PRIME TIME LAW
A Practical Guide for those who
are experiencing the Prime of Life
and for those who Care for them
An Educational Presentation by:
David L. McGuffey
Serving
Our Practice: People First
(706) 428-0888
www.mcguffey.net
All rights reserved, Copyright
2001-2004
Last Revised: February 17, 2004
|
Notice and Disclaimer: This Handbook is to be used for educational
purposes only. This handbook is
updated irregularly and some material may be out of date. It is not designed
to replace individual legal counsel.
Use of this Handbook does not create an attorney-client privilege
between you and the Law Office of David L. McGuffey, LLC or its lawyers. If you have a specific legal question,
you should see a lawyer who can discuss your case with you. Attorneys with and the Law Office of
David L. McGuffey, LLC are not presently certified as Elder Law Specialists
(although Mr. McGuffey is certified as a Civil Trial Specialist) by the
Tennessee Commission on Continuing Legal Education and Specialization. No representation is made that the
quality of legal services provided by and the Law Office of David L.
McGuffey, LLC is greater than the quality of legal services provided by other
lawyers. |
Table of Contents
Introduction 4
People: Rights and Responsibilities 6
First Things First: Planning 6
Parents 6
Children 6
Organize your affairs 6
Planner/Questionnaire 7
Financing Retirement 7
Changing Levels of Income 7
Social Security/Retirement Benefits 8
Types of Social Security Benefits 8
Most people ask two questions about Social Security 8
Retirement Benefits 8
Am I fully insured? 9
More on Social Security Credits 9
When can I receive benefits: Retirement Age? 9
Since early retirement will permanently reduce my benefits, should I
retire early? 10
How much do I receive? 10
Social Security/Disability Benefits 11
Initial Advice 11
Am I eligible for disability benefits? 11
How can I tell whether I have enough SS earnings to be eligible? 11
Do I have a disability? 12
What if I am already receiving other benefits? 12
Where can I apply for Social Security? 12
Miscellaneous Information 13
How do I contact the Social Security Administration 13
What if I disagree with the Social Security Administration? 13
The Appeals Process in a Nutshell 13
Supplemental Security Income (SSI) 13
Medicare and Medicaid 14
Medicare 14
Medicaid 16
Eligibility 16
Long Term Care Insurance 18
A Word about Doctors 21
Long Term Care (LTC) 22
What is Long Term Care ( 22
Do you (or does someone you love) need LTC? 22
Home Health Care and Congregate Housing 23
Assisted Living 23
Nursing Home Care 24
Admission Agreement 25
Resident Rights 25
Malpractice, Neglect and Abuse 25
Elder Abuse 26
What You Can Do To Prevent Or Stop Elder Abuse 28
Health Care - Who makes the
decisions when you cannot? 28
Living Wills 28
Durable Power of Attorney for
Healthcare 30
Property: Asset Management and Distribution 31
Planning for incapacity 31
Financial (Non-Health Related) Powers of Attorney 31
General Powers of Attorney ( 31
Limited POAs 32
Making POAs Durable 32
Guardianship 32
Wills 33
Formalities of Will 33
Intestacy 34
Estate Planning 37
Definitions 39
Chart 2: Finding Vital Records 40
The
adage is true: “Most people do not plan to fail. They simply fail to plan.” This handbook is designed to help you
avoid falling into the trap of waiting until its too late, and failing to plan.
As
you read through this handbook, keep in mind that our population is getting
older.
|
Profile of Age Characteristics
for the (compiled by U.S. Administration
on Aging): The total population
of the |
When
you plan, you select a target, you take aim, and you take the necessary steps
to hit your target. The questions you must ask are: (i) what
are my goals for retirement (and beyond) and (ii) what have I done to achieve
my goals? For those who die
early, these questions are moot.
For the rest of us, a lack of planning can lead to unnecessary hardship
on ourselves as we age and, after death, on those we leave behind.
As
with all plans, you must begin somewhere.
We begin with a discussion of what your rights are. This provides you with one of the points
of departure. Another is an
assessment of your financial position and an evaluation of any planning you
have done thus far. The last is an
assessment of your current health.
“Your Legal Rights 101"
In
examining Elder rights, a brief examination of legal rights in general may be
helpful. Elder rights, like most
other rights, spring from three primary branches of the law. They are personal rights, property
rights, and contract rights.
Personal rights govern how people
should be treated. All of us have
certain rights as citizens. We
expect others to obey laws and rules created for our protection. When someone violates a rule established
for our protection, and when that conduct harms us, our personal rights have
been violated. Depending on the
circumstances, the person who harms us may be held accountable under criminal
or civil laws (or both).
Property rights relate to
ownership. Those rights govern the
use and possession of property. If someone interferes with your lawful use of
property, then your property rights may have been violated.
Contract rights govern agreements. Agreements, ranging from a common
purchase at the grocery store to an agreement for services at a skilled nursing
facility, are often of vital importance.
When parties reach an agreement, they expect each side to live up to
their word. The law says that
parties to an agreement have a right to the benefit of their bargain.
In
Elder law, personal rights protect you from abuse, neglect and substandard
care. Wills, trusts and powers of
attorney concern property rights since they relate to how your property is used
or distributed. Contract rights
protect the value of your agreements with individuals and businesses,
particularly where you rely on those individuals and/or businesses to provide
necessary care.
Once
you know your rights, it is important to know you can take action when your
rights are violated. Although it
may not be necessary to complain about every wrong you suffer, if someone
violates your rights and if you choose to speak up, the law will hold the
wrongdoer accountable. For example,
if anyone commits a criminal act that harms you, then the State will take
action if you report the crime. If
someone tries to take your property, the law provides a way to get it
back. When someone breaks (or
“breaches”) their agreement, the law allows you to sue for damages,
and in some instances, the court may force the other party to live up to their
agreement.
In
the case of abuse, neglect and malpractice, our civil justice system says an
injured party should be repaid what was lost. For example, if you are injured due to
another person’s negligence and if you require medical care, then the law
says the person who hurt you should pay your medical expenses. Since the law cannot undo pain, if you
suffer pain, then the law says we should try to quantify your pain in dollars (e.g.,
how much would you give to avoid that pain); the wrong-doer should then pay you
that amount. If a
wrong-doer’s conduct injures your loved one and he/she dies, then you
have a right to hold the wrong-doer accountable in law. In that instance, the law asks:
“What is a life worth?”
In
sum, our legal system is premised on responsibility and accountability.
With
that in mind, our goal is to equip you to exercise your rights before you are
injured, disabled or incapacitated.
We hope your property will not be taken from you (or one of your loved
ones) and depleted by an abuser. We
hope assisted living facilities, nursing homes and other businesses that care
for the elderly will provide appropriate care. We hope this Handbook will be used to
prevent harm and ensure quality living.
If
this Handbook helps you, then we have done our job. If, after reading it, you still have
questions, we invite you to contact us (or another lawyer) and seek help. Help is available.
Finally,
it is important to remember that no general article or paper can address
specific legal situations. If you
have a question concerning a situation that involves you or someone you know,
you should seek the advice of a lawyer.
People:
Rights and Responsibilities
I. First Things First: Planning: An old and trite (but true) saying is:
“People don’t plan to fail; they fail to plan.” The most important thing you can do for
yourself and your family is to think ahead, talk openly with those you love and
plan for your future. Reluctance to
plan will not prevent time from catching up with you.
1. “Planning” is not a dirty word: In virtually every arena of life, we plan. We plan because those who fail to plan
wander in the dark, with no definable goals, which reduces their chance of
successful living. Those who plan
have direction. They have goals or
targets. When choices need to be
made, we can evaluate those choices against specific goals, and can make the
choice most likely to achieve those goals.
Estate Planning, which now includes planning for life during “old
age,” is the process of arranging your affairs so that your wishes are
carried out with maximum effect and minimum expense during any period of
incapacity and following death.
2. Parents: If you have a normal family relationship, your
children will try to help you as age deprives you of some of your
independence. If you have specific
desires concerning how your children should help (or in some cases, leave you
alone), then you should tell them.
If you do not talk with your children now, you cannot expect them to
know your wishes later.
3. Children: Your parents were independent before you were
born. Planning for incapacity is
not about taking control of their lives. Planning is about honoring them. (See Ephesians 6:2) Your parents may not be ready to
relinquish their independence.
