantastic. We recommend that people look into this as an option because it can provide additional options that your estate plan cannot. However, we have found that a lot of insurance plans either will not cover enough of the cost of the care needed, or that they have term limits that no longer provide the length of coverage needed.
“I don’t want to be on Medi-Cal; the facilities aren’t as nice”
While there is a stigma that “Medi-Cal facilities” are not as good as other facilities, that is not the case. Facilities choose how many Medi-Cal patients they will take which means there is a wider range of options available to people as far as quality. Further, for those living in the greater Bay Area, the options have expanded greatly.
Once you make the decision to set up an estate plan, it is important to understand what levels of protection are available. We are able to create a customized plan that will fit your specific needs. I am going to touch on each layer of planning that we provide, but I want to focus on planning in the event that you or a loved one needs long term skilled nursing.
You should have a Will if you do not have real estate, you have an estate of less than $166,250, or you are the parent of Minor Children.
It is crucial to note that having a Will does not mean that you can avoid probate. If you die with a Will, your estate must go through probate in order to be administered and distributed. So, if one of your goals is to avoid probate, then a Will is not going to be the best option.
Probate is required in order to settle accounts with the living, to settle the accounts of the decedent, and to transfer title from the decedent to their heirs or beneficiaries.
Probate is a legal process that follows the State’s rules. There is often a lengthy delay as you are on the Court’s calendar. For anyone who has dealt with the Court, I am sure you can attest that the Court is not efficient. This delay can cause undue stress on the family. It is also a significantly more costly process. The Probate Code sets the fees that are applied to the estate, and depending on the size of the gross estate, this fee could be substantial.
The good news is that Probate can be avoided by using Trusts!
Revocable Living Trusts and Pour Over Wills
Revocable Living Trusts
A Trust is a contract between the Settlor (creator) and the Trustee (manager of the assets). The Settlor sets the terms of the Trust and determines how assets will be managed, who they will go to and in what manner, and when they will be dispersed. The Trustee’s job is to carry out the settlor’s wishes. Each family and situation are different, so your Trust should be customized to your individual situation. One size does not fit all, and our firm prides itself on providing customized Estate Plans for an affordable cost to the client’s we serve.
Your Living Trust is created during your lifetime and can be revocable or irrevocable. A Trust can also be used for income tax, estate tax, and gift tax protection.
The Trust keeps the estate out of probate which protects against the costs and delays that come with the Court, it protects your privacy as the Trust does not need to be lodged with the Court, it can defer or avoid income and estate taxation, and avoids court-supervised guardianships or conservatorships.
However, a Trust only avoids probate on assets properly transferred to it. When you establish a Trust, a crucial step is to ensure that title of certain assets is given to the Trust. I walk my San Jose, Capitola, and Sacramento clients through a comprehensive list of which assets should be titled in the name of the Trust, and which ones should not be. Any asset that should be given to the trust, and is not when you pass away, may still need to be probated.
Pour Over Wills
A Pour Over Will accompanies your Trust. Your Pour Over Will names an executor if you forget to title the necessary assets in the name of the Trust and it needs to go to Court. The Pour Over Will tells the Court that the asset that was left out of the Trust should be given back to the Trust and distributed pursuant to the Trust’s terms.
Your Pour Over Will is also where you name a guardian for your minor children.
Guardianship designations are one of the most intimate decisions that you can make. You are trying to name someone who will take your place if you are no longer able to care for your children, and this can seem like a daunting or impossible task. During our initial consultation we discuss attributes that would make someone a great guardian for your children, and which ones would not.
In our initial consultation we also discuss the difference between the Guardians of the Estate, and Guardians of the Person. Some people are more equipped to handle finances while others are more capable of taking care of the children. In some situations, these are the same people while in others they are different. Your plan should be tailored to your situation and family, as there is no “normal” way of doing things.
Advanced Healthcare Directive
One of the first documents we ensure each of our clients has is an Advanced Healthcare Directive. If you are over the age of 18, you need a written Health Care Directive. Often the assumption is made that your spouse could automatically make your medical decisions if you are unable to, or that your parents can continue making your decisions once you become an adult. However, when HIPPA laws changed in 2004, it became essential to have a written directive. No person has the power or right to make your medical decisions unless you give them that ability.
A Healthcare Directive allows you to name an agent to act on your behalf concerning medical matters if you become incapacitated and are unable to communicate your wishes and decisions to your doctor.
If you do not have a written directive, the Court may get involved and appoint someone to make those decisions for you. This may or may not be someone that you would want, and it means that in a critical point the Court has to get involved.
By leaving instructions for your end-of life care within your directive, you can give some much-needed guidance to your loved ones. This guidance allows them to not have to assume what your wishes would be and can remove the burden from their shoulders when it comes to stopping treatment, what to do with your remains, and more. As such, it is very important to not only make sure that your current wishes are in place, but to also discuss your wishes with the person, or people, that you have named. This gives them the chance to ask questions, for you to explain your thinking, and can provide some much-needed peace of mind during what is likely a very challenging and emotional time.
The last thing you should be worried about is who can make your medical decisions if the worst happens. We will help guide you through these decisions and ensure that your wishes are clearly outlined for your loved ones.
Financial Powers of Attorney
A Durable Power of Attorney allows you to name an agent to act on your behalf concerning financial matters. If you have issues traveling to the bank or want someone else to handle your bills and finances, you can achieve this by using your Durable Power of Attorney. This document allows your agent to care for your financial matters on your behalf without having to prove any kind of medical disability. It also gives them the ability to fill out paperwork necessary for any assisted living or nursing home admissions.
One of the abilities we make sure to give your financial power of attorney is the ability to set up one of our Medi-Cal trusts in the event you need long term skilled nursing. I will discuss this in depth below.
It is important to note that your Durable Power of Attorney is only in effect during your life. Once you pass away, the document cannot be used to manage the assets that you had.
Long Term Care
There is a lot of confusion over the differences between Medi-Cal, Medicaid, and Medicare.
Medicare is the federal health insurance program for:
- People who are 65 or older
- Certain younger people with disabilities
- People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD)
Medicaid provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities for every state except for California.
Medi-Cal is similar to Medicaid however California has taken creative license with the rules. We are the only state that operates under this unique set of rules. If you have questions about the differences, please set up an appointment with us to discuss.
Long Term Care Protection Available
We offer a preventative plan which will allow you to have more options for how to pay for your long-term care, that you may not think you qualify for. For most of us, our assets have disqualified us from being able to benefit from Medi-Cal paying for our long-term skilled nursing needs. However, with our Med-Cal Trust, we not only make it possible for you to retain your assets, but to also qualify for Medi-Cal benefits.
By setting up this planning, we protect you against state recovery in the event you need Medi-Cal to pay for the long-term skilled nursing, as well as preserving the assets for the healthy spouse. One of the worst decisions is choosing whether to pay for your spouse’s care needs or keep enough assets for yourself. With this planning, we allow you to do both. Further, this planning allows you to preserve your assets so that you can leave your children an inheritance, rather than spending all of your resources on a care facility.
This planning also allows you to continue living in your home, and that state cannot take it away to let you qualify. You are able to keep the home and qualify for Medi-Cal benefits.
If you or someone you know is interested in learning more about Trusts, and long-term care protection, please contact us at 800-244-8814 to schedule a consultation. We’d be happy to meet with you to discuss your family’s unique needs and help you build a solid wall of protection around your assets in the event you need long-term skilled nursing.