Overcoming Emotions: Moving Mom to a Nursing Home

Q. My aging mother has lived in her home since I was a child. My family loved the neighborhood so much that we never moved, and when I got married and had my own family, we bought a house a few blocks away. Now, dad’s been gone for many years, and mom has had home health care for the last several years, along with me acting as her primary caregiver. But now, mom’s dementia has gotten worse to the point where she’ll likely need nursing care in the not-so-distant future for her physical ailments and mental decline.

In my opinion, a bed in a facility with 24-hour supervision would ensure greater safety for her — but at the same time — less freedom for her and more guilt for me. My wife, siblings, and most of mom’s close friends agree with my assessment of the situation. When I spoke with my mother about this, she also seemed to be accepting of the situation. Right now, I am feeling a mix of relief and sadness, and am having trouble overcoming the emotions involved with this move. It’s hard to accept mom moving out of the family home and into a nursing home, and it’s also hard to relinquish my caregiving role and admit failure. Do you have any suggestions?

————-

A. Many family caregivers become emotional over nursing home placement. Some regard it as a failure to care for a loved one, while others see it as the ultimate loving and responsible act when safety becomes paramount. Some hold both views and feel powerfully conflicted.

A five-year study explored the effect of long-term care placement on 180 family caregivers (Schulz et al., 2004). Family caregivers were assessed both before and after their relative was placed in a long-term care facility to determine the impact of this transition on the caregivers.  Despite the anxiety, stress, and negative perceptions of the situation that many of them had beforehand, the following occurred for the majority of the caregivers:

● Involvement with Loved Ones: Caregiving family members remained highly involved with their relatives following admission to a long-term care facility. Following placement, about half of spousal caregivers visited daily and an additional 45% reported at least weekly visits. Among non-spousal family caregivers, a quarter visited daily and an additional two-thirds report weekly visits.

● Performing Caregiving Tasks: The majority of caregivers who visited their relatives on a regular basis performed tasks similar to those carried out when the care recipient was living at home, such as managing money, arranging medical care and transportation, and providing social support. More than 50% of both spousal and non-spousal caregivers report participating in the physical care of the resident.  In addition to visiting and participating in care following placement, family caregivers took on new tasks such as interacting with administration and staff of the facility as the advocate for their loved ones.

● Anxiety/Stress Relief: Family caregivers continued to experience some stress (but to a lesser degree than before), despite favorable impressions of the care their family member was receiving and an improvement in their own social life.

How to Deal with the Stress and Anxiety

Most caregivers feel it’s a privilege to care for their loved one, and don’t necessarily want to be relieved of the job of providing the care, even if it’s physically and emotionally draining, but often it’s inevitable. Acknowledging the possible mix of emotions including grief, loss, guilt, and relief, may allow for a healthier adjustment after nursing home placement of a loved one.

Here are thoughts for dealing with the many emotions that arise around this difficult family decision:

● Try looking at the situation differently: Rather than focusing on “your failure as a caregiver,” understand that sometimes professional care is necessary for the safety or comfort of your loved one and/or for you to have some life apart from caregiving.

● Acknowledge that you’re coping with a significant adjustment: While this doesn’t change the situation, it can help to give yourself permission to pause and understand the challenge you’re facing.

● Practice letting go: If your loved one is being well cared for, do what you can for your loved one, and then move forward with your own life.

● Reassure yourself that your job is to provide the right care:  The “right” plan should meet a parent’s needs now and in the future, while taking into account the needs and capabilities of other family members. If the care that best meets that formula is nursing home placement, then that is the prudent choice for everyone.

● Help your loved one adjust to the facility: Work together to identify meaningful activities and routines for her to help facilitate the adjustment.

● Find little, and perhaps new, ways to express your care and love. Maybe you can bring the newspaper, pictures of your kids, or flowers to your mom to brighten up her room.

● Know that caregiving changes but continues: You may no longer need to administer your mother’s medication or cook her meals, but you can still make sure her nursing home room is clean, her nurse’s aides are responsive to her, and that she is reasonably content. You can still help your mother live as fully and safely as possible as she ages.