Thus, care giving is about you helping
your parents respond to the aging process. Your parents may not appreciate you
taking control of their lives (in whole or part) without consent. Talk to them. Find out where they want your help and find
out where they want you to “butt out”. If you do not talk to your parents now,
you are inviting trouble and disagreement later if you “step on their
toes”.
4. Organize your affairs: If you cannot (easily) find your financial
information, including account numbers, insurance policies, deeds, powers of
attorney, Will, Living Will, and other vital information, then you should
assume looking for that information will be burdensome for your children (or
spouse) in an emergency situation.
You should make a list of banks where you have accounts, insurance
companies with which you have policies, and places where you have documents and
property. Even if you consider this
information private, you should keep it where it can be accessed when needed.[1] At a minimum, you should keep a copy of
your important information (or a statement of where it can be found) with your
Last Will and Testament.
5. Planner/Questionnaire: We
have a planner/questionnaire that may help you organize your personal
information. If want a copy, you
can contact us by email and we will send it to you. Fill out the parts that
apply to you and take it with you when you meet with an Estate Planning
professional. When you fill it out, keep two things in mind: (i) Do not let the
questionnaire serve as an excuse to postpone planning -- it is better to begin
planning with an incomplete questionnaire than to avoid planning altogether;
(ii) Be forthright with your Estate Planning professional. Professionals cannot help you map out
the best route to achieve your goals if you fail to tell them your present
circumstances.
1. Changing Levels of Income: In 2000, the median household income for all
Americans
was $42,148. On the high side, those
aged 45 to 54 had a median annual income of $58,218. Unfortunately, income often drops
following retirement. Thus, on the
low side, those aged 65 and older had a median annual income of $23,048 in
2000. (Source:
A. It
is not too early to consider how you will finance your retirement. Data from the Census Bureau website,
shows common income sources (in
percentages) for persons 65 years of age and older.
We are not financial advisers and, thus, it is not
our purpose to tell you how to finance your retirement. However, Census Bureau data shows that
many Americans continue to rely heavily on Social Security. We question whether that makes sense in
today’s political climate. If
you have not spoken with a financial adviser, and if you are relying on Social
Security to meet your needs, we suggest that you seek professional
guidance. If you need information
concerning financial planning needs, contact a Certified Financial Planner.
The
following list of organizations is a starting point in securing appropriate
financial advice:
|
American Institute
of Certified Public Accountants: Personal Financial Planning Division |
AICPA-PFP Division
1211 Avenue of the |
888-999-9256
www.aicpa.org |
|
Financial Planners
Standards Council |
|
800-305-9886
www.cfp-ca.org |
|
National
Association of Personal Financial Advisors |
|
888-FEE-ONLY www.napfa.org |
|
Society of
Financial Service Professionals |
|
888-243-2258 www.financialpro.org |
|
CFP Board of
Standards |
1700 Broadway |
303-830-7500
www.cfp-board.org |
|
Financial Planning
Association |
Suite B-300
|
800-322-4237
www.fpanet.org |
If
you need assistance hiring a financial planner, the following resources are
available:
|
www.fpanet.org/plannersearch/cfpfacts.cfm www.cfp-board.org/cons_10qs.html. |
2. Social Security/Retirement Benefits: Social Security has been with us since 1935. It is sometimes called the Old Age,
Survivors, and Disability Insurance (OASDI) Act. OASDI programs, which are administered
by the Social Security Administration (SSA), provide income to approximately 91 percent of elderly households. Benefits are paid to workers, their
dependents and survivors of workers.
Social Security is designed to provide economic security and a source of
income to those who contribute to the system. A substantial volume of information
concerning the Social Security program is on the internet at: http://www.ssa.gov.
Types
of Social Security Benefits: Social Security pays three principle types of
benefits: (1) retirement benefits, (2) disability benefits, and (3) benefits
paid to dependents. Benefits paid
to dependents include payments to spouses, children and lump-sum death
benefits.
A. Most
people ask two questions about Social Security:
(i) Will
I receive Social Security benefits?
(ii) If
so, how much will I receive?
B. Retirement
Benefits: Answering the first question in the previous
section: most Americans will get Social Security retirement benefits. You will not get SS benefits until you
apply for them. (How to apply is
covered later in these materials.)
You are probably[2]
eligible to apply for retirement benefits if you: (i) were employed in a
covered job (a job that was subject to
Social Security taxation), (ii) are fully insured, and (iii) have reached
at least the age of 62. More simply
stated, if you paid Social Security taxes for at least ten (10) years, then you
will probably be eligible for retirement benefits at age 62.
C. Am
I fully insured? The
answer is, probably, “yes”.
Most Americans who have been in the job market for more than ten years
are fully insured. In SS technical
terms, you are fully insured when you have forty (40) credits. Credits are roughly equivalent to
quarters worked in a covered job.
Forty credits are necessary because the law says you must have at least
one credit for each year of life after age 21 through age 62.[3] (You
might wonder why the government doesn’t just say
“forty”. We have no
idea.). Prior to 1978, credits
were based on actual calendar quarters worked. Since 1978, Social Security
“credits” are based on the amount of income you earn each year
instead of the amount of time you spend working. You can only earn four credits per year,
but if you earn enough money, you can get the annual maximum all at once. If you stop working before you have 40
credits, a record will be kept of the number earned. When you start working again, your
credits will continue to build. As
stated above, when you have forty (40) credits, you are “fully
insured”.[4] The SSA considers some persons, such as
certain World War II veterans as fully insured regardless of the number of
quarters earned.
More
on Social Security Credits:
The Social Security Administration put the following explanation on its
website: “The amount of earnings it now takes to earn a credit changes
each year. In the year 2004, you
must earn $900 in covered earnings to get one Social Security or Medicare work
credit and $3,600 to get the maximum four credits for the year.” (Emphasis added). Thus, if you earned $3,600.00 in one
week (or one day), you would get your annual maximum of four credits at
once. The amount of income you must
earn to get credit for a quarter changes each year and is posted on the SSA
website.
D. When
can I receive benefits: Retirement Age?: Currently, the minimum retirement age is 62.[5] However, you will not get the maximum
benefit amount unless you delay taking benefits until you reach your full
retirement age. Full
retirement age, depending on your birth date, ranges between 65 and 67. (See Chart 1 at the end of these
materials.) Persons who take
benefits prior to reaching full retirement age are permanently penalized
five-ninths (5/9) of one percent (1%) for each benefit month prior to reaching
full retirement age. For those
without calculators, if your full retirement age is 65, and if you begin taking
benefits at age 62, then this is a permanent benefit reduction (penalty) of
20%. All cost of living adjustments
(COLA’s) will be based on this reduced benefit amount.
E. Since
early retirement will permanently reduce my benefits, should I retire early? Unfortunately, we cannot tell you whether
you should retire early. It
will depend on, among other factors, your current financial need and your
health. We suggest that you consult
a financial planner if you are considering early retirement. Nonetheless, you may want to consider
some of the following information:
(i) First,
your local Social Security office will help you calculate your estimated
benefits using different retirement ages, or will provide you with the tools to
make those calculations yourself.
(Most of the tools they use are on the Social Security Website.) Once you determine your estimated
benefit amount, keep in mind that, additional earnings prior to the month you
reach age 65 will reduce your Social Security benefit.
(ii) During
the year you turn 65, your Social Security benefit is reduced $1 for every $3
you earn over the limit (the limit is
$2500 per month, or $30,000 per year).
(iii) From
age 62 through the year you turn 65, benefits are reduced $1 for every $2 you
earn over the limit (the limit is $940
per month, or $11,280 per year).
Thus, if you intend to continue working after age 62, penalties may
offset any perceived advantage to taking Social Security benefits prior to
reaching full retirement age.
Again, this is a subject to take up with your financial advisor.
F. How
much do I receive? Your
benefits are equal to your Primary Insurance Amount (PIA). Your PIA, a number that must be
calculated, is the sum of three separate percentages. The Social Security Administration has
several “calculators” on its website that will estimate your PIA
for you. Some of these “calculators” require information about your
earnings history. If you do not
know your earnings history, the Social Security Administration will give you
that information. If you submit
form SSA-7004, it will be provided
at no charge. You can get form
SSA-7004 by calling (800) 772-1213,
by downloading it at www.ssa.gov/online/ssa-7004.pdf, or by
going to our website.
