On the front page of the Springfield State-Journal Register this morning, there is an article about the new Medicaid law changes and how they will impact families. Joshua was quoted several times in the article and a big illustration summary of the law, states at the bottom “Source: Joshua Becker of Edwards Group LLC”. The reporter, Dean Olsen, came out to our office earlier this week to talk to him about the new law.
Aging Trends and Obstacles of Legacy and Control
There are some things going on in our society now that makes aging, and the way families deal with it, different than it used to be. The issues below are things I see my clients facing as we discuss planning for aging and disability.
1. Better healthcare and longer life expectancy. That’s a good thing, right? Yes, but it leads to some challenges. If you live longer, your health issues may cause you to run out of money, your declining health may dramatically reduce your quality of life, or there’s even a chance your children may face declining health or even pass away before you do.
2. Earlier retirement. People are living longer, but retiring earlier. In 1910, the average retirement age was 74 years, meaning people often worked until they passed away or had to quit for health reasons. In 2002, the average retirement age was 62. Isn’t it nice to retire early? Yes, but it also leads to more planning pitfalls, i.e. more years to potentially get bored, lonely, or run out of money.
3. Families are more scattered. I know some people who have several households within the same family living on the same street. This is rare. More common is that parents have children scattered around different cities, different states, or even different ends of the country. When the family is so spread out, what does that mean for the parents as they age and need assistance? The magazine Christianity Today recently had a column (“Honor Thy Father” for Grownups) about honoring your parents by taking care of them in their old age. How does a family do that when there are 1000’s of miles in between? Often it means delegating the day to day assistance to professional care givers or medical personnel.
4. Communication between generations. David Solie’s book “How to Say it to Seniors: Closing the Communication Gap with our Elders” discusses the two main tasks facing older adults: how to maintain control and how to leave a legacy. Those issues can lead to both conflict as well as rewarding and meaningful conversations.
Let’s think about control
As a person ages, they are faced with losing control. Loss of health, friends, social status, ability to work, driving, choosing where they live, and control of money. All these evaporate as the years tick by. As they are already facing these things slipping away, along comes one of their kids. And what is he telling them? Stop driving, move to assisted living, go to the doctor, eat better, etc.
Is it any wonder that the older generation balks at the advice sometimes? Even if the advice is logical and right on target, it is still another threat to their independence and control. The control is already slipping away naturally and then comes a child wanting to (seemingly) speed up that loss. When a child pushes their elderly parent to make the “right” decision about some life circumstance, it can lead to frustration on both sides, with both feeling unappreciated.
Some people learn from experience that trying to convince our elders with logical arguments will get no where when the elder sees it as a threat to their independence and control. The author, David Solie, says we should stop fighting for control and instead be there to assist. When an older person is allowed the room to make a decision they will often come to a conclusion much more quickly than if they were pushed.
Those in the younger generation are constantly pushing forward to the next new thing. Older adults are sometimes faced with hanging on tight to avoid losing what they already have. Remembering each generation’s different perspective will hopefully reduce the frustration and conflict in those already difficult conversations.
Leaving a legacy
Unfortunately, some seniors spend so much energy and effort trying to maintain control that they never get to the second task of aging – reviewing their legacy. Leaving a legacy involves reflecting on life and how we will be (or want to be) remembered. Reflection means slowing down and focusing on past details. True reflection means a lack of urgency about current tasks.
This lack of urgency is another obstacle to a child pushing a parent to make decisions about a new living arrangement or some other decision that “must be made right now.”
For all us overly busy people, measuring our worth on errands done, emails sent, and whether we are caught up on our facebook status, it may be hard to relax and drop our task orientation.
However, when you hear an older person repeating a story or going into exhaustive detail, listen! You might see how the values in the story reflect the legacy that the storyteller wants to leave and how they would like to be remembered.
Here are some things to consider for yourself as you look at getting older. They are in no particular order, just my random thoughts from years of working with families facing these situations.
1. Are you having discussions about how you want to be cared for as you get older? Talk about it. Better yet, put your wishes down in legal documents so people are clear what you want.
2. Is your family prepared to handle things without your help, whether financially or otherwise? If not, you better make doubly sure things are set up right, so they get the assistance they need.
3. Have you lined up the financial resources needed if you became disabled? Such as disability insurance (at work or individual), long term care insurance, emergency fund savings. Do you have too much debt? Do you really want to be retired or facing a disability with credit card debt or a mortgage that’s not paid off?
4. Who is going to help you with healthcare decisions? Who will encourage you to go to the doctor? Who will go to the appointments with you to make sure you stay as healthy as you can for as long as you can?
5. Are you spending too much? How does your income, savings, and spending line up if you look out a few years? Have you calculated how your savings will grow or shrink based on your current spending level? or do you need to have a professional help you do that?
6. Are you spending too little? You have worked hard and saved your money. It’s OK to spend some and enjoy yourself by traveling or other things you enjoy. Or, if you truly have more income than you need and can spend, consider using those funds to increase what you leave at death. For instance, if you have IRA distributions you have to take (after age 70.5), use those distributions to pay life insurance premiums. Then leave the life insurance to your loved ones or a charity you believe in. When we run statistical projections for clients considering life insurance, they almost always show that a person leaves more money at death by purchasing life insurance. If you really don’t need the money, parlay it into a bigger chunk with life insurance.
