Avoiding the Big 3 (Part 1)
Thanks for being one of the first to view the grand re-opening of our Blog. To start us off, I have included the video of the first edition of another of our first’s, which is the ELP Legal Minute. This is a new series broadcast on Facebook where I literally talk for one minute, then that’s it. Obviously, I have to get right to the point.
The goal with legal minute is to take a complex topic such as estate planning, planning for incapacity or Medicaid planning and break it down into bite size pieces, then talk about one segment each day. We start off with the topic of pre-planning.
A lot of folks call the office to say that they just “want to get their ducks in a row”.
Usually what they mean by this is that they want to do whatever type of planning is necessary to protect them from many of the bad things that they have seen happen to others when they didn’t plan. For sake of our very short blog discussion, we identify the following 3 Bad Things:
- Probate. This is not necessarily bad, but it’s usually something that you want to avoid, if at all possible. Probate is a judicial process (you’re in a Court, which is a clue) and is very time consuming, expensive and not a lot of fun. The Probate process is often required to transfer ownership of assets from one generation to another pursuant to your will or state law. Fortunately, this process can typically be avoided with a little pre-planning that we will talk about in a future blog post.
- “Losing it to the Nursing Home”. This is not the correct phrasing, but it’s the way that most people refer to the spend down process. The truth is that Nursing Homes are the good guys – they just want to be paid. Sometimes Medicare pays for the first several days if you have a qualifying hospital stay first. After this, you start paying out of pocket until you qualify for Medicaid. The trouble is that people often (unnecessarily) spend down everything to qualify for Medicaid assistance to help pay for nursing home care. With proper planning, this can often be avoided.
- Avoiding an Asset Freeze when your loved one loses capacity. I have heard many spouses say, “We have been married for 50+ years. I know what he wants!!!” Yes, that is probably true. But they often find out quickly that they cannot act on their loved one’s behalf without a properly executed power of attorney. If your loved one has an IRA or other assets is his/her own name, you may not be able to access the money to use for their care without a properly prepared power of attorney. When they lose capacity, they lose the power to execute legal documents. In such cases, another Court proceeding, called guardianship may be required to give the authority to act on your loved one’s behalf. By the way, the same reasoning hold true for inability to make healthcare decisions without good health care documents.
Here’s Part 1 of our Facebook LiveCast on this topic. You can watch Part 2 on our Facebook page or back here at the blog.