Medicaid Complexity in Virginia and other States

Nursing homes in the metro DC area cost between $10,000 – $12,000 a month. This amount is catastrophic for most of us. The Medicaid program is our country’s largest health and long-term care benefits program, covering one in six Americans, including 70% of nursing home residents and 20% of persons under age 65 with chronic disabilities. Unfortunately, Medicaid laws are the most complex and confusing laws in existence, and impossible to understand without highly experienced legal assistance. Without proper planning and legal advice from an experienced Elder Law attorney, such as myself, many people spend much more than they should on long-term care, and unnecessarily jeopardize their future care and well-being, as well as the security of their family. Please read the Medicaid Complexity page on our Website for more details.

Medicaid Planning in Virginia and other States.

Medicaid planning can be started while you are still able to make legal and financial decisions, or can be initiated by an adult child acting as agent under a properly-drafted Power of Attorney, even if you are already in a nursing home or receiving other long-term care.  In fact, the majority of our Life Care Planning and Medicaid Asset Protection clients come to us when nursing home care is already in place or is imminent.

To protect your family’s hard-earned assets from the disastrous costs of nursing homes in our area, the best time to create your own long-term care strategy is NOW.  Generally, the earlier someone plans for long-term care needs, the better.  But it is never too late to begin the process of Long-term Care Planning, also called Lifecare Planning and Medicaid Asset Protection Planning.

If you have a family member nearing the need for long-term care or already getting long-term care or if you have not done Long-Term Care Planning, Estate Planning, or Incapacity Planning (or had your Planning documents reviewed in the past several years), please call us to make an appointment for a no-cost consultation:

Fairfax Elder Law: 703-691-1888
Fredericksburg Elder Law: 540-479-1435
Rockville Elder Law: 301-519-8041
DC Elder Law: 202-587-2797

Medicare Recipients Will Be Less Vulnerable to Sticker Shock in Hospitals

Over the course of a day or so, Karen’s right arm began feeling weak and her speech began to slur. She was convinced she was having a stroke, so she called 911 and was rushed to the nearest emergency room. She remained in the hospital for nearly 48 hours to undergo testing, since it was unclear whether she had a stroke, a fainting spell, or something else. She assumed she was admitted, due to the longevity of the stay, the tests that were run, and the attention from physicians. It turns out she was in “observation status,” or an outpatient designation used to monitor patients during periods of medical uncertainty. She found this out the hard way, when she received a hefty bill in the mail (none of which was covered by Medicare).

For Medicare beneficiaries such as Karen, hospitals are “observing” without admitting – sometimes for more than 48 hours. In the past, beneficiaries may subsequently receive short-term rehabilitative care in a skilled nursing facility, without realizing that Medicare will not pay for it and get stuck with out-of-pocket costs that can amount to many thousands of dollars. However, starting on August 7, a new law will go into effect that makes it mandatory for hospitals to notify patients whether they are in “observation status.”

The NOTICE Act Officially Goes into Effect in Less than a Month

Last year, President Obama signed the NOTICE Act into law, requiring hospitals to inform Medicare patients who are in the hospital under outpatient observation status that they haven’t actually been “admitted” to the hospital and what that means in terms of cost-sharing requirements and subsequent coverage eligibility.
The law aims to eliminate the confusion and surprise of out-of-pocket costs for Medicare beneficiaries who might not realize that simply spending the night in the hospital doesn’t make one an inpatient—and may leave one vulnerable to unexpected charges.

As a reminder, under the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act:

• Medicare patients who have been in the hospital for more than 24 hours are required to be notified of their status within 36 hours of when they start receiving services as an outpatient;

• Hospitals are required to provide patients with verbal and written notification of their status and will have one year to comply with the law from the date it is enacted;

• Hospitals must explain the individual’s status as an outpatient and not as an inpatient and the reasons why;

• Hospitals are required to explain the implications of that status on services furnished (including those furnished as an inpatient), in particular the implications for cost-sharing requirements and subsequent coverage eligibility for services furnished by a skilled nursing facility;

• Notices must be written and formatted using plain language and made available in appropriate languages;

• Notices must be signed by the individual or a person acting on the individual’s behalf (representative) to acknowledge receipt of the notification, or if the individual or representative refuses to sign, the written notification is signed by the hospital staff who presented it; and

• Clinicians will also have to explain how Medicare covers people under observation and clarify that a “non-inpatient” status may have personal cost implications. The law leaves out non-observation outpatients such as emergency room patients.

