As people grow older, their grown children may begin to assess their parents’ futures as well. While people often think of the division of assets when doing estate planning, it is important for them not to forget that there will come a time when they will need more medical assistance and possibly long-term care. Having discussions about senior care options early on is an important part of pre-planning.
There are legal and financial aspects to pre-planning to consider that are state-specific, especially concerning Medicaid eligibility and local resources such as financial assistance and senior housing. In Western New York, it is best to seek experienced elder law advice on all pre-planning considerations.
What is involved with legal pre-planning?
While there are many aspects to estate planning that involve minimizing taxes or taking care of a dependent’s financial or educational future, three documents should be in place first:
- A Will, which directs how your assets will be distributed.
- A Power of Attorney (POA), which gives one person, or Agent, the authority to act on your behalf on financial or medical matters. In the event that you become incapacitated, a Durable POA will allow the agent to continue in that capacity.
- A Living Will, which is an advanced directive that lays out your healthcare, treatment and medication preferences, and religious or end-of-life choices.
What is senior pre-planning?
Taking care of the financial aspects of retirement is only part of the equation. In the event that the health of one or both parents begins to deteriorate, knowing just how expensive long-term care is will be important.
In 2015, the estimated annual cost of home care was $44,616, assisted living was $43,200 and nursing home care was $80,300. Planning for retirement must include a discussion of how to pay for these potential expenses.
While retirees can plan for long-term care through trusts, a reverse mortgage or annuities, a discussion of government health plans should be considered as well. For example, many do not realize until too late that Medicare does not pay for long-term care of any kind.
Medicaid is a federal program that is administered differently in each state, setting caps on income eligibility and offering spend-down options and ways of protecting a non-applicant spouse. For example, New York offers a Community Spouse Resource Allowance that helps eligibility of a Medicaid applicant by allowing the other spouse to retain more of the couple’s assets. Putting all options on the table early will make the transition into your twilight years smoother.