G. How
much of my current income is subject to SS taxation?: The amount of income
subject to Social Security taxation changes each year. For 2004, the maximum covered earnings
amount is $87,900. Knowing the
maximum covered earnings amount will allow you to calculate the maximum PIA for
each year because that is the base number used in calculating the percentages
described above. For prior years, the amounts are online at the Social Security
website. Information telling you how to calculate your retirement benefit at
at: http://www.ssa.gov/OACT/ProgData/retirebenefit1.html.
2. Social Security/Disability Benefits: Disability benefits are for persons who are not
old enough to qualify for retirement benefits, but who otherwise meet
eligibility criteria. The primary
difference between retirement benefits and disability benefits is the method of
determining whether you are eligible; if you are eligible, the method of
calculating the amount of your benefits is similar.
A. Initial
Advice: Applying
for disability benefits without an attorney is like walking through a minefield
blindfolded. SS disability is
sufficiently complex that it is a legal specialty. If you have any doubts
concerning your ability to successfully represent yourself in front of the SSA,
you should contact a lawyer experienced in dealing with SS disability cases.
B. Am
I eligible for disability benefits?
Generally, you are eligible for SS disability benefits if (i) you have
enough social security earnings to be insured for disability; (ii) you apply;
(iii) you have a disability; and (iv) you have been disabled for five
consecutive months.[6]
C. How
can I tell whether I have enough SS earnings to be eligible?
According to federal regulations, the SSA can apply any of four (4)
different rules to determine whether you have enough SS earnings to be eligible
for disability benefits. The
regulations are found at 20 C.F.R. § 404.130, (which is on the internet). You must meet the criteria in one of the
rules in those regulations. If you
do not know whether you meet these requirements, you should contact an
attorney.
D.
Do I have a disability? The
SSA defines “disability” as the inability to engage in any substantial gainful activity by
reason of any medically determinable
physical or mental impairment. This
means medical evidence must show that you can not hold any job. “You must not only be unable to do
your previous work, but also any other type of work considering your age,
education and work experience.”[7] Your condition must be one that can be
expected to result in death or that has lasted or can be expected to last for a
continuous period of not less than 12 months.[8] It does not matter whether work suitable
for your condition exists in your immediate area, whether a specific job
vacancy exists, or whether you would be hired if you applied for work.[9]
E. What if I am already receiving other
benefits? If you
are receiving other disability benefits, such as worker’s compensation
benefits, then your SS disability benefits will be reduced by the amount of
those benefits. See SSA Handbook
§ 503.2
3. Where can I apply for Social Security? You
can apply for benefits bytelephone, over the Internet at www.ssa.gov, or at any
Social Security office. The
toll-free number is 1-800-772-1213. Local Social Security offices
include:
|
|
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423-7488 |
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423-639-9506 |
Room 223 Fed. Off. Bldg |
|
|
615-895-5790 |
|
|
|
706-226-1023 |
Room 104, Federal Bldg |
|
If
you are looking for a SSA office
closer to you, go to the SSA Office Locator at http://s3abaca.ssa.gov/pro/fol/fol-home.html
and enter your zip code.
When
you apply for Social Security benefits, take the following: your Social
Security number, birth certificate, W-2 forms or self-employment tax return
from the previous year, military discharge papers (if applicable),
spouse’s Social Security number and birth certificate if he/she is
applying for benefits, children’s documentation if dependent benefits are
applicable, and the name and account number where your benefit check will be
direct deposited. Take the original
documents with you; the Social Security Administration will copy them and give
you back the originals. If you need
help getting original documents such as birth certificates, the Social Security
Administration will help you.
A. How
do I contact the Social Security Administration? The
SSA Hotline is 800-772-1213. For
the hearing impaired, the number is 800-325-0778 (TTD).
B. What
if I disagree with the Social Security Administration? If the
SSA takes some action adverse to you, then you can appeal. There are appeal deadlines and if you
miss them, you can lose your right to object. You should consult a lawyer if you think
an appeal is necessary.
C.The Appeals Process in a Nutshell: The appeals process, described in SSA Publication
Nos. 05-10041 and 05-10141 (available on the internet),
has four steps: (1) reconsideration; (2) hearing by an Administrative Law
Judge; (3) review by the Appeals Council; and, (4) federal court review. Generally, you start the appeals process
by following the appeal instructions on your notice of benefits. If you disagree with the SSA benefit
determination, you must file your appeal within 60 days after the notice arrives. At each appeal level, if you are not
satisfied with the result, you will have a limited time to file notice that you
want to move to the next step in the process. If your appeal involves a SSA decision
to terminate benefits, then you can continue receiving benefits during the
appeal process if you follow the instructions in your notice by filing the
appropriate request within 10 days.
However, if you lose your appeal, you will have to repay the benefits.
5. Supplemental Security Income (SSI): Unlike, Social Security, SSI is based on present
need. Congress stated the purpose of SSI as follows: “to provide
supplemental security income to individuals who have attained age 65 or are
blind or disabled.”[10] More to the point, the purpose of SSI is
to provide recipients with sufficient income to secure food, clothing and
shelter. 20 C.F.R. 416.110. SSI guarantees a minimum income for the
aged, blind and disabled. To
qualify, your countable 2004 income
must be less than $564.00 per month for individuals, and less than $846.00 per
month for couples. Also, your present countable
assets must be less than $2,000.00 for individuals or $3,000.00 for
couples. http://www.ssa.gov/OACT/COLA/SSI.html
A. Countable
income and assets include all income and assets that are not specifically
excluded.
B. Currently,
the SSA excludes the first $20 of unearned
income you receive each month. It
excludes the first $65 of earned income each month. After the first $65 of earned income,
one-half of the excess is not counted.
Generally speaking, your countable income is what you earn over those
levels. See SSA Publication No.
05-11000.
C. Currently,
the SSA excludes: (i) the home you
live in and the land it sits on; (ii) certain automobiles; (iii) household
goods and personal property up to $2000 in value; (iv) burial plots and plans;
(v) burial funds up to $1,500.00;
and (vi) life insurance policies with face value of $1,500.00 or less.
D. Current
Maximum Federal SSI Payment: As of January 2004, the maximum Federal SSI
payment is $564 per month for eligible individuals; $846 per month for an
eligible individual with an eligible spouse; and $282 per month for an
essential person. Information on SSI payment amounts and calculations appears
on the SSA website at www.ssa.gov/notices/supplemental-security-income.html.
You can access general information about SSI through the SSA website at www.ssa.gov.
E. SSI
Reductions: If you live in the home of a friend or relative, or if you live in
a nursing home, your SSI amount may be reduced. The reason for this reduction is: SSI
benefits are based on need and your needs are reduced when someone else
provides you with food, clothing or shelter.
Until
you are of sufficient age to worry about the distinction between the two, most
people do not know how Medicare differs from Medicaid. These two very different programs,
Medicare and Medicaid, are the primary source of healthcare funding for persons
over sixty-five and persons in nursing homes. And since everyone is living longer
today, there are more Medicare and Medicaid recipients than ever before.
Medicare is designed to pay for the healthcare
needs of individuals over age 65 and for disabled persons who have received
SSDI benefits for more than 24 months. The benefits are not tied to your income or earning capacity, nor are they tied to
your health, except for persons qualifying due to Social Security Disability
status.
Medicare
is completely funded by the federal government with no contribution from the
individual states. Local Social
Security Administration offices manage the programs for the Health Care
Financing Administration (HCFA), recently renamed The Centers for Medicare and
Medicaid Services. The Medicare
program is designed to meet the medical needs of those covered, but not necessarily
custodial needs.[11] Medicare principally covers
hospitalization, acute care needs, physician, therapy and home health care for
the homebound. Medicare coverage
for long term care is limited to the first 100 days following
hospitalization. Thereafter, if
long term care is necessary, it must be funded some other way.
