If you have parents who are getting older, you may have concerns about their ability to handle their own day-to-day needs. You may be able to provide a certain amount of assistance if you live in the same area, but at some point in time, they may require more care than family members and friends are capable of providing.
Many people are surprised when they hear long-term care statistics. You could assume that only a small percentage of elders ultimately reside in nursing homes. In fact, this is not the case. The United States Census Bureau tells us that just under 25 percent of people who are at least 85 years of age are nursing home residents. Approximately half of elders who are 95 years of age and older are receiving nursing home care.
Lifespans are increasing, and studies have shown that the oldest segment of the population is growing faster than any other. The life expectancy for a 67 year old person is at least 85 years, so a very significant percentage of senior citizens will require nursing home care at some point in time.
The Medicare program will not pay for a stay in a nursing home, and this can have a devastating impact financially, because nursing home care is very expensive, and costs have been rising year-by-year.
Durable Power of Attorney
Let’s say that your father has passed away, and your mother has been widowed. When she is planning her estate, she could execute a durable power of attorney to account for possible incapacity. She could name you as the agent or attorney-in-fact, and you would be empowered to handle her financial affairs if she was to become incapacitated at some point in time.
Though Medicare will not pay for long-term care, Medicaid will pick up the tab, but there are income and asset limits, because it is a need-based program. To qualify for Medicaid, many people give away assets before they apply.
Alzheimer’s disease is very common among the oldest old, and this is one of the reasons why so many elders reside in nursing homes. The Alzheimer’s Association tells us that 45 percent of people who are at least 85 have contracted the disease.
To continue with our hypothetical example, you recognize the fact that your mother is starting to have memory problems. They are not that significant, but you are concerned about the future.
Since you are empowered to act on her behalf, you may want to implement a Medicaid planning strategy so that your mother could qualify for Medicaid to pay for long-term care in the future. This would involve gift giving so that she had limited assets left in her own name.
Can you give away your mother’s assets if you are an agent under a power of attorney? Unless the authority was specifically given when the document was created, the answer would be no.
However, if you and your mother are aware of the fact that Medicaid eligibility could benefit the family in the future, you could work with an elder law attorney to include the necessary verbiage that would allow for this type of gift giving.
People often wonder about personal liability with regard to nursing home costs. If you are the agent under a power of attorney, you would not be personally liable for any nursing home costs that may be incurred, unless you obligated yourself contractually.
Schedule a Free Medicaid Planning Consultation
Now that you have some basic information about how Medicaid planning can be relevant to your family, you probably have some detailed questions. This is understandable, and there is definitely a great deal to digest if you want to make sure that your parents get the care that they need toward the end of their lives without losing everything that they have saved in the process.
In most cases, legacies can be preserved when the appropriate steps are taken well in advance. The best way to proceed will depend upon the circumstances, and we would be glad to assess your situation and make the appropriate recommendations.
Our firm offers free consultations, and we understand the fact that it can be difficult to talk about these sensitive family matters with a person that you have just met. You can rest assured that we are down-to-earth members of the Indianapolis community, and we make our clients feel comfortable from the moment they walk into our office.
If you would like to set up an appointment, send us a brief message through our contact page or give us a call at (317) 684-1100.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.