7. Never say never. Transitions and change are difficult. Are you laying down a gauntlet by saying “I never will…”? Instead, make a plan so you can enjoy the most freedom and as full a life as possible for as long as possible.
8. Are you willing to make a transition sooner than necessary so you can avoid losing control? By getting “greedy” and holding on too long, sometimes people can end up losing their independence more quickly. For example, a grandmother leaves the family home earlier than anyone thinks she needs to, and enters a retirement community, where she has less stress of home upkeep, and more social opportunity that keeps her young. Another grandmother waits too long, goes downhill at home by herself, gets hurt by falling, declines by not eating right. Then when she is later forced to move to another living arrangement, she can’t enjoy the people or activities there because of declining health. Remember, there are endless variations to the type of retirement community or assistance a person can choose. Make choices while you still have choices, instead of having those choices made for you in a crisis.
9. Make gifts while you are around to see someone enjoy them. Gifts to your church or charity. Gifts to family (especially of heirlooms where you can share the story behind them). If you can, give some money and things away while you are still healthy so you can see how they bring joy and benefit to those who received it. To learn more about charitable giving, click HERE.
10. The ultimate question. I personally can never think about getting older without thinking about the ultimate question – what is there beyond this life? I believe that faith in Jesus Christ leads to eternal life.
It’s my job to use whatever tools will best get the job done for the client. What will work best to build the plan the client wants?
Although it’s not the client’s job to understand all the tools that we use in the plan, most clients end up with a basic understanding of how a living trust works by the time we are done designing the plan.
Living Trust – not just to avoid probate
In most plans, a living trust is the most useful tool to accomplish a lot of important goals. The living trust does help a client avoid probate, if used properly. This has been a big focus over the years by both attorneys and clients. But that’s only the beginning.
Disability Planning: Don’t settle for a “blank check” power of attorney
The living trust is also the best vehicle to help do detailed disability planning. Powers of Attorney typically give a power as a “blank check” with no guidance, but a living trust is different. A living trust allows you to do disability planning that gives a lot of details about how you want to be cared for, who will manage the funds while you are disabled, who can they spend money on during your disability, and who decides whether you are disabled in the first place. The power of attorney simply grants raw power without much guidance about how to use it. A living trust grants similar power but then can give lots of guidance, procedures, preferences, and instructions to be used by those managing your money when you are too sick to do it.
The goal of disability planning within a living trust is to have you and your family cared for during your disability in the same way you would have done it yourself, if you had been able.
Maybe you have wondered, “What are the options for my family to pay for nursing and long term care costs?”
There are 5 basic ways to handle it.
1. Stay at home without outside help. As long as one spouse is healthy, this works fine. But too often I see the caregiver spouse start having health issues, possibly brought on by the stress of 24-hour care for their loved one.
2. Move in with family and avoid the expense altogether. Just tell them to get your room ready, you’re on your way! This option works great for some families, but not so great for others. And it’s not just the younger generation that has the concerns. Often, my older clients say they don’t want to be a burden to their kids or put stress on them. Plus, there are some health concerns that are just beyond what a family can handle at home on their own.
3. Spend your life savings, either on nursing help at home or in a facility.
4. Let the government pay for it. Too many times, I have heard people say, “I’ll give all my stuff to my kids and let the government pay for my nursing home.” Unfortunately, there are some kinks in this plan.
If you give your money away, you really have to give it AWAY. This means your kids can waste it all, the money can be exposed if your child gets divorced, or can be at risk if they have financial problems such as getting sued, having a downturn in business or getting laid off.
You can’t just give all your money away and then apply for Medicaid to get the government to pay for your nursing care. If you give assets away, it may impact your application if you apply within 5 years after the gift (5 years according to federal law – Illinois is still at 3 year “look back” because they are late in complying with the federal requirement).
Even if you get on Medicaid, you have limited options. The government won’t pay for home care and only pays for the bare minimum of care in a nursing home that may not have been your first choice. I’m sure it’s no surprise that the nicest nursing homes don’t take government aid, they only take private payments.
5. Buy long term care insurance. If you need long term care, whose money would you rather spend? The insurance company’s or yours (which was intended to be your kid’s inheritance)? Plus, certain long term care policies allow you to use the funds to hire help at home, so you can avoid a nursing home altogether. In addition, many people are exploring hybrid long term care benefits, where they purchase an annuity or life insurance policy that can be accessed for nursing costs if necessary.
We can help you sort out these options. The earlier you start planning the better. If you would like to start planning now for nursing home costs, our popular Long-Term Care Essentials Workshop is a great place to start. This free workshop will talk about planning for care, protecting your assets and myths about Medicaid qualification. Find out more about the workshop HERE.
However, it’s never too late to plan. Even if you have a loved one in a nursing home using their savings to pay for it, call us at (217) 726-9200. There are legal and financial strategies that may be able to protect some of the funds for the family.
For more information about general planning, check out our article “Getting Old Ain’t For Sissies: 10 Things to Consider As You Get Older” HERE.
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