By Noelle Alicea, PT, DPT
Geriatric Clinical Resident
Delaware

What is an estate plan? An estate plan serves to manage an individual’s assets during situations including incapacity and death. The success of a plan limits the chance of crisis, conflict, or panic due to successful written authority to outline personal wishes. 

But what does it take to create an estate plan? The truth is that it’s not easy and can require a financial investment. When beginning a search for where to start with creating an estate plan, the focus should be on finding an Elder Law Firm. The role of an Elder Law firm is to support and direct a person in personalizing their financial plan. The right Elder Law team will provide recommendations and options that fit individualized goals. Working with an Elder Law team that looks out for the best interest of the client, can facilitate a very comfortable aging process, ultimately trusting that personal wishes will be respected and addressed. 

Outlined below are a few documents with related patient scenarios that could be beneficial for patients, in order for them to understand why consulting an Elder Law Firm and legally preparing to age is important. Please remember each estate plan is different and unique to each individual. It is important to consult an Elder Law team to help make individualized decisions. There are three main categories of documents: 

• Lifetime planning documents
• End of life planning documents
• Asset protection documents

Let’s explore each in greater detail. 

1. Lifetime Planning Documents

Lifetime planning documents are the documents that are going to be in place, and only in place when a person is alive. Once there is passing, these documents hold no value. 

Power of Attorney (POA)

The POA is a legal document that allows the creator to name an agent(s)  that can make legal and financial decisions on the creator’s behalf. 

Scenario: The patient goes into the hospital and understands he or she will be returning home at some point, although it may take a few weeks to get stronger or healthier first. If the POA is currently active, they can assist with maintaining the patient’s financial and legal obligations while the patient is temporarily unable. This can include, but is not limited to: 

• Getting money out of the bank to pay a bill 
• Paying rent 
• Applying for Medicaid
• Speaking with insurance companies 

An Elder Law firm will assist you with identifying who would be the most appropriate POA, when that person can facilitate their role, and what role you want them to have. In addition, with proper pre-planning with the Elder Law team, your legal and financial matters that you would be unable to attend to or address from a hospital bed may be accessible for the POA to assist with.

Advanced Healthcare Directive

The Advanced Healthcare directive outlines a person’s medical wishes, those needed to keep someone alive when they are no longer able to make decisions for themselves. An Advanced Healthcare Directive involves three major parts: 

• Living Will 
• Medical Decision Maker
• Anatomical Gifts

The living will states what the patient’s end-of-life medical wishes are once they are deemed incapacitated and have a qualifying condition (permanently unconscious or terminally ill). This is not a DNR. 

The medical decision-maker/health care agent is the one who carries out the medical decisions of the patient only if they are incapacitated and there is no expectation of recovery. This person is separate from the POA, although you could assign one person to both. 

Finally, anatomical gifts (organ donation) will legally specify where their body will go and to whom it may go to upon passing.

Scenario: A patient goes to the hospital due to a severe accident. They are in a coma and on a ventilator and now require tube feedings to stay alive. The doctors have reported the patient as permanently unconscious with no chance of recovery. The medical decision-maker has the ability at this time to apply the living will and carry out the wishes of the patient.

Again, it is important to utilize an Elder Law team to assist you with making a decision about who to assign as your medical decision-maker. In addition, pre-planning with the local law team can allow the patient to focus on recovering and/or trust that their wishes will be carried out. Proper planning also gives the family the ability to support the patient’s decisions when they get into complex health situations. 

2. End of Life Planning Documents

The role of the Elder Law team is also to assist the person in preparing for end-of-life planning. With the right team of people and proper Elder Law planning, it often allows families time to grieve with comfort knowing that financial, legal, and medical decisions have already been made. Decisions that could cause controversy among family members, are now objective and based on the patient’s desires. Utilizing the Elder Law team to create end-of-life documents is crucial in minimizing the chance of conflict, anger, or disruption while families are grieving.

Last Will

The Last Will addresses end-of-life planning. The document states who will be in charge of administering the estate and directs where assets will go. Documents commonly included:

• Distribution of tangible personal property
• Nomination of guardian for minors
• Nomination of executor

An Elder Law firm will assist you with identifying who would be the most appropriate executor for your will. In addition, with proper pre-planning, the Elder Law team will legally define where each and every one of your assets will go based on your individual goals and values. 

In order for the executor to carry out the will, they must go through a probate process. The probate process involves going through all assets, which are typically long, expensive, and visual to the public. An alternative document to the living will is called the Revocable Living Trust. 

Revocable Living Trust

A revocable living trust is an alternative to a living will that still allows the creator to describe where they want their assets to go but adds the benefit of avoiding the probate process.

Scenario: Mary Lou passes away with only a will; the family will most likely be using their personal finances to address the funeral costs. Months later once the probate process has settled, they can hope to get compensated. As an alternative, if Mary Lou had utilized her Elder Law team and created a revocable living trust as an end-of-life planning tool, then it is very likely that the document could have stated that her money could have been used for the funeral costs.

Discussing your options about the pros and cons of a revocable living trust with an Elder Law firm is crucial for understanding what works best for your individual situation. 

3. Asset Protection Planning

An Elder Law firm will most often first advise you to get your foundation estate plan established: living documents and end-of-life documents. Once a good foundational estate plan is set, do not be afraid to consult them about other types of financial and legal documents that could be beneficial for you to establish as you age. One consideration to inquire further about is planning for Long Term Care. The average long-term care costs can range from $5,000-15,000/month and can quickly deplete life savings. Long-term care insurance will typically not cover the full amount and there will still be an out-of-pocket cost for the person.

Two end-of-life planning tools that can assist with this cost are the Medicaid LTC Program and Veterans Pension with Aid and Attendance. The role of the Elder Law firm with asset protection plans is to assist you with ensuring payment for needed services, preserve a nest egg, avoid probate, and provide a legacy. 

Irrevocable Asset Protection Trust (Pre-planning 5 years)*

An additional end-of-life planning tool is an irrevocable asset protection trust. The irrevocable asset protection trust can allow a person to state what they want to protect from probate and the costs of long-term care. Once an asset is put into this trust, it needs to be in there for 5 years before it is protected from the costs of long-term care. 

Scenario: Mary Lou falls and ends up in the hospital. The hospital transfers Mary Lou to a skilled nursing facility. She is unable to return home due to the severity of her injuries and her decline in health status. If Mary Lou was able to get aid help in the home, they would allow her to go home, but she reports it’s too expensive and she will not be able to afford it. 

The facility presents the monthly cost of long-term care and Mary Lou realizes she will need to use money from both income and savings, which means she will slowly be depleting her nest egg. If Mary Lou had an Irrevocable Asset Protection Trust established at least 5 years prior, then Mary Lou would not be required to deplete her assets to pay for care.

The Importance of Planning to Age

Overall, it is crucial for patients and families to begin the process of understanding what financial, legal, and medical documents are available. Due to an understandable lack of knowledge, families often find themselves in uncomfortable and undesirable situations when managing the aging process. An Elder Law Firm should be where you direct your attention to learning about how to plan for successful aging. Working with an Elder Law team prior to any major health or financial burdens and planning proactively will limit stress, decision making, and potential conflict within families to allow a smoother transition and grieving process. 

Take one action today and find an Elder Law team in your community to get yourself started. Set up a consultation to see how they can help you. It is never too late or too early to start planning. The benefits that pre-planning will provide will be priceless. 

*The length of time funds must be owned by the trust varies by state.

Disclaimer: This article is not legal advice. Reach out to an attorney before making any legal decisions.