Medicare
is divided into three parts: Part A, Part B, and Part C. Part A pays for in-patient hospital
care, limited skilled nursing home care, home health care (on a limited basis),
and hospice. Part B pays for
doctors’ services, outpatient hospital services, home health care (all
home health care will be under Part B by 2006), and a number of other medical
services and supplies that are not covered by Part A. Part C (also called Medicare + Choice),
is an “opt-in” program similar to private HMOs. Part C includes everything in Medicare
Parts A and B. In some cases, Part
C pays for additional services not usually reimbursed by Medicare. There is an additional premium for any
extras in your Part C plan.
Medicare
Parts B and C charge premiums unless you are specifically granted a “free
enrollment”. The premiums
will vary depending upon your employment history and payment of Medicare
premiums.
For
most health care services covered by Medicare, there is a deductible. For example, services covered by Part B,
typically require payment of a twenty percent (20%) deductible;
Medicare typically pays the other eighty percent
(80%).[12] Likewise, Medicare will charge
deductibles and co-payments. Be
sure and check these points when you enroll. Medicare supplement plans, also known as
“MediGap” policies, are popular insurance offerings that pick up
where Medicare stops, including payment of Medicare deductibles and
co-payments. Most states offer 10
standard plans from which to choose with numerous different coverages. MediGap policies can be purchased from
most insurance companies that sell healthcare policies. You cannot be turned down if you apply
for a MediGap policy during your open enrollment period.
If
you are entitled to receive Medicare Part A with no premium, the Social
Security Administration will probably enroll you automatically if you apply for
benefits at age 65. Regardless of
when you take Social Security benefits, and regardless of whether your Part A
is free, you should apply for Medicare at your local Social Security Office
about 3 months before your 65th birthday. Detailed information on enrollment
procedures and periods is at www.medicare.gov.
Common
premium and co-payment amounts are available online at www.medicare.gov.
Other co-payments for specific services are listed
in Medicare and You, available on the Medicare website (www.medicare.gov).
Medicaid,
unlike Medicare, is a needs-based program and is based on an individuals poor
financial condition. When you apply
for Medicaid, officials review your financial condition to determine whether
you are “poor enough” to qualify.
Eligibility
is determined using a two part test.
First, you must be categorically
eligible:
(i) You
must be a
(ii) You
must fit within a covered group, such as the following:
(a) Age
65 or older;
(b) blind
and disabled ( as defined by the Social Security Administration);
(c) pregnant
women and infants;
(d) children
through age 18; or
(e) parents
and children, or
(f) a
SSI recipient.
If
you meet at least one of these “categorical” requirements, then you
must also meet financial eligibility
criteria (in other words, you must be poor enough). Medicaid officials will require your
disclosure of documentation showing your income and assets.
Within
certain federal parameters, income and asset thresholds used to measure
eligibility are set by each state.
Since Medicaid is a needs-based program, usually you will meet with an
official at your local welfare office (Department of Family and Children
Services)[13]
when applying. If you have excess
assets at the time of application, then you will be required to “spend
down” some of those assets before you become eligible for Medicaid
benefits. Once you have satisfied
both the income and asset tests for Medicaid, and are categorically eligible,
you will receive Medicaid benefits.
Nursing
home care often costs between $3500 and $6000 per month. Thus, under present
conditions, even persons with substantial assets quickly find themselves poor
enough to qualify for Medicaid. In
Since
Medicaid is a joint program between the state and federal governments,
different states have different options with respect to enrollment and services
offered.[14] For example,
Most Medicaid programs make benefits retroactive for
a limited period of time (usually, 3 months). For example, if you apply for Medicaid
today, and if you are approved for benefits, you may receive benefits
retroactive to 90 days before your application date.
B. Medicaid
Planning.
With
one principal exception, Medicaid looks at the eligibility of the applicant as
of the application date. Many
applicants who have excess assets engage in planning strategies to protect
those assets and still qualify for Medicaid. If planning is not done properly, transfer
penalties may apply that will prevent the applicant from receiving
Medicaid. Thus, you should contact
a qualified Elder Law Attorney before transferring assets for the purpose of
becoming Medicaid eligible. (For a
referral, go to the National Academy of Elder Law Attorneys website at www.naela.org).
When
you apply for Medicaid, the government looks at all assets you own (or control)
as of the date of application and all assets you have transferred during the
previous 36 months. Although you
must disclose your assets, only countable assets are considered. Most assets excluded for SSI counting
purposes are also excluded when determining Medicaid eligibility. Thus, your home and the land it sits on
are excluded, as are household goods, a cemetery lot, prepaid funeral
contracts, one automobile and any asset that is not marketable. Since every State Medicaid plan is
different, there are some variations in the transfer rules from state to state.
Special
Rules in Nursing Home Cases
The
exception mentioned above, regarding the time Medicaid eligibility is
determined, applies to nursing home residents. Special rules apply to protect couples
where one spouse requires nursing home care and the other remains healthy. In those cases, eligibility is
determined as of the first day of the first month
of continuous (30 days or more) institutionalization.[16] That date, sometimes called the
“snapshot” date, is critical for planning purposes.[17]
Initially,
the healthy spouse can keep all non-counted assets (e.g., the home and land it
sits on). After non-countable
assets are excluded, the healthy spouse is entitled to a resource allocation
designed (in theory) to prevent impoverishment. For 2002, the resource allowance,
depending on your State, ranges from $17,856 to $89,280. Since the institutionalized spouse is also
entitled to keep up to $2000 in resources, some states, such as
Income
earned by the healthy spouse is not considered available to the nursing home
resident; thus, only the nursing home resident’s income is considered in
determining eligibility.[18] Conversely, the income of the
institutionalized spouse is considered available to the healthy spouse if he or
she needs it to avoid becoming impoverished. As with assets, the healthy spouse is
entitled to an allowance, which is adjusted each year. Income of the institutionalized spouse,
up to the allowance threshold, is transferred to the healthy spouse until the
joint income of the healthy spouse meets the minimum guidelines.[19] In
Is
planning wrong? Elder Law Attorneys
(and most members of the U.S. Congress) say it is not because the goal of long
term care is to restore health so you can return home. If you are too impoverished to return
home, then the system has failed.
Similarly, if your healthy spouse cannot live independently due to
impoverishment, then the system has failed. If you plan ahead, then you can qualify
for Medicaid benefits without becoming poor. On the other hand, if this planning is
not done correctly, you could very easily disqualify yourself.
If
you plan, Federal and State laws allow you to protect assets and still qualify
for Medicaid. Among planning
opportunities, you can transfer assets to a Special Needs Trust for the benefit
of a disabled person. Medicaid
rules are complex and you should consult an advisor if you wish to engage in
that type of planning. Contact the
National Academy of Elder Law Attorneys (www.naela.org) for
a referral.[20]
If
you qualify and you can afford it, buy long term care insurance. Buy it for the same reason you buy home
owner’s insurance or automobile liability insurance: to have it in place
if you need it.
Long
term care insurance allows you to purchase quality long term care and still
protect your assets. It provides
more flexibility because you can use it to purchase a full range of options
including home health care.
Policies
marketed by numerous companies, are priced after considering age, health, and
coverage sought. Policies can be
structured on either an indemnity
or a reimbursement basis.
Indemnity policies pay regardless of whether care is provided, while
reimbursement policies “reimburse” you for expenses paid to third
party health care providers.
Further, policies can be structured to cover only nursing care and
assisted living, or, where comprehensive coverage is purchased, they cover home
health care and other non-institutional needs. Although long term care insurance can be
beneficial and can assist you in meeting health care related goals, remember
that when you consider purchasing insurance, you are probably dealing with a
commissioned salesperson. The
insurance company, similarly, is a for-profit business. Their job is to take in more premium
dollars than they pay out in claims.
While nothing is wrong with this (you want your insurer to earn profits
so they can pay claims), your job as an educated consumer is to ask enough
questions to make an informed decision so you get a product that meets your
needs. Insurance products are
beneficial only to the extent they
meet your needs. If you find an
affordable policy that fits your goals, and if it is offered by a reputable
insurer, buy it.
You
must ask questions. You should ask
about the insurance company’s rating (look for A+ or better from a
reputable rating service such as A.M. Best or Moody). Ask about the company’s claim
payment history. You should ask
about the company’s commitment to the long term care insurance
market. There is no
“scientific” way to measure this commitment, but indicators include
(i) the number of policies written, (ii) the number of long term care policies
written as a percentage of the total number of policies underwritten, (iii) the
company’s reserves and (iv) whether the company has increased rates as
necessary to maintain solvency as health care costs have risen. You should contact trusted organizations
such as the A.A.R.P., the Better Business Bureau, and local chambers of
commerce. Check for complaints
filed with your state’s Department of Insurance and/or the State Attorney
General’s office.