Although the federal law is set to go into effect next month, a handful of states have already written laws of their own requiring hospitals to notify patients of their outpatient status.

Be Advised: The Form Might Not Tell You All You Need to Know

When it comes to providing notice to patients, the newly required form is crucially important, as it should help observation patients avoid ugly financial surprises. However, according to AARP, the form that was recently unveiled by Medicare officials does not tell patients what they really need to know.

This is why AARP says the form falls short:

• It’s confusing: Most people will have an extremely hard time understanding the form- especially explanations of Medicare’s observation coverage rules.

• No personalized explanation of status: The cookie-cutter form requires only a generic statement on why doctors are not formally admitting the patient.

• Limited usage: Non-observation outpatients do not get the form, despite facing similar financial consequences as observation patients.

Fortunately, Medicare can still fix the form to give people under observation and other outpatients clear and meaningful information before the law goes into effect, and AARP is advocating for them to do so.

You Should Still Inquire About Your Status

Remember, form or no form, if you or a loved one are in the hospital for more than a day, be sure to ask hospital personnel what your status is. Keep asking because it can be changed from day to day. If you are told you are in the hospital under observation status, you can ask the hospital doctor to be admitted as an inpatient and explain the medical reasons that you need to be admitted. This will not guarantee anything, but it can’t hurt.

Medicaid Planning in Virginia and other States.

What if you or a loved one need long-term nursing home care now or in the future? To protect your hard-earned assets from these catastrophic costs, the best time to create her own long-term care strategy is NOW. If you have not done Long-Term Care Planning, Estate Planning, or Incapacity Planning, please call us as soon as possible to make an appointment for a no-cost initial consultation:

Fairfax Elder Law: 703-691-1888
Fredericksburg Elder Law: 540-479-1435
Rockville Elder Law: 301-519-8041
DC Elder Law: 202-587-2797

Critter Corner: New Mental Health Bill Introduced in Congress

Dear Commander Bun Bun,

I am a caregiver for my brother, who has schizophrenia. I heard something about a bill to help caregivers like myself and those with mental illnesses. Do you know anything about it, and if so, can you provide information?

Thanks,

Bill Forus

—–

Dear Bill,

Nearly 10 million Americans have serious mental illness (schizophrenia, bipolar disorder, and major depression); but millions are going without treatment as families struggle to find care for loved ones.  Last week, the House voted 422-2 in favor of HR 2646, the Helping Families in Mental Health Crisis Act to help with the situation.

The Bill, which is driven by Tim Murphy, R-Pa., a clinical psychologist, is a huge step toward the first major overhaul of the federal government’s approach to mental health in years. Murphy, backed by advocacy groups all over the country, is focused on changing federal policies that make it difficult for family members to get help for a troubled relative.  Since the Sandy Hook school shootings in 2012, Murphy has lobbied his colleagues to focus more attention on early assessment and intervention.

The bill, if passed into law, would:

● target resources where they can best improve the mental health system;

● push for more dollars to combat serious mental illness;

● establish greater accountability measurements to make sure funding is used effectively, and that outcomes are improved;

● give judges an easier path to require treatment;

● amend privacy laws to make it easier for caregivers to seek treatment for mentally ill patients;

● address effective discharge planning to ensure a timely and smooth transition from the hospital to appropriate post-hospital care and services;

● provide additional psychiatric hospital beds for those experiencing an acute mental health crisis and in need of short term (less than 30 days) immediate inpatient care for patient stabilization;

● advances early intervention and prevention programs;

● provide community-based alternatives to institutionalization for those with serious mental illness, such as assisted outpatient treatment and other assisted-care community approaches;

● focus on suicide prevention;

● advance integration between primary and behavioral care; and

● increase program coordination across the federal government.

The Bill was passed by the House and was received in the Senate on July 7. Read more about the Bill here.

