Monday, September 26, 2011

Routine Advice Makes for Difficult Choices Later

For the record, I am not an attorney and I do not provide legal advice.

I still meet people who have no wills, or worse wills that they have not updated in over a decade. Then, of course there are the people who have gone to an attorney's Living Trust Seminar. Generally, they get a Living Trust completed and think everything is fine. I am amazed to see these client's of local attorneys who have Living Trusts, but have not transferred any of their assets into their new Living Trusts. There is a reason for this that I will discuss later. Wills and Living Trusts that are properly designed and implemented are useful tools for the "what if you die" scenario. However, what if you do not die, but rather have a prolonged illness that requires Long Term Care?

The choices to pay for Long Term Care are simple.
  1. Long Term Care Insurance.
  2. Use your own money.
  3. Public benefits like Medicaid or VA that you have to qualify to receive.
I dare to say that none of these choices are choices that anyone really likes. Most people do not buy Long Term Care Insurance, because of the costs. Most people do not want to use their own money to pay for Long Term Care costs and expenses, either. Finally, most people do not want to think of themselves as having to take handouts from the government. Nevertheless, these are the choices. You can plan for it, or not.

Sadly, if you do not have any Long Term Care insurance, then you have to use your own money, unless you can qualify for Medicaid or VA benefits. In order to qualify for Medicaid, you can have about $2,000 in cash. If you have more than that, then the state that you live in expects you to pay your own way.

Here is the inescapable truth: If you do not plan, then you will pay out of our own pocket.

With proper planning however, there are things that you can do to protect your assets.

A lot of older Living Trusts and Wills were what is known as "I Love You" trusts or wills. This means that the husband leaves everything to the wife and the wife leaves everything to the husband, then when they both die, everything goes to the kids. There may be reasons why leaving everything to your spouse could be a bad idea. Especially, if your spouse has qualified for Medicaid and is in a nursing home. Suppose the healthy spouse dies and leaves everything to the Medicaid patient husband in the nursing home! Yikes!!! This would be an irrevocable scenario where the family would receive nothing until after Medicaid was fully reimbursed.

As adult children, we assume that our parents have hired the right attorney, the right financial adviser and the right accountant and everything should be in order. I can tell you that in most cases, everything is not in order. The main reason is that the attorney wants to earn their fee and generally does not work with the financial adviser or accountant. The financial adviser does not want to have roadblocks like attorneys and accountants to get in the way of their advice. The accountant does have any time as it is since most people wait until the last minute to file their taxes. The last thing the accountant wants to do is chase down some attorney or financial adviser on April 15th and tell them what they are filing on behalf of their client. The point is that there is a strong likelihood that your parents financial situation is not in order like you may think. It is worth it to take a look see.

Of course, some people do not have attorneys, accountants or financial advisers at all, but are do-it-yourself-ers. These people go to Legal Zoom® for legal documents, online brokerage firms to manage their own money and they use Turbo Tax® to file their taxes. I can guarantee you these people have not properly planned for a prolonged illness.

We have a process to help you through this complex area of life. Instead of using an attorney to sell you a Living Trust, a financial adviser to recommend investments or an accountant to file your taxes, you might want to think about using someone like us to help you navigate the complexity of what happens if you or a loved one has a prolonged illness requiring you to spend all of your hard earn money. In conjunction with an Elder Care Attorney, we can help devise a plan to protect your assets.

Our next seminars are October 6, 2011 at 2 pm or 6 pm at the aloft Tapestry Park Hotel at the Southeast corner of Southside Blvd and Gate Parkway (across from Claude Nolan Cadillac) in Jacksonville, Florida. R. Kellen Bryant, Elder Care Attorney who is a member of the National Academy of Elder Law Attorneys, WealthCounsel, Medicaid Planning Systems and who is a VA accredited attorney will be the guest speaker. You can RSVP to 800-769-8516.