If
you have done your homework and are comfortable with the insurance provider,
then you may be ready to make a purchasing decision. When you purchase a policy you are, in
essence, purchasing access to a pool of money. You will want to purchase enough to
cover your needs, but not so much that you simply fund the pool for other
policy buyers. Talk with the agent
about the cost of long term care and about the probable length of time you will
need that care. Consider purchasing at least three years of coverage, at least
$100.00 per day of benefits, and inflation protection; healthcare costs only increase. Although most polices are limited to a
term of years, some companies sell life-time need policies. Discuss this with your agent if such
policies interest you. Some
policies cover only necessary items, while others may cover
“PERKs”, such as private rooms. Some policies are crafted to achieve
beneficial tax treatment, others are not (although there is a difference of
opinion concerning whether this is significant). Some include inflation protection, while
other policies do not. You should
weigh the benefits and costs of various packages as you make your decision.
The
following chart, published by the National Citizens Coalition for Nursing Home
Reform (“NCCNHR”) (www.nccnhr.org) identifies some pros and cons of LTC
insurance:
|
Pros *helps protect assets *helps preserve inheritance for loved ones * may avoid dependence on family or interference with their standard of living * may preserve freedom to choose preferred
long-term care services, such as choosing a nursing home * policy may cover more than nursing homes, such
as home care, adult day care, assisted living, or other health care
facilities * helps avoid Medicaid * premium will be treated as qualified medical
expenses for tax purposes |
Cons * premiums/co-payments may be unaffordable,
especially for older people * if your assets are low, you may soon qualify
for Medicaid whether or not you have LTC insurance * if your assets and savings are high, paying out
of pocket may be the best decision * other options may be preferable - e.g., finding
an additional source of income, such as reverse mortgages * long term care insurance coverage may be
limited, yet it may improve over time * general health insurance may cover some
long-term care * policy payments may be below the real cost of
nursing home care |
If
you have additional questions about LTC insurance, NCCNHR suggests contacting
the following:
United
Seniors Health Cooperative Consumers
409
(202) 479-6973 (202)
462-6262
website: http://www.ushc-online.org. website:
http://www.consumersunion.org.
Families
(202)
737-6340
website:
http://www.familiesusa.org.
One of
the most important decisions you can make is deciding who will be your doctor. Unless you can pay cash, your decision
may be limited to those doctors who accept your insurance or who accept
Medicare and Medicaid. Still, among
those available doctors, you should pick the best doctor you can find because
everything else related to your health care flows from that decision.
If
necessary, use your current doctor as a referral for other health care
providers. If you trust your
current doctor, he or she may be your best source of information. Do not hesitate to ask others in the
community, including friends and family about their experiences with doctors
you do not know. Look to persons
you trust for a referral. If that
is not an option, then consult reputable organizations such as the American
Board of Internal Medicine (202) 289-1700 and/or the
Today,
many doctors are board certified.
This means the doctor has specialized knowledge and qualifications
concerning a particular practice area.
In most circumstances, a doctor must complete specialized training and
pass an examination before they are certified. Today, the American Board of Internal
Medicine and the
When
selecting a doctor you should also confirm that he or she has hospital
privileges at the hospitals where you would seek primary treatment. Confirm your understanding of how your
doctor charges for his or her services and whether they accept your
insurance.
If you
are concerned about your doctor for any reason, the Public Citizens Health
Research Group has published a listing of 20,125 questionable doctors. You can order that publication on-line
at www.citizen.org/hrg/qdsite/qdform.htm, or you
can call (877) 747-1616 or you can write to Questionable Doctors 2000,
When
seeking treatment at hospitals, unless it is an emergency situation, your
doctor should participate in choosing your hospital. You can choose hospitals based on
locality, specialty or other criteria, but the primary concern is that the
hospital will meet your medical needs.
If you have questions concerning the hospital, most are accredited by
the Joint Commission on Accreditation of Healthcare Organizations
(“J.C.A.H.O.”). Since
most hospitals seek certification, a hospital that is not J.C.A.H.O. accredited
should be examined closely to determine the reason why it is not accredited.
The
American Hospital Association has published a Patient’s Bill of Rights
which detail some of the care you should expect to receive. That Patient’s Bill of Rights is
available on the internet at www.aha.org/resource/pbillofright.asp.
1. What
is Long Term Care (“LTC”)?: Long Term Care includes a range of
services aimed at helping those persons with chronic or debilitating conditions
live as independently and comfortably as possible. Many of these services are considered
“custodial”, which is why Medicare and health insurance policies
provide little or no coverage.
Among LTC options are the following: Senior Only Apartment-Style Housing;
Congregate Care Facilities;[21]
Home Health Care; Assisting Living Facilities; and Nursing Home Care. Adult Day Care, a more recent option, is
principally designed to help care givers during those hours when they cannot be
available. As the cost of LTC
rises, other options designed to reduce the cost of LTC may become
available.
Check
with the LTC provider you are considering to get specific information relating
to facilities near you.
2. Do
you (or does someone you love) need LTC?: If you can function independently,
putting particular emphasis on your ability to care for your daily living
activities, then you may not need long term care. LTC is designed to meet the needs of
persons who can no longer provide for their own activities of daily living such
as, eating, bathing, and ambulating (moving around). Among mobility issues are getting to and
using the bathroom and getting into or out of beds, chairs or other difficulties
in moving around. Other activities
that may indicate a need that should be addressed include difficulty traveling
outside the home, keeping track of money, preparing meals, doing housework or
taking medications.
Your
doctor should participate in any decision concerning LTC, but the following
checklist may help you determine whether its time
to consult the doctor on that issue:
A.
Bathing (do you[22]
need someone else’s assistance?)
B.
Continence (do you have
trouble controlling your bladder or
bowels?)
C.
Dressing (do you need
assistance; when you don’t have assistance do you either avoid dressing
or do you wear what you wore previously?)
D.
Eating (do you need
assistance with feeding or do you need tube feeding assistance or intravenous
feeding assistance?)
E.
Mobility (do you need
assistance moving around; when you don’t have assistance are you confined
to a bed or a chair?)
F.
Using the toilet (do you
need assistance from another person?)
G.
Speech (do you have trouble
speaking or when you speak is your speech so severely impaired that it is
difficult or impossible to
carry on a normal conversation?)
H.
Hearing (have you lost all
or most of your hearing so that you can not understand normal conversation or
hear noises such as the knock on a door or the ringing of a telephone?)
I.
Vision (are you either blind
or so visually impaired that you could not recognize a person standing 2 to 3
feet away?)
J.
Mental status (is it
difficult for you to understand or follow
simple instructions; do you require constant supervision or a
restraint for your own safety?)
3. Home Health Care and Congregate Housing: Options for home healthcare and congregate
housing vary from place to place.
Contact the Administration on Aging’s Elder Care Locator at (800) 677-1116 to find out what options are
in your area. Another helpful
contact is the Alzheimer’s Association of (800)272-3900.
Assisted
living facilities, also called “personal care homes” or
“residential care facilities” are available to help those who need
limited assistance with activities of daily living.
At
a minimum, assisting living facilities should offer three (3) nutritious meals
each day, housekeeping, laundry and some level of supervision to make sure that
residents are okay. They should
also offer some level of social/recreational activity, a safe environment,
handicap equipped facilities, and should have 24 hour staff on the
premises. When you are inspecting
an assisted living facility, among other things, you should ask are “what kind of
license does the facility hold and does it accept Medicaid?” You should determine who owns the
facility; whether it is responsible to a local owner or is it part of a large
corporation or chain; whether it is for profit or not for profit; whether it is
affiliated with a religious organization; or whether it is affiliated with
local nursing homes. You should ask
how many residents currently live there and on average how long do they live
there. You should meet the staff,
ask about the average length of employment for staff and find out how many
people are on duty at any given time.
Does the facility do a background check on staff and/or require
training?
