Estate Planning Plus Elder Law Equals a Great Life Care Plan
by Don Drake, Connelly Law Offices, Ltd.
National Estate Planning Awareness Week was adopted in 2008 to help the public understand what estate planning is and why it is such a vital component of financial wellness, and this is especially true given today's economy, the inflation we are experiencing, and the precipitous drop that many individual's 401K plans have experienced.
"The terms elder law and estate planning are often used interchangeably, but there are significant differences between the two," said certified elder law Attorney RJ Connelly III. "While there is some overlap that does exist between the two, learning and implementing strategies from both law practice types is crucial to prepare for successful aging and preserve a family legacy." So, let's try and differentiate the two.
Estate Planning, when properly done, allows families to:
Name guardians for minor children
Manage and protect valuable assets
Distribute property according to specific instructions after you die
Minimize potential estate taxes
Simplify or avoid probate
Distribute property to beneficiaries
Create a business succession plan
"In my experience, the older a person is, the more they tend to focus on asset protection," said Attorney Connelly. "What they are doing is building their legacy, and that's important. But sometimes, individuals or couples are a little late when addressing some of these needs and that's when elder law kicks in. For instance, I recently assisted a couple who were in their late eighties and suddenly had serious medical needs requiring long-term care. So, you see, elder law really deals with the latter stages of life and the needs a person or couple have as they age and while they're still alive, such as, but not limited to, Medicaid planning and applications, senior transitional services, and real estate downsizing."
"Elder law really deals with the latter stages of life...such as, but not limited to, Medicaid planning and applications, senior transitional services and real estate downsizing." --- Attorney RJ Connelly III
"Seniors are rightfully concerned about protecting their legacy from exorbitant medical costs, nursing home fees, fraud, and abuse," Attorney Connelly said. "What they want is to keep the family home and assets for a spouse or the next generation."
Understanding Estate Planning
"I want to discuss estate planning a bit more in-depth," said Attorney Connelly. "First, estate planning is for adults of all ages. What an estate plan does is determine what will happen to assets upon death. The documents we use include Advance Directives and powers of attorney, trusts such as the irrevocable trust, and of course, the will, if appropriate, to ensure that the individual's wishes are followed. If there are minor children, a will identifies a guardian to guide and protect them through life until they become adults. Naming a guardian for minors is the most crucial aspect of a will."
"When putting together an estate plan, we can structure assets and property to help an estate avoid probate, minimize estate taxes, and protect disabled individuals," continued Attorney Connelly. "As I mentioned earlier, there are revocable and irrevocable trusts that can save money on estate taxes, which then leaves more to beneficiaries. But avoiding probate is the ideal." Why?
"Probate is actually an antiquated process and is slow, can be very costly, and is a public process, so it makes sense to keep as much of your estate out of probate as possible," pointed out Attorney Connelly. "Several assets can pass to heirs without being addressed in a will or a trust through beneficiary designations. Deeds, insurance plans, IRAs, and 401(k)s are all examples of beneficiary designation account types." Given that, should estate plans be updated?
"Probate is actually an antiquated process and is slow, can be very costly, and is a public process, so it makes sense to keep as much of your estate out of probate as possible." ---Attorney RJ Connelly III
"Absolutely," said Attorney Connelly. "Reviewing your designations is crucial upon major life changes, particularly death or divorce. Update your beneficiaries. If they have changed or are deceased, a court will decide the fate of your funds. Is that what you really want?"
And what about someone who has a business? "If you have a small business, estate planning is also relevant to the business’s future success, because it will need to continue to operate if something happens to the owner," Attorney Connelly points out. "A succession plan helps a future business owner or family member to run the business upon your retirement, incapacitation, or death. What we do, for example, is help structure inheritance using life insurance policies to balance inheritable assets if one adult child is particularly interested in running the business and others are not. These questions obviously need to be answered and a plan put into place before the passing of the owner otherwise succession could become quite complicated."
Understanding Elder Law
We just had an excellent explanation of estate planning, so now let's take a deeper look at elder law. "As I briefly touched on earlier, elder law focuses on the latter stages of life," said Attorney Connelly. "This area of the law anticipates future medical needs, including long-term care, or alternatives such as aging in place with Home Health Aides providing care to ensure a senior can live a long, healthy, financially secure life. We also research insurance products that offer long-term care and aging-in-place insurance packages."
Individuals are living longer today which means that available resources must last longer, so just how does Connelly Law help make this happen? "We know how to help individuals qualify for Medicaid or other government benefits while allowing them to keep a portion of their assets," stated Attorney Connelly. "We also support them through Medicaid hearings and appeals, should the need arise."
"We also help protect individuals, within the boundaries of all legal, ethical and equitable boundaries, from elder exploitation or abuse as they become older and caring for themselves becomes difficult," Attorney Connelly continued. "What we can do is designate a durable power of attorney (DPOA) for property and financial affairs and another for healthcare, permitting representatives to oversee and protect seniors when they are no longer able to take care of themselves."
DPOAs are documents used in estate planning. Without a power of attorney, elder law and estate planning can assist with guardianship and conservatorship, which, as pointed out by Attorney Connelly, is a "less desirable course of action."