A guide to the most common mistakes seniors and their caregivers make in planning for their future.
Mistake #1 - Focusing on the Will
Whne people think of estate planning they often focus on death and the pros and cons of having a Last Will and Testament. While this document may help a person's beneficiaries, it does nothing for the elder person themself. Instead, the senior should be focusing on planning for their life on earth and that means shifting the focus to incapacity. Much more important that a Will to the seniro is having very well drafted General Durable Powers of Attorney, Medical Powers of Attorney, HIPAA Releases and Living Wills. This documents will alow trusted individuals to assist with financial and medical decision making and can help avoid costly guardianship proceedings. In sum, they are much more important to the senior than the Will.
Mistake #2 - Relying on Medicare
We typically see families follow a specific path as they age. This starts with a health crisis that impairs the senior physically, mentally or both. Next comes a housing crisis as the family tries to determine where the senior will be able to live. Will they need home care? Will they Need assisted living? Will they need nursing home care? At this point, the family finds out that the Medicare insurance is about to fail them because it will not pay for non-medical in-home assistants, nor assisted living and no more than 100 days in a nursing home. This then leads to a financil crisis as the family scrambles to figure out how to pay for the care that is needed. There are only three ways to pay for long term care: (1) out-of-pocket, (2) long term care insurance and (3) government assistance. Since most people do not have long term care insurance nor can afford to pay privately, government assistance is the most common solution to the financial crisis. Here, the mistake is that the reliance on Medicare has left the family with no knowledge of what other benefits may be available. It is critically important that retirees and seniors understand how they fit in with the rules of Medicaid and Veterans Benefit and what it will take to become eligible. s
Mistake #3 - Giving Away Assets
There is a persistant rumor that the best way to protect against the costs of long term care is to give your assets away. Many people have heard that you must "get everything out of your name for five years" and thus start transferring money and property to children or otheres. DO NOT GIVE AWAY YOUR ASSETS!!! When you put your property in other people control, that person's problems can now impact your assets. Such things as death, divorce, disability and debt can all have an impact on your assets if you have exposed them to someone else. However, there are ways to protect yourself and your property without relinquishing control. There are various types of trusts and other methods that can provide the protection you desire without the risks associated but just giving stuff away.
Mistake #4 - Getting Bad Advice
If you go to your family doctor with a cold she treats you. If you go to her for a sprained ankle, she treats you. But if you go to your family doctor for cancer, she immediately send you to an oncologist who specializes in cancer. The law, and particularly elder law, is no different. Elder law involves a very specialized knowledge of the interaction of probate, guardianship, government benefits, taxes and real estate among others. A person with elder law questions should seek out the advice of an elder law attorney. Unfortunately, this is also one of those areas where the least informed people are often the most vocal. Everyone from your friend in Sunday school to your CPA to the attorney who helps you nephew with a DWI all have advice and typically no idea what they are talking about. Also, be very careful. There are plenty of people holding themselves out as experts in VA benefits or Medicaid. These are typcically insurance salesmen thrying to get investments or sell insurance or just plain old scammers. The National Academy of Elder Law Attorneys (NAELA) has a website what allows you to search for an elder law attorney in your area. So get good advice and don't listen to what your neighbor's aunt's step-child's girlfriend did for her parents.
Mistake #5 - Doing Absolutely Nothing
An experience elder law attorney will typically tell you that is is never to late to assist a person with their health, housing, financial and legal needs. Even if a person is already in a nursing home, there is typically many ways to protect that person and their assets. However, the close you get to a crisis, the fewer options you have. Most retirees and seniors want to stay independent, not become a burden on others and not go broke before they die. These goals are possible, but only if you plan ahead. For most people, there will be a long-term care situation at some point in their lifetime. Plan ahead!!! Get your powers of attorney in place, know how your going to pay for long term care, don't give away your assets and get good advice. But to do any of these things, you've got to make the first step and decide that today is the day you will plan for tomorrow.
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