Managing personal savings and other assets is critical to having the resources needed to enjoy one’s retirement years, especially if that comes to include some form of assisted living. This KET Forum with Renee Shaw and a panel of experts presented useful information about wills, estate planning, and other financial and medical issues facing older Kentuckians. Here are five takeaways from their discussion.
1) Trusts and wills can help protect your assets while you’re alive and arrange for their disbursement after death.
Since ancient times people have created a set of instructions known as a last will and testament (or simply a will) to document how they want their personal property distributed after death. These instructions include naming an executor, who is a trusted individual charged with implementing the decedent’s wishes.
Now, wills are used to direct the court process known as probate that will disburse your assets. Misty Clark Vantrease, a partner with Kentucky ElderLaw in Louisville, says that process begins when a judge reviews the will of a deceased individual to ensure that it is valid and swears-in the executor named in the will. Creditors then have a six-month period in which they can make any claims on the estate for unpaid debts or tax liens. Finally, the remaining assets are distributed to the beneficiaries as outlined in the will.
Amy Dougherty, an attorney with Bluegrass Elderlaw in Lexington, says wills don’t expire, but she encourages people to review and update the document every few years to address changes in person’s circumstances, such as the death of a beneficiary.
“If you have an old will, it might be valid but likely it won’t meet the goals that you currently have,” says Dougherty.
It used to be that people could edit an existing will by making hand-written notations and initialing the changes. But Vantrease says such informal changes are no longer valid in Kentucky. She advises having an attorney create a new will that incorporates the desired changes.
According to Vantrease, people can avoid having their estates go through the probate process by using a different legal instrument called a trust. Vantrease explains that a person while still living can put their assets into a trust, and then when they die, those assets are automatically distributed to the beneficiaries without first going through probate court or the six-month waiting period.
Trusts can either be revocable or irrevocable. Vantrease says revocable trusts allow the individual creating the trust to remain in charge of their own assets and make changes to the trust before they die. An individual who creates an irrevocable trust no longer controls their assets and cannot make changes to the arrangement once it is created. The assets in an irrevocable trust are managed by a trustee you appoint when creating the trust.
“It is very different than the revocable trust,” says Vantrease. “You’re giving up a lot when you make an irrevocable trust your tool for preserving or protecting assets.”
Beyond avoiding probate, she says an irrevocable trust can help an individual protect their home or other assets from being used to pay for any long-term care expenses the government may want to recoup after the person dies. A trust can also help preserve some savings you might want to live on while in assisted living. But there are rules and waiting periods involved, so it’s best to plan ahead and consult with an attorney to determine what kind of trust will best meet your specific needs and desires.
While the cost to have a lawyer prepare a will may be as little as a few hundred dollars, Vantrease says the fee for establishing a trust could be as much as $5,000 - $6,000.
2) There are services you can use if you have no one who can serve as an executor or trustee, or to oversee your medical directives.
If you don’t have a relative or a friend that you feel comfortable with appointing as the executor of your will or trustee of a trust, there are services that can help. A reliable attorney or financial professional can fill those roles. Another option is new organization called Bluegrass Fiduciary Services in Lexington. It helps so-called solo agers (individuals who don’t have a partner or children) find a trustee, executor, or personal representative to handle their medical care wishes and/or their estates.
3) Long-term care in a nursing home is incredibly expensive – up to $16,000 a month in some parts of Kentucky. Special insurance coverage can help pay some of those expenses.
People may choose a dedicated long-term care insurance policy or add a long-term care rider to an existing life insurance policy. Amy Dougherty says a long-term care policy can give an individual more options over what nursing home they can choose, but she warns that flexibility comes with a cost.
“Long-term care insurance can be great, if you can afford it,” says Dougherty. “Often the premiums are very substantial.”
In fact, she says a dedicated policy could cost as much as $20,000 a year.
A more affordable option is to get a long-term care rider added to an existing life insurance policy. Johnathon Davis, managing principal at JT Davis Asset Management in Lexington, says such riders may add only a few hundred dollars a month to your premium. He says another option is to divert funds from an IRA or 401(k) into a life insurance policy that has a long-term care rider.
Whether going with a stand-alone long-term care policy or getting a rider on your life insurance, Daugherty encourages people to know exactly what services are covered. For example, does the policy cover assisted living or memory care?
“A lot of the policies that are written now have these larger price tags but they don’t offer as much,” says Daugherty. “So you want to do investigating and make sure that you understand what you’re buying.”
4) A variety of documents and orders are available to detail what medical care an individual wants to receive if they can’t speak for themselves.
A living will or medical care directive can list what medical interventions a person is willing to accept in life-threatening situations. Similar directions can also be written into a Medical Orders for Scope of Treatment (MOST) document. This is a doctor’s order that directs the care of an individual who has a progressive chronic illness or who is already seriously ill.
In Kentucky, the MOST form includes the level of intervention the patient desires and whether they want antibiotics, fluids, and nutrition administered to them. Liz Fowler, president and CEO of Bluegrass Care Navigators in Lexington, says the physician orders in a MOST plan can be updated as your treatment plan or care needs change. Click here to view a sample MOST document.
Fowler says Kentuckians may also elect to sign an Emergency Medical Services Do Not Resuscitate Order. This document tells first responders attending to an individual in cardiac or respiratory arrest that they do not want to be intubated or defibrillated, or to receive CPR. Click here to view a sample EMS DNR order.
An individual can also communicate their medical, personal, and spiritual care desires by completing the Five Wishes document. Fowler says this document can help families have important conversations about a loved one’s wants before there is a medical crisis.
5) Local offices of Area Agencies on Aging and Independent Living as well as senior care providers can supply a wealth of information on financial issues and support services for older Kentuckians.
Those seeking help with services ranging from adult day care to home modifications to respite services can contact senior centers located in every county or their regional Area Agencies on Aging office.
The Lexington aging office has a handy Pathways Guide that provides a comprehensive list of programs and services available to seniors.
The Program of All-Inclusive Care for the Elderly (also known as PACE) provides seniors who want to continue to live independently with options for health care and other social supports. Daryl Love of Bluegrass Care Navigators in Lexington says PACE is designed for those individuals who may qualify for nursing home care but prefer to remain in their own homes.
“This program provides the wrap-around services that people may need, helping them coordinate the complexities of medical care in a very safe environment,” he says.
Click here to learn about PACE services around Kentucky.
