Q: My sister has a durable power of attorney for our older sister, now in early stages of Alzheimer's, and handles her financial affairs. If skilled nursing care is required, even against our ill sister's wishes, does the power of attorney apply?A: A durable power of attorney for financial matters is not the same as a durable power of attorney for health care matters unless, as is the case in a few states, some of both purposes can be included in one document. Remember: the word "durable" means that the authority vested by the power of attorney continues after incapacity. People in the early stages of Alzheimer's may or may not be incompetent to make their decisions. If there is a dispute over how your sister will be cared for, then there will have to be a court proceeding through which a judge will decide if your sister is incapable of making her own decisions. And if she is, someone will be appointed to make the decisions for her under the guidance of the court.
Q: Like many of us who divorce, I found myself moving back with my parents to help them through their final years. Through years of hard work, they accumulated assets including a home, some stock, and savings that they wanted me to have, especially since I gave up my job to care for them. My father died from cancer three years ago. His treatment was fully covered by Medicare and Medigap insurance. My mother, who was diagnosed with Alzheimer's disease, now requires full-time long-term care. I was shocked to find that her illness is not covered by Medicare or her other insurance, and that her assets will have to be "spent down" to poverty level in order for her to be entitled to Medicaid. This doesn't seem fair to her or to me. Why should cancer be covered and Alzheimer's not? What can I do?
A: We recently read that our health care system is nothing more than "a morbid lottery in which the illness one happens to get determines who will or won't go bankrupt." With more than one-fourth of those over age 65 entering nursing homes, this is a sad state of affairs. That's why there must be planning -- before the fact when there are still options. Studies show that senior citizens are spending an average of more than 17 percent of their incomes on out-of-pocket health care expenses, as opposed to about 10 percent in 1961. Nursing home costs and insurance premiums account for most of the increase.Medicaid planning involves the restructuring of a family's holdings so that the older family members who need long-term care can secure Medicaid benefits and family assets can be preserved for the surviving healthy family members. We suggest that you contact an attorney well-versed in elder law to help you decide what you can do, if anything, at this late date.
Q: About a year ago, my wife and I -- both 65 -- had an attorney establish a living trust agreement for us. We then transferred most of our assets into this trust except for our home, car, and checking account. The total value of our estate is less than $600,000. What effect will this living trust have regarding Medicaid if we ever need it?
A: None. Under the current system, the only time you will find you qualify for Medicaid is when you are effectively bankrupt. Many people mistakenly assume that a living trust will help solve this problem. It won't. Generally, a living trust can help your survivors avoid the delay and cost of probate and keep your family business private at your death; however, you can accomplish many of the same things in other ways, including a jointly-held property with the right of survivorship.But planning to avoid probate is a bad idea if a nursing home stay is on the horizon because, since you still control where your income goes and how your assets will be disposed of, a living trust will not help you with – and generally hinders -- Medicaid planning. When you begin to plan, it's best not to do it piecemeal, but in as flexible fashion as possible. You should consider not only probate expense, but also retirement, estate, health care planning, and long-term care issues simultaneously.Jan Collins is an award-winning writer and editor. Jan Warner is a matrimonial, elder law, and tax attorney. Both are based in Columbia, South Carolina. Please send your questions to P.O.Box 11704, Columbia, S.C. 29211 or send your questions by email to janwarner@nextsteps.net.
