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Planning for Incapacity, Long-Term Care and Death
By Kevin Kirkevold, Attorney at Law, Yakima, Washington

Attorneys who specialize in elder law are often asked to advise clients regarding issues associated with incapacity, long-term care and death. Happily, with proper planning, much can be done to mitigate the problems associated with these events.

As we grow older, one challenge that we may have to meet involves diminished capacity. Whether this takes the form of increasing physical frailty or decreasing mental ability, much can be done to ease the burdens imposed by such circumstances. The preferred solution to issues regarding incapacity is to have a comprehensive Durable Power of Attorney drafted to meet an individual's specific needs. An appropriate Durable Power of Attorney can be prepared to deal with management of business or financial affairs, as well as with health care needs. Usually the Durable Power of Attorney becomes effective upon incapacity.

A directive to Physicians or Living Will is used to authorize the removal of life-support systems if one is in a permanent vegetative state, or is terminally ill with death likely within a reasonably short period of time. This directive allows a person, while he or she is competent, to authorize removal of life-support systems. Thus, family members will not have to make that difficult decision.

When advance planning has not taken place, a guardianship may be needed to manage the personal and financial affairs of an incapacitated person. This is an expensive and time consuming legal proceeding, especially when compared to the time and cost associated with the preparation of a Durable Power of Attorney. But a guardianship does impose specific legal duties and obligations on the guardian, as well as provide oversight by the Superior Court.

Living Trusts can also be used to deal with issues associated with incapacity, as well as estate planning. A Care Management Trust can be particularly helpful in this regard.

Long-term care planning can be a critical issue facing many seniors, and is an area where an Elder Law Attorney can be extremely helpful. Levels of care run from independent in-home living; to independent in-home living with assistance; to living in an assisted living facility or adult family home; to living in a nursing home. Costs increase depending on the level of care. An assisted living facility can cost $2,500 per month or more; and a nursing home can cost $7,000 per month or more. The average cost of nursing home care in Washington, according to the most recent survey by the Washington State Department of Social and Health Services, is almost $7,500 per month.

The Tax Reform Act establishing the $5,000,000 Federal Estate Tax threshold became effective January 1, 2011 and it will expire December 31, 2012. Absent further congressional action, tax rates will rise and exemptions will plummet in 2013.

There are four main ways to cover these staggering costs -
  • Private pay, out of one's hard-earned resources;
  • Nursing home long-term care insurance;
  • Medicare, a very limited program which among other things, requires three days hospitalization prior to admittance to a nursing home; and
  • Medicaid, a federal program administered by Washington State Department of Social and Health Services.
The rules and regulations associated with obtaining Medicaid eligibility are quite complex, but a skilled Elder Law Attorney can be of invaluable assistance. Those who go it alone, or rely on the advice of someone not experienced in Medicaid planning, can easily run afoul of the law with consequent, negative results as far as eligibility is concerned.
How should you plan for the consequences associated with death? Here, as with incapacity and long-term care planning, it is better to plan ahead rather than simply react. By such preplanning you insure that your estate passes to the person(s) you want it to, and that your affairs are managed by someone you trust. Pre-planning can also minimize taxes and expenses, and insure that actions are taken in an expeditious manner.

The primary estate planning document for most people is a Will. In addition to this, married couples in the State of Washington can execute a Community Property Agreement, which transfers all of the deceased person's interest in property to his/her spouse. An alternative is a Living Trust. This type of document has received increasing attention in the media and advertising. These trusts avoid the costs of probate and possibly taxes - compelling arguments for the uninformed. While probate costs in some states may be high, Washington State probate laws insure the expedited handling of a person's estate at a reasonable expense (often times less than the cost of establishing the Living Trust). Likewise, estate taxes only become a potential issue for those individuals whose estate exceeds $3,500,000. With the enactment of the Economic Growth & Tax Relief Reconciliation Act of 2001, this figure has gradually increased through 2009 to $3,500,000. This law will become ineffective after 2010, absent reenactment by future congresses. Nevertheless, the vast majority of people do not have to worry about estate taxes. Be proactive rather than reactive and seek the advice of an attorney skilled in handling problems affecting seniors. It will save you money, stress, time and energy.
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