You
should ask about the needs of current residents. For example, are they wheel chair bound
or do they need assistance with eating and/or bathing? If the percentage of residents needing
substantial assistance is high, then the facility will need a higher staff-to-resident
ratio to provide quality care.
You
should ask about services and costs related to meeting any activities of daily
living needs. For example, how are
meals prepared; is there a menu; who prepares the meals; and what is their
training? If you require special
dietary needs, will those needs be met?
You should inquire concerning housekeeping, laundry, assistance with
bathing, whether there are call buttons and, if so, where are they located. You should ask what transportation is
available for doctor and hospital visits and how much it costs. You should ask whether there is a
calendar of recent recreational activities. You should ask about safety issues such
as sprinkler systems, smoke detectors, handrails, panic buttons. You should ask about convenience items,
specifically, what is available and the cost. You should ask about discharge rules
where your health declines, and whether any deposits/down payments are
refundable under these circumstances.
Finally, you should review the admission contract carefully, seeking
advice from a lawyer if it contains terms you do not understand.
Nursing
homes are primarily designed to meet the needs of persons who are convalescing
from illness or to provide long-term nursing supervision for persons with
chronic medical needs. The goal is
to provide appropriate care and treatment to restore or maintain a
resident’s highest level of physical, mental, and social well-being. According to a report published in 1994 by
the U.S. General Accounting Office, an estimated 12.8 million Americans of all
ages need assistance from others to carry out every day activities. Approximately 57% are persons aged 65 or
older; 40% are working age adults aged 18 to 64. Of those, 6.2 million Americans require
another person’s help with at least one basic activity of daily living
such as eating, dressing or using the bathroom. As of September 5, 2000, the GAO
estimated that 1.6 million elderly and disabled persons are in nursing homes nationwide.[23]
As
pointed out earlier in this Handbook, Medicaid is the primary government
program that helps pay for long-term care.
However, not all nursing homes accept Medicaid as a form of payment. Even nursing homes that accept Medicaid
limit the number of beds for Medicaid residents. Accordingly, if you know you will be in
need of nursing home care (e.g., your physician says nursing home placement
will soon be necessary), then you may want to put your name on a waiting list
so as to ensure the availability of a bed.
You
should investigate any nursing home you are considering before admitting
yourself or a loved one. You should
be able to secure information concerning complaints that have been filed
against prospective nursing homes by talking with the local long-term care
Ombudsman. (More about who
“Ombudsmen” are and how to contact them later).
The
official Medicare site provides a nursing home checklist you can use when
inspecting a nursing home. It is
available at www.medicare.gov/nursing.
After
you have selected a nursing home, you should carefully review the Admission
Agreement. If you have questions
concerning the agreement, review it with a lawyer. Never sign a legal document that you do
not understand. Among the items in
the Admission Agreement, it should state terms and conditions, charges, what
services are covered under the basic rate, and what services require an
additional fee. In addition, the
Admission Agreement should identify whether the home is Medicare and/or
Medicaid certified. If the home is
certified, then it will not be allowed to transfer or discharge you if your
private funds are exhausted and you become reliant on Medicaid. Of note, if the prospective resident is
a Medicare or Medicaid recipient, then it is illegal for a nursing home to
require payment guaranties from a third party.[24]
Many homes demand third party guaranties anyway;
but because they are illegal, they cannot be enforced. A simple letter from your lawyer should
end harassment from the nursing home.
Nursing
home residents do not abandon their rights as citizens when they cross the
nursing home’s threshold.
Under State and Federal law, they still have all rights they would have
outside the nursing home. In
addition, residents have the right to be treated with dignity, to be free from
abuse, to individualized assessment and care, and to information about their
condition. If the facility accepts
Medicare or Medicaid, then it must provide all services and treatment necessary
to help the resident maintain or reach his or her highest practicable physical,
mental and psycho-social well-being.
If you have questions about your rights as a nursing home resident, or
the rights of a loved one, contact an Elder Law Attorney.
C. Malpractice,
Neglect and Abuse:
If
you think your loved one is a victim of Nursing Home malpractice, neglect or
abuse, you should contact your local long term Ombudsman immediately.
Every
county has a “watchdog” called a long-term Ombudsman. The title “Ombudsman” was
created in the Elder Americans Act.
An Ombudsman works to improve the quality of life for residents in
long-term care facilities. The
Ombudsman investigates and works to resolve
problems or complaints affecting long-term care
residents; identifies problem areas in long-term care; speaks out for change;
provides information about long-term care and related services; promotes
resident, family, and community involvement in long-term care; educates the
community about the needs of long-term residents; coordinates efforts with
other agencies concerned with long-term care; visits long term care facilities
routinely to talk to residents and monitor conditions; and educates facility
staff about resident rights and other issues. The Ombudsman’s duties include
reporting institutional abuse. In
the
If
a your loved one dies as a result of suspected abuse, neglect, or malpractice,
then consider having an autopsy performed.
An autopsy can help confirm that appropriate care was (or was not)
given.
Finally,
if the situation warrants it and others should be held accountable for harming
you or your loved one, consider contacting law enforcement officials or a
private attorney.
Elder
abuse occurs every day. It is
sometimes defined as physical, psychological, sexual or financial abuse or
neglect (depriving the elderly of their most basic needs such as food,
clothing, shelter, supervision, medical assistance) of the elderly. Often, those closest to elders are the
abusers. According to a study published
in the Journal of Elder Abuse and Neglect (Volume 10, 1999):
“approximately 60% of the perpetrators (of elder abuse) were relatives of
the elderly victims, mostly their adult children, and the rest of the
perpetrators were not related to the victims.” While physical abuse is obviously
criminal, economic abuse is equally serious because it may have the effect of
depriving victims of their life savings and assets and, thus, their economic
ability to live independently. The
Elder Abuse Incident Study, found that elders who
are unable to care for themselves are more likely to suffer from abuse. Female elders are more likely to be the
victims of all categories of abuse, except abandonment. Approximately 6 out of 10 victims of
elder abuse experienced some degree of confusion.
In
approximately 52% of all cases, men were the perpetrators of the abuse. The principal age category of
perpetrators was 41 to 59 years.
Study data showed that family members were perpetrators in 9 out of 10
cases. Adult children of elder abuse
victims were the most likely perpetrators (47.3% of the time). The second highest “abuser”
category were spouses.
Among
non-relative perpetrators of elder abuse, the study notes the following:
neighbors, apartment managers, tenants, guardians, persons with power of
attorney who initially helped elders do grocery shopping and bill paying, but
gradually took advantage of them, contractors and handymen who ripped off
elders with bogus charges, unscrupulous or phony financial planners,
professional con men who provided “free” tax preparation services
for elders at senior centers to gain their trust and then defrauded them later,
home care aides or caretakers who stole food or other valuables from the
elder’s homes (sometimes after intoxicating the elder), a room and board
proprietor who dipped into the elderly resident’s funds and valuables,
and others who befriended the elders to take advantage of them. (Financial
Exploitation of Elders: Analysis of Risk Factors Based on
In
defining abuse, the following definitions were adopted:
Physical abuse was defined as the use
of physical force that may result in bodily injury, physical pain or
impairment. Physical punishments of
any kind are examples of physical abuse.
Sexual abuse was defined as
non-consensual sexual conduct of any kind
with
an elderly person.
Emotional
or psychological abuse was defined
as the infliction of anguish,
pain
or distress.
Financial
or material exploitation was
defined as the illegal or improper
use of an elder’s funds, property
or assets.
Abandonment was defined as the desertion of an elderly person
by an
individual who had physical custody or otherwise
had assumed responsibility for providing care for an elder or by person with
physical custody of an elder.
Neglect was defined as the refusal or
failure to fulfill any part of a person’s
obligations
or duties to an elder.
Self-neglect was characterized as the behavior of an elderly
person that threatens his/her own health or safety. The definition of self-neglect excludes
a situation in which a mentally competent older person (who understands the
consequences of his/her decisions) makes a conscious and voluntary decision to
engage in acts that threaten his/her health or safety.
Among
the conclusions reached by the Study Committee were the following:
B Our
oldest elders (80 and over) are most often abused and neglected
B Female
elders are more often abused than males
B
Almost half of abused and neglected elders were not physically able to
care for themselves.
B In
almost 9 out of 10 incidents of domestic elder abuse and neglect, the
perpetrator is a family member.