Hop this is helpful,

Commander Bun Bun

Help! My Husband Was Recently Diagnosed with Bipolar Disorder

Q. I was 25 years old when I met my now husband, Elliot. We became best friends and two years later, then we got married and had a baby. Fifteen years and three children later, I began to notice lots of changes in his personality and mood. He agreed to see a psychiatrist, got a second opinion from a neurologist, and ultimately his diagnosis was Bipolar II. Our marriage was thrown for a ride, with a lot of sleepless nights, thoughts of divorce, and lessons learned about trying to keep loving someone with this kind of mental illness.

Elliott’s diagnosis threw a real wrench into our lives and our planning, but I love him and want to care for him and work it out. I know you mentioned once that you have a family member who was in a similar situation. Do you have any suggestions for us, and how we can plan for the future?

A. Twenty million American families have at least one family member with special needs, including my own family.

Bipolar Disorder, also known as manic depressive illness, is a mental illness characterized by mood swings between the two psychological pulls of depression and euphoria. Bipolar II is a milder form of the disorder that is characterized by longer low periods and less dramatic manic periods.

A recent report showed about 6 million people (2.4% of people worldwide) have had a diagnosis of Bipolar Disorder at some point in their lifetime and that the U.S. has the highest lifetime rate, at 4.4%. According to Dr. Igor Galynker, director of the Family Center for Bipolar Disorder at Beth Israel Medical Center, there’s hope for most who have been diagnosed with Bipolar Disorder. “It is not curable, but it is treatable with medications and psychotherapy,” said Galynker. In other words, people with Bipolar illness, such as one of my close family members, can have productive lives like anybody else once they’re in treatment and compliant with treatment.

Caring for a Loved One with Mental Illness

Currently, as many as 8.4 million Americans are providing care to an adult with an emotional or mental health issue. In fact, according to AARP, there are about as many family caregivers of adults with mental illness as there are family caregivers of adults with dementia.

AARP reports that these mental health caregivers don’t often share their stories, because in some circles mental illness still carries a negative stigma and family members want to protect their loved ones from stereotypes and potential discrimination. Half of these caregivers say it is difficult to talk about their family member’s illness with others and that they feel alone.

This dynamic is confirmed in new research conducted by National Alliance for Caregiving (NAC) in partnership with Mental Health America and the National Alliance on Mental Illness (NAMI). Since not many real life accounts are available, the findings offer a look into what those who care for a loved one with mental health issues can expect based on participants’ responses:

  • Mental health caregivers spend an average of 32 hours a week providing support, compared to 24 hours that the average caregiver spends. That is a whole eight-hour workday more.
  • The duration of their caregiving is more than twice as long (nine years compared to four).
  • Mental health caregivers help with medications, shop, make meals, arrange transportation, manage paperwork, search for services, make appointments — and more.
  • Half say that the care recipient is completely or significantly dependent on them for financial support. It is no wonder that they report higher levels of financial strain than non-mental health caregivers.
  • 3 out of 4 report high levels of stress.
  • It is often difficult to find even basic care from a clinician with mental health expertise, or at least one with a basic understanding.
  • The majority of people receiving care (58%) are between the ages of 18-39 and it is often a parent taking on care of the adult child (45%).
  • The main conditions requiring care are bipolar disorder (25%), schizophrenia (25%), depression (22%), and anxiety (11%).
  • The majority of caregivers (55%) reported that they were included less than they felt they should have been in care conversations with their loved one’s providers.
  • Caregivers indicated that the most helpful policies or programs would be mental health service coverage parity (31%), care navigation (30%), and caregiver education (15%).
  • About half of mental health caregivers reported that their loved one was sent home “too early or too quickly” from the emergency room, hospital, or other facility after a mental health crisis situation (49%).
  • Nearly half (48%) of caregivers said it was difficult to talk with others about their loved one’s mental or emotional health issues.
  • Four in 10 caregivers struggled to find an accurate diagnosis for their loved one.
  • Families whose loved one had found an accurate diagnosis reported that it took 11.8 years, on average, to get there.
  • Treatment is also an issue. A majority of caregivers found that it was difficult to find the right drug and dose, and fewer than four in ten caregivers (37%) reported that their loved one’s medication was effective in providing the help they need.
  • Caregivers noted several barriers to accessing health care services and long-term services and supports, including day programs, peer support, case managers, in-patient treatment centers, and low availability of services in rural areas.

