In this KET Forum, host Renee Shaw and a panel of experts including elder law attorneys, social workers, and financial advisors answer viewers’ questions about what steps you and your loved ones should take when planning for the final stages of life. Topics discussed include wills, durable powers of attorney, revocable trusts, living wills, medical directives, financial distributions, estate taxes, and other medical, legal, and financial documentation.
Here is a summary of six questions and answers from the program:
1) Is there a particular order I should follow when preparing financial and medical plans, and at what age should I start?
“There’s not a particular order, but what there is a particular need to understand what your assets are and how they can best be used to help you and your loved ones, and how they can best be transitioned at the end of your life,” says attorney Amy Dougherty, who is a member of Bluegrass ElderLaw.
Dougherty and her fellow attorneys Misty Clark Vantrease from Kentucky ElderLaw and Mike McKinley from Elder Care Law of Kentucky recommend people begin by consulting with an elder law attorney where they examine all of their financial assets in detail. During this meeting, the client will discuss their goals for distributing their assets and what kind of medical care they want to receive in their final years. After these goals are established, the attorney will work with the client to create the appropriate plan with necessary documentation.
As far as the best time to seek consultation, Dougherty says her firm receives inquiries from young people who want powers of attorney all the way to persons with terminal illnesses trying to get their affairs in order shortly before they die. But as a rule of thumb, the attorneys say around retirement age or shortly before is the best time to seek advice.
“For long-term planning care purposes, those nursing home concerns, 65 to 75, I think is the sweet spot to really do a lot of that planning unless they have a chronic health condition that warrants an earlier consultation,” Vantrease says.
Once these plans are made, they should be reviewed and updated when any major life event occurs, such as a new marriage, a new child, or the death of a spouse. “The older you get, the more often these plans need to get reviewed,” McKinley says.
2) If I or a loved one have to go into a nursing home, how will I/they pay for it?
As discussed in KET’s Forum on caregiving, nursing home expenses can exceed over $100,000 per year. Few people want to spend their final months or years in a nursing home, yet these facilities may be the only option for those requiring constant and comprehensive services.
The panelists advise those considering nursing home care to have their attorney review all admissions and payment documents before signing anything.
“An analogy I like to use is no business owner in the world would sign a lease to pay upwards of $10,000 a month in perpetuity until you die without their lawyer at least glancing at the contract before they move in,” Mike McKinley says. “The facility’s got lawyers, the doctors all have lawyers, yet you’ll sign a stack of paperwork because you’re under so much stress.”
Due to the high cost of nursing homes, many people who enter them will have to first allocate all of their income to pay for care, and then sooner or later have to enroll in Medicaid, the federal health care program for low-income individuals. If a person enrolls in Medicaid, most of their assets will be “spent down” to cover nursing home costs before Medicaid begins coverage. Their primary residence is generally exempt while they are alive and in a nursing home, but in most cases the proceeds from an estate sale of the residence will be used to reimburse Medicaid expenses after death.
As Misty Clark Vantrease explains, there are ways to protect one’s assets from being spent down in order to receive Medicaid. However, during the 2000s the federal government instituted a five-year “look-back” period in which Medicaid administrators examine any asset transfers and determine whether the value was eligible to be used for nursing home expenses.
“If I make an application for Medicaid, Medicaid will look back to make sure that any transfers to trusts or otherwise occurred five years before,” she says. “If they did, they’re disregarded, but if they didn’t, then Medicaid will not cover that person for an amount of time that (administrators) believe is equal to the amount you could have paid for if you did not transfer that money.”
Shielding assets from Medicaid’s five-year look-back rule is a top reason why seniors consult an elder law attorney while in good health. Those already stricken with ailments may also consider using all options for assistance before deciding to seek round-the-clock, on-site care in a nursing home facility.
“I think it’s important that our clients understand that making sure they’re getting the proper supports is actually the greatest tool to making sure they never go to a nursing home,” Vantrease says. “Whether it’s home care, getting enrolled in PACE (see below), assisted living, or retirement living, having the right supports in place and not just ignoring the situation is going to give them the best chance to age where they want to.”
3) When is it advisable to create a trust to protect assets, and what are the benefits and drawbacks?
The elder care attorneys stress the need for every person to, at the very least, draft a will that instructs how to distribute their assets after death. Whether there is a will or not, the deceased person’s assets will be administrated through a legal process called probate. During probate, the value of the decedent’s assets is determined and then creditors may make claims to the court to settle debts.
One way to avoid probate is to create a trust that collects an individual’s assets under the management of a trustee and that names beneficiaries. The trust can be revocable or living, in which the individual is the trustee and may modify instructions until death when the successor or alternate assumes responsibility. In an irrevocable trust, an individual transfers all management and distribution of assets to a designated trustee. Irrevocable trusts cannot be modified once created except by approval of the beneficiaries.
The decision to create a trust versus a standard will depends on each individual’s assets and plans for distributing them, according to the elder law attorneys. Mike McKinley says he prefers creating trusts for most of his clients with expensive assets in order to protect their privacy, since entering probate requires public documentation of a decedent’s assets. However, he warns that persons seeking to create a trust must be certain to list every one of their assets in it, even those of lower value, as any that are not covered will be subject to probate.