B Although
the reported number of elder abuse cases is significant, more than 5 times as
many incidents are suspected to go unreported.
1. What
You Can Do To Prevent Or Stop Elder Abuse:
If
you suspect that someone is abusing an elder or that an elder needs assistance,
then you should call the Elder Care Locator at (800) 677-1116 to locate support and protective services in the
community where your elder lives.
|
Elder
Abuse Statutes Others may be found at: www.elderabusecenter.org/laws/index/html. |
|
Elder Abuse Hot Lines: You can report Elder Abuse at the following
toll-free numbers: National Domestic Violence Hot Line: (800)
799-SAFE or 799-7233 Contact information for other
states is available on our website |
VII. Health Care - Who makes the decisions when you cannot?:
Living
wills are documents authorized by statute.
Most states specify those formalities necessary for individuals to state
their preference concerning whether to accept or refuse medical care during the
final stages of life. Living Wills
are not used to kill otherwise healthy patients; they are ineffective until a
patient who is terminally ill cannot direct his or her medical care,
either individually or through an
effective power of attorney. Living
Wills differ from traditional Wills because they express specific desires that
take effect while the individual is still
living. Traditional Wills have
no effect until the death of the declarant.
A
Living Will allows you to communicate your desire concerning end-of-life care
to your family and your physicians.
For example, do you want to be placed on a ventilator or receive IV
nutrition even if there is no medical reason to believe you will ever regain
consciousness (i.e., you are brain dead)?
Living
Wills can authorize the removal of life support, pain medication, food and
water after your doctor says the patient “is not coming back”. Once these items are removed, the
patient will die naturally, with as much dignity as possible.[29] Again, the Living Will does not
authorize anyone to “take a life”; they cannot take effect until
your doctor determines there is no hope for your recovery.
End-of-life
decisions are among the hardest and most heart-wrenching decisions made by
spouses, children or other loved ones.
Consequently, a Living Will can remove some of the heartache and much of
the stress for family because it communicates your wishes to them, validating
those hard choices.
We
highly recommend that you discuss your desires with your loved ones and that
you make your choices known to them both prior to and after executing a Living
Will. Their understanding of your intention is critical.
Living
Wills are typically discussed when one undergoes any major surgical
procedure. The federal Patient Self-Determination Act mandates
that hospitals inform you of your rights concerning end-of-life decisions. Often, admitting nurses request a copy
of any Living Will or other advanced directive you have in place before
admission or upon admission for any surgical procedures. If you do not have one in place, often
the hospital will have a pre-printed form you can sign stating your
preferences. Make certain your
healthcare provider knows your decision and knows whether you have a Living
Will.
As
with a traditional will, you have the right to change your mind. If you change your mind about any
portion of the Living Will, you can revoke your Living Will with a simple
statement to that effect or by making an oral statement to your attending
physician. The physician will then
note in your medical chart that you have revoked your Living Will.
Living
wills must be executed with the same formalities as traditional wills. That means, you need two (2) independent
witnesses in the same location and at the same time for the execution of the
Living Will. It is best if you also
have a notary public witness the execution. Further, the beneficiaries under your
traditional will should not be the witnesses for your Living Will. Pick someone else. If the Living Will is signed while at a
healthcare facility, other restrictions apply. Usually, your doctor must
witness execution of the Living Will in that setting. Your best course of action is to have
the document executed well in advance.
2. Durable Power of Attorney for Healthcare:
A
Durable Power of Attorney for Healthcare lets you designate one or more persons
who will make health care decisions for you if you cannot make decisions for
yourself. Since this POA is
“durable”, it continues through any period of incompetence or
disability. Durable Healthcare
Powers of Attorney are commonly used where a patient is unconscious or where he
or she suffers from a form of dementia, such as Alzheimer’s disease.
Most
states, including
In
both States, the Health Care Power of Attorney must be witnessed by two (2)
persons who are present when the principal signs the Power of Attorney. The document must be notarized by a
notary public who is present at the time the principal signs the document. Additionally, in
Once
a Durable Power of Attorney for Healthcare is executed, it is critical that you
tell your attorney-in-fact (also called your “agent”)[30]
that you have named them as such.
Since a Durable Power of Attorney for Healthcare lets your agent make
all healthcare decisions for you when you cannot speak for yourself, make sure
your agent understands your health care preferences, particularly as they
relate to long term care and end-of-life decisions. In some states, such as
Your
agent can make those decisions described in your Living Will. In both
The
procedure for revoking a Durable Power of Attorney for Healthcare is similar to
the procedure for revoking a Living Will.
You simply notify your agent that you have removed him or her, or that
you desire to revoke the Durable Power of Attorney for Healthcare. Notice may be oral or in writing. You should also notify a healthcare
provider orally or in writing of that decision. If you give that notice to a healthcare
provider, the healthcare provider will probably make that a part of your
medical record.
Property:
Asset Management and Distribution
As
has been stated earlier in this Handbook, planning for incapacity and death is
not a pleasurable experience.
However, planning can: (i) minimize the stress on our loved ones; (ii)
ensure that your wishes relating to healthcare and the disposition of your
assets are followed; and, (iii) protect your assets from taxation and from
depletion. Many different planning
tools are available to those in the prime of life. We have already discussed the Durable
Power of Attorney for Healthcare.
Next we will discuss General Powers of Attorneys, Wills, Trusts, and
Gifts. Each is a tool that may be
used to help you achieve your goals.
As with anything significant in life, consider consulting a professional
before selecting the right tool for your situation.
II. Financial (Non-Health Related) Powers of
Attorney:
Powers
of Attorney come in many shapes and sizes. Generally, a Power of Attorney is a
document where one person (the “principal”) gives another person
(your “agent” or “attorney-in-fact”) authority to act
on his or her behalf. The scope of
that Power of Attorney can be very limited, or it can be wide open allowing the
agent to do virtually anything for the principal.
In
1. General
Powers of Attorney (“POAs”):
You
can use a general Powers of Attorney to grant as much or as little power to
your agent as you desire.
Typically,
an agent has only that authority described in the Power of Attorney. Both
In
Powers
of Attorney terminate when the principal dies. Generally, an agent’s action,
without knowledge that his principal is dead, will be enforced as if the
principal was alive. A General
Power of Attorney, like a healthcare Power of Attorney, can be revoked by the
principal at any time by giving written or verbal notice to the agent. Actions after an agent receives that
notice are beyond the scope of his authority and do not bind the principal.[31]
Limited
Powers of Attorney are powers that are not unlimited. Because a power of attorney is like a
“blank check”, most powers of attorney are limited. Limited Powers of Attorney are used in
many instances. Often, when
individuals can not be present for real estate closings, they execute a Limited
Power of Attorney allowing an agent to close the deal. Similarly, when buying a car, typically
the seller signs an odometer statement and limited power of attorney that lets
the dealership transfer title to the car. Another situation that is common for
a Limited Power of Attorney is when an individual authorizes someone to
represent him before the Internal Revenue Service. The Internal Revenue Service has a form
(Form 2848)[32]
allowing an attorney or accountant to represent you in IRS matters.
Limited
Powers of Attorney can be tailored to handle virtually any circumstance. Many Limited Powers of Attorney are
executed for a limited time such as while the principal is out of the country
or undergoing surgery.
As
stated above, traditionally, Powers of Attorney terminate upon incapacity (e.g.
dementia). Most states now let you
create a “durable” Power of Attorney that survives incapacity. To make a POA durable, language should
be included stating that you want the Power of Attorney to continue during any period of incapacity or
disability. Language such as
“this Power of Attorney shall not be affected by subsequent disability or
incapacity of the principal” or similar words usually suffice to show
your intent to make the Power of Attorney “durable”.
Like
non-durable Powers of Attorney and Living Wills, you can terminate or revoke
your durable Power of Attorney, orally or in writing. Simply give notice to your agent.
Powers
of Attorney are very helpful in many facets of life, but can be critical when
planning for incapacity. As
explained below, Powers of Attorney are more flexible than Guardianships.
