Everyone wants to age at home. It is possible to live and die at home just as you wish. However, doing so irresponsibly will prevent you from staying at home and will greatly increase your chances of being admitted to a nursing home. Your irresponsible nature will stubbornly refuse to acknowledge that the human condition is fragile, that your memory is not what it used to be, your balance, agility and strength is failing. You begin to have minor falls. You sometimes forget to turn off the burner on the stove and taking medications when you should. Humans are driven by primary drives. In older age, these drives are “activities of daily living”. The industry calls these activities “ADLs”. ADL has legal significance as the inability to perform them, the activities that a person normally performs daily, signifies the type of care you might need and also the type of long-term care benefits you are entitled to receive from insurance or a government benefits program such as Medicaid. [Read more…]
The single biggest threat to your retirement is not tax, bad investments or probate. It is high long-term care costs. However, what exactly is long-term care? Clearly, long term for a twenty year old is different than a ninety year old. A ninety year old likely considers six months of life remaining as optimistic.
We are talking about money now rather than life, although many people consider the two related. Medicare has a specific definition of long-term care. Remember, Medicare is a national health insurance program. It is not that different than the health insurance plan you may have had at your work or purchased yourself when you were younger. [Read more…]
During an episode of the BoomX show, airing on KOMO radio each and every Saturday from 2:00 to 4:00, a listener called in with an interesting question. She is 58 and still works but has a health condition that is treated with, among other things, prescription drugs that cost over $30,000 per year. She wants to retire and asked what her options were.
3 possible ways to pay for high prescription drugs:
Washington State’s Health Insurance Exchange: Mandated by the Patient Protection and Affordable Care Act (Obomacare), the exchanges all Washingtonian’s affordable insurance. That’s right! Almost anyone can sign up for the coverage on the Exchange. Even if you are not medically indigent, you can still qualify for coverage. Just pay the full premium amount for the coverage they select. There is no pre-existing condition exclusion clause but you do have to enroll during open enrollment which is from November 1 to January 31 of each year. (There is also a special enrollment period for certain circumstances, such as losing your employee health insurance.)
Social Security Disability Income: I had not inquired but she was still working and younger than her full retirement age. Yet, she has a serious medical condition. In such cases, she may meet the requirements to qualify for Social Security Disability Income.
To qualify for SSDI, she must have a qualifying disability and have worked recently and enough hours.
Disability: Social Security considers and applicant disabled if:
- The applicant cannot do work that they did before;
- cannot adjust to other work because of a medical condition(s); and
- the disability has lasted or is expected to last for at least one year or to result in death.
Work Requirement: In 2015, for example, she earned one credit for each $1,220 of wages or self-employment income. When she earned $4,880, she would have earned your four credits for the year.
Generally, she needs 40 credits, 20 of which were earned in the last 10 years ending with the year you become disabled.
Medicare is a national health insurance program for Americans over age 65. But, you have to apply and pay premiums. Medicare has two “parts” that are relevant to prescriptions drugs: Part C or D.
Washington State Prescription Drug Program: a free prescription drug discount program for Washington residents. Although this program does not coordinate benefits with insurance or Medicaid, it can be used for prescription drugs not covered by your insurance. Check out the programs website.
What is a “no-contest” clause?
A no-contest clause is a provision in a will or trust that threatens to disinherit a beneficiary of the will if that beneficiary challenges the terms of the will in court. In other words, if you create a will and subsequently pass away, your beneficiaries will be unable to challenge the decisions you made in drafting your will. These clauses are helpful in discouraging your heirs from fighting over your estate after you are gone.
Example of a “no-contest” clause:
Robert and Mary Smith are married with two children, John and Rachel. The Smith’s have a joint revocable trust that contains a no-contest provision. In this trust, Robert and Mary have left one quarter of their assets to John, one quarter to Rachel, one quarter to their church, and one quarter to Mary’s sister, Jane.
At the time that Robert and Mary create their trust, their children are in a long-standing argument with Jane. Robert and Mary want to ensure that their wishes are respected and that their estate is divided equally among all four beneficiaries without argument, so they decide to include this no-contest provision in the trust.
In this case, the no-contest clause protects the Smith estate against fighting among beneficiaries because it discourages John and Rachel from attempting to reduce Jane’s share and vice versa. Furthermore, Mary and Robert can have the peace of mind that their passing will not create further strife among their family members.
A no-contest clause is not the right option for every situation, so it is important to consult a competent attorney who can help to evaluate your personal circumstances. You should carefully consider the dynamics of your family in conjunction with your goals for your estate in order to create a solid plan.
As we discussed in the previous blog, a power of attorney is the legal vehicle through which a person is able to appoint an attorney-in-fact (or agent) of their choice who will have the authority to make financial or medical decisions on their behalf. The creation of a power of attorney must take place while the principal (the grantor of the power) is legally capable of consenting to it, it cannot take place if the principal has already been incapacitated.
When is a Power of Attorney effective?
Because the power of attorney is created while you – as the principal, are still physically and mentally capable, it may be that you do not want to grant an authorization to another person to make decisions for you until and unless you become incapable of doing so. Or perhaps you would rather that your attorney-in-fact is able to immediately exercise the authority.
There is a paragraph within the power of attorney that allows you to specify when you would like it to become effective. Depending on your personal wishes your power of attorney may be drafted to be either:
- Effective immediately – POA will be effective immediately upon signing; OR
- Springing – POA will become effective only if and when you become incapacitated
Which option is better for me?
The answer to this question is different for each individual and depends on your personal preferences and circumstance. There are benefits and disadvantages to each option.
One major benefit of a power of attorney that is immediately effective is that there is no question about when the attorney-in-fact will be able to begin to exercise decision-making power. When dealing with powers of attorney that are springing only upon incapacitation, courts often require that it must be proven that the principal is indeed incapacitated. This can be an expensive hassle; one that can be eliminated with a POA that is immediately effective.
However, especially for younger clients, there is a disadvantage to an immediate power of attorney. A power of attorney gives an extensive range of power to the chosen attorney-in-fact. This is good because it ensures that you have control over who will be making important decisions for you, and allows them to make those decisions. However, it also gives your attorney-in-fact access to your property and potentially the ability to transfer assets out from underneath you if they have bad intentions. If you are concerned about this possibility, a springing power of attorney can avoid the problem by limiting the attorney-in-fact’s power. It is clearly very important to take time and to carefully consider your selection for your attorney-in-fact.