“You are making the administration of your estate easier on your children with a revocable living trust,” he says. “You still maintain control of all of your assets, you can change it at any time – revocable being the key word. But you get zero asset protection from it, you’re not protecting your assets from creditors or potential tax issues that may come up, you’re not protecting your assets from nursing home (costs), or from yourself for that matter if you are your own trustee.”
Amy Dougherty and Misty Clark Vantrease acknowledge that revocable trusts can be helpful for clients who have varied and financially complex assets that may be located in different states, but they also say that wills might be the better option for people with relatively straightforward assets.
“I always tell clients that when someone dies, we look and see what is in that person’s name alone with no joint owner and that doesn’t have a beneficiary and isn’t in a trust,” Vantrease says. “Whatever’s left is what must go to court, and that is frozen until I take that original will and hand it to that court, and then the judge appoints the executor.”
4) How does designating a power of attorney work?
Misty Clark Vantrease says that a durable power of attorney is a legal document empowering a designated person to make financial decisions for an individual if he or she becomes incapacitated. The panelists urge viewers who are getting on in years to strongly consider designating a power of attorney while they are still of sound mind, in order to greatly simplify any financial matters that may befall them in the future when they may or may not be able to make rational decisions.
Anyone who drafts a power of attorney can change their designee at any time, and Vantrease says that second and even third alternates should be added.
“A lot of married couples assume that they can do everything for each other,” she adds, “but they do have to name each other in that document – ‘My husband, (or) my wife can handle finances for me if I’m incapacitated.’”
Generally speaking, a person with power of attorney does not have any liability for their designator’s debts after he or she dies, according to the legal panelists. “When you’re an agent or power of attorney for someone, you’re standing in their shoes,” says Dougherty. “You’re not taking on obligations with your own assets.”
In fact, a power of attorney ceases to have legal force as soon as the designator dies, and that person’s assets will then be subject to distribution via their estate.
5) How can we establish our goals to age in place, and what resources can help us do so?
Most of us have a desire to “age in place,” and live independently in our residence for as long as possible. Liz Fowler, president/CEO of Bluegrass Care Navigators, says that goal became more attainable with the launch of the state’s first PACE (Program for All-Inclusive Care for the Elderly) program in 2022.
“This program is for individuals who are 55 and older,” she says. “Most of them are dually eligible for Medicare and Medicaid, and they meet the level of care that the state determines makes them eligible to live long-term in a nursing home. But the support of the PACE program (provides) medical care and services, coordinating all of your care, socialization, transportation, and safety modifications in the home.”
PACE programs have existed since the early 1970s and gained federal Medicare and Medicaid waivers in the 1990s. Fowler says there are currently six PACE offices in Kentucky with plans for more.
Another important goal is setting clear and legally binding requirements for medical care as we age. Fowler says that there is a useful document available online, Five Wishes, that establishes a person’s wishes for future care. The Five Wishes form is revocable and revisable, and is legally valid in Kentucky along with nearly every other state.
“It’s a tool you can walk through about the people you want to make your health care decisions for you and encourages you to designate an individual plus two alternates, what kind of medical treatment you want, what kind of comfort you want, what people you want to be around, how you want communication to occur,” she explains. “It just walks you through some very simple questions to begin to have discussion with your loved ones.”
“Almost without fail, our clients tell us when I ask where they want to spend their last years, it’s at home,” says Scott Neal, elder planning specialist and president of D. Scott Neal Inc., a financial services company. When assisting each client with his or her financial plan, Neal focuses on finding the best options for aging in place and paying for health care (usually a combination of self-pay, insurance, and Medicaid).
“I like to focus questions around, what do you want your legacy to be?” Neal continues. “One of the most difficult conflicts elders face is how to hold on to as much control as possible while letting go of (their) legacy. And the resolution of that conflict gets into all kinds of conversations about what they want their legacy to be.”
6) What do we do to ensure the medical care we receive when gravely ill or at the end of life is in accordance with our wishes?
Designating a health care surrogate or health care power of attorney is an essential step toward having your care goals met, explains Lindsay Medley, social worker with Lexington Senior Center. The power of attorney/surrogate empowers a trusted person to make medical decisions and consult with physicians and health care workers if the individual in question is unable to do so, in accordance with established goals that may be listed in a Five Wishes list, for example.
A health care surrogate is designated to make medical decisions for someone whether at the end of life or not. Misty Clark Vantrease says that a person may also draft a living will, which is a limited document that details preferences about whether to receive life-extending treatment, organ donation wishes, and other care options. Lindsay Medley notes that individuals can write a living will without an attorney, and forms are available online.
“I also provide for my clients, free of additional charge, a living will directive,” Amy Dougherty says. “I’ll go through it with them, and if they choose to sign it, that’s fine. I just say, ‘Your estate planning is complete if you don’t sign this document, you already have a health care power of attorney and that may be enough for you.’” A living will is useful, however, for those who want to clearly communicate about the medical care they will accept, and more importantly, will not accept, in the final stages of life, Dougherty adds.
“The living will in Kentucky has a preamble: it requires a circumstance where you’re non-decisional and you can’t tell anybody what you want,” Vantrease says. “The greatest advantage of a living will is to take the burden off of an adult child from having to make a very difficult decision.”
Fowler stresses that documents such as a living will and the Five Wishes instructional document can and should be updated if an individual’s medical condition declines or if their end-of-life goals evolve.
“It’s just really important because health care changes,” she says. “Your personal needs change, and medical technology changes, (which) changes what your outcomes might be.”