A
guardian[33]
is someone appointed by a Court to
represent you when you cannot represent yourself and when you do not have a
valid Power of Attorney. In
A
guardian is not appointed until a hearing is held and the ward is found
incapable of caring for himself or herself. According to the Supreme Court of the
If
the Court appoints the petitioner as guardian, he or she is then responsible to
the Court and must seek Court approval of most significant actions. Thus, guardianship is less convenient
than action under an effective Power of Attorney; where guardianship proceedings are
contested and legal representation is required, it is more expensive. Since most court filings are public
records, guardianship also includes a loss of privacy.
Many
questions concerning the rights and responsibilities of guardians are addressed
and answered on The National Guardianship Association website
(www.guardianship.usalaw.com). You
can contact the NGA at
A
traditional Will is, quite simply, a written statement of how your property is
distributed when you die. The
law requires certain formalities before any will is recognized as a final
declaration of where your property goes after death. Accordingly, be careful with pre-printed
forms. Since most attorneys provide
free consultations, we recommend that you at least meet with an attorney to
discuss your estate planning goals.
Certain
formalities must be followed when wills are executed. First, the will maker must be of sound
mind. In other words, the person
making the will must be competent, clear thinking or lucid. The law presumes you are competent to
make a will if you know you are directing where your property will go when you
die and you can clearly express your desires.
Second,
the will maker must be at least fourteen (14) years old.
Third,
the will maker must sign the document.
Fourth,
the execution of the will by the will maker must be witnessed by at least two
(2) witnesses who are at least fourteen (14) years
old themselves and who are present at
the same time and in the same place as the will
maker when he executes the will. If
all of these formalities are accomplished, the will is probably legal and
binding.
Most
attorneys advise that both witnesses execute an Affidavit when the will is
executed. The affidavit indicates
that the identities of the persons signing the will were verified by a notary
public. If done this way, then
witnesses usually do not have to be located and brought to Court when a will is
probated; their statements in the affidavit regarding how the will was executed
are usually sufficient. Most, if
not all Tennessee Courts, will accept the affidavit to probate the will in lieu
of making the witnesses appear and testify about its execution.
Wills
can and should provide for the disposition of all property of the will maker, whether the property be real
property or personal property. No
specific language is required other than language showing that the will maker wants
to, in the present tense, dispose of the property when he or she dies.
When
someone dies without a will, they
die intestate. Intestacy means that the State decides where your property goes
after you die. When you die without a will in
Your
probate estate includes any property whether real or personal that is titled in
your
name.
Certain items such as real estate owned jointly with right of
survivorship, do not become a part of your probate estate. Likewise, insurance policy proceeds
which have specific beneficiaries listed do not become part of your probate
estate.
Today,
many people buy forms in office supply stores or other places, attempting to
save money by preparing their own wills. While these wills may work, why
“roll the dice” with your estate? Many attorneys prepare wills at reduced
rates and certain groups, like A.A.R.P. members, can often get special rates on
wills. Thus, even though legal
representation is not required when you execute, a will, remember that you are
disposing of all of your earthly assets.
As one respected text puts it, “although no particular form is required,
the best interests of the testator and his estate will be served by drafting
the will in traditional form, spelling out his intent in detail, anticipating
all contingencies that may arise, and using words that have a clear and well
defined meaning.” Prichards
on Wills and Administration of Estates, 5th Edition.
3. Codicils:
Codicils
are documents that amend, change or modify an existing will. Codicils may be used to change a
beneficiary, change the executor, or they may dispose of additional property. Codicils must be executed and attested
in the exact same manner as a will.
If a previously executed will was invalid for any reason, and is then
“republished” (reaffirmed) in a valid codicil, any deficiency in
the execution of the prior will is eliminated. Both the will and the codicil are then
deemed legal because the codicil is a republication of an entire will with the
new terms.
4. Holographic
wills:
Holographic
wills are handwritten wills, signed by the testator, that dispose of assets.
Often, holographic wills omit legal formalities. Nonetheless, Holographic wills are
sometimes recognized if they are clearly illustrative of the testator’s
intent and they are completely in the testator’s handwriting. We do not advise use of holographic
wills; still, if the only choice is between intestacy or a holographic will,
then use a holographic will.
5. Nuncupative will: A nuncupative
will is an oral will made on one’s death bed.
A
nuncupative may made be made only by a person in imminent peril of death
whether from illness or otherwise and shall be valid only if the testator died
as a result of the impending peril and must be:
(a) declared
to be his will by the testator before two (2) disinterested witnesses;
(b) reduced to writing by or under the
direction of one of the witnesses within thirty (30) days after such
declaration; and
(c) submitted for probate within six (6)
months after the death of the testator.
T.C.A. § 32-1-106.
That
same statute provides that a nuncupative will may not dispose of more than
$1,000.00 in personal property unless you are in the military in the time of
war in which case the aggregate amount could equal $10,000.00. Further, a nuncupative will neither
revokes or changes an existing written will.
6.
Both
V. Trusts:
Trusts
have been used for centuries as a way of “controlling” the use of
property when the Settlor (the person creating the trust) is incapacitated,
dead or can no longer hold legal title to the property. Trusts can be implied or expressed. Typically, they are in writing and are
created for a specific purpose.
A
trust created during the Settlor’s[36]
lifetime is called an inter vivos (or
“Living”) trust. A
trust created through a will is a testamentary trust. Once a trust is created, it is treated
as a separate legal entity, like a corporation, and holds property in its own
name for the benefit of others.
Anyone, including the Settlor himself, can be the trust beneficiary.
Trusts
can be revocable or irrevocable. If
a trust is revocable, then the Settlor can give property to the trust while
reserving the right to take it back under stated conditions. Irrevocable trusts permanently transfer
property from the Settlor to the trust.
The trust then holds the property until it is distributed to its
beneficiaries.
Trusts
are often more efficient tools for asset management than Powers of Attorney
because the trust holds legal title to the trust property. That means that the trustee has power to
“act like an owner” so-to-speak, signing legal papers where
necessary. Trusts also survive the
settlor’s incapacity, which makes them a good disability planning
tool. Of course, the Trustee must
look after the interests of the beneficiaries, and he must answer to the
appropriate court.
In
some instances, trusts can be established to meet special needs of a
beneficiary. If the beneficiary
otherwise qualifies for government benefits, the trust can be drafted to protect
eligibility for those benefits.
However, those trusts are highly specialized and should only be prepared
by a qualified professional.
This
paper does not address the use of trusts as a tax planning device. See your tax professional if that is a concern.
|
Wills versus Living Trusts |
||
|
Issue |
Wills |
Living Trusts |
|
What it is |
A Will is a document, authorized
by statute, stating how your assets will be distributed after your death. |
A Trust is a legal entity that a
settlor creates by contract, for the benefit of named beneficiaries. |
|
Estate Taxes |
Same as Living Trust. |
Same as Will. |
|
Income Taxes |
Step up basis can give slight
tax savings. |
None. |
|
Medicaid Liens |
Community Spouse can make
testamentary distribution without penalty for institutionalized spouse. |
No benefit. If you can reach assets, so can
Medicaid authorities. |
|
Costs to Prepare |
Usually less expensive than
Living Trust. Attorneys often
prepare simple wills for a nominal cost, such as $250. A.A.R.P. Members are entitled to
special rates from attorneys in the A.A.R.P. Legal Network. |
Usually more expensive than
Will. Among costs are all costs
associated with transferring assets from your name into the trust. |
|
Costs to Settle |
Requires probate; usually more
expensive than Living Trust. |
Avoids probate (usually);
usually less expensive than Will; Living Trusts are also an effective way to
avoid multi-state (or ancillary) probate where you own real estate in more
than one state. |
|
Disability Planning |
Wills are not effective until
death, so they are not an effective disability planning tool. |
Living Trusts can be used to
manage assets during a period of disability. |
|
Distributions to Beneficiaries |
Just as quick as Living Trust. |
Just as quick as Will. |
|
Confidentiality |
None. Wills are filed with the Probate Court
and are (usually) public records.
For example, at least one website publishes celebrity wills. |
Trust documents are private and
maintain confidentiality over terms and assets. |
|
Protection from Creditors |
Initially, creditors must be
dealt with. However, after the
statutory notice is given, creditor claims that are not presented to the
executor are barred. |
Virtually none. Again, as with Medicaid, if you can
reach assets, so can your creditors. |
|
Traps |
Among common traps, a Will that
is not properly drafted or executed may not be recognized by the Probate
Court. |
|