Resources for Caregivers of Loved Ones with Mental Illnesses

Family caregivers for adults with mental illness face remarkable challenges providing appropriate support for their loved ones. Family members often feel responsible, or may be held responsible by legal and social service systems. The burden of care can be substantial, and often lasts a lifetime for committed family members, including parents of adults with mental illness, spouses, partners, siblings and, with later onset disorders, children. Here are some resources:

Special Needs Planning

A Special Needs Trust or a variant called a Sole Discretion Trust is often an essential tool to protect a mentally ill individual’s financial future. This type of trust preserves legal eligibility for federal and state benefits by keeping assets out of the mentally ill person’s name while still allowing those assets to be used to benefit the mentally ill person. Read more here.

When it comes to special needs planning and guardianship, you want to ensure that your family member with mentally illness will remain financially secure even when you are no longer there to provide support. A Special Needs Trust is one type of vehicle that provides funds with which a mentally ill person can maintain his or her quality of life, while still remaining eligible for needs-based programs that will cover basic health and living expenses. But many people with mental illnesses such as Bipolar Disorder are never officially declared to be “disabled,” and that’s where other types of trusts such as the Sole Discretion Trust is often more appropriate for this type of special needs planning. We invite you to make an appointment for a free initial consultation to learn more about special needs planning:

Fairfax Special Needs Planning: 703-691-1888
Fredericksburg Special Needs Planning: 540-479-1435
Rockville Special Needs Planning: 301-519-8041
DC Special Needs Planning: 202-587-2797

Critter Corner: The Best Way to Leave Assets to Minor Children

Dear Commander Bun Bun,

My husband and I were talking about doing estate planning and how to provide for our minor children. Of course, we want to leave almost everything to our children, because we want to make sure that they are provided for in the event something happens to us. But we couldn’t trust them with the inheritance at this time, since they are still young and immature. If we name a guardian for our children, will that person be able to use the inheritance to take care of them? Is the Will the right vehicle to do this type of planning, or is there a different strategy you recommend?

Thanks!

Taye Kincare-Ofthem

—-

Dear Taye,

Quite often, children inherit money, real estate, stocks, CDs and other investments from their parents, grandparents, or other relatives. Many parents think that if they name a guardian for their minor children in a Will and something happens to them, the named person will automatically be able to use that inheritance to take care of the children. Unfortunately, that’s not what happens.

When the Will is probated, the court will appoint a guardian to raise the child; usually this is the person named by the parents. But the court, not the guardian, will control the inheritance until the child reaches legal age (18 in Virginia and most states). At that time, the child will receive the entire inheritance. Most parents would prefer that their children inherit at a later age, but with a “simple Will,” you don’t have that choice, nor would a “simple Will” in this situation make anything simple. Once the child attains the age of majority, the court must distribute the entire inheritance to the child in one lump sum.

A much better strategy is a Revocable Living Trust, the preferred option for most parents and grandparents. With a Revocable Living Trust, the person(s) you select as successor trustee(s), not the court, will be able to manage the inheritance for your minor children or grandchildren until they reach the age(s) you want them to inherit. In addition, each child’s needs and circumstances can be accommodated, just as you would do. And, assets that remain in the trust can stay protected from the courts, irresponsible spending, and creditors (including divorce proceedings).

To learn more about estate planning for your specific situation, you should make an appointment for a no-cost introductory consultation with Mr. Farr.

Hop to see you soon,

Commander Bun Bun

Critter Corner: The Best Way to Leave Assets to Minor Children

Dear Commander Bun Bun,

My husband and I were talking about doing estate planning and how to provide for our minor children. Of course, we want to leave almost everything to our children, because we want to make sure that they are provided for in the event something happens to us. But we couldn’t trust them with the inheritance at this time, since they are still young and immature. If we name a guardian for our children, will that person be able to use the inheritance to take care of them? Is the Will the right vehicle to do this type of planning, or is there a different strategy you recommend?

Thanks!

Taye Kincare-Ofthem

—-

Dear Taye,

Quite often, children inherit money, real estate, stocks, CDs and other investments from their parents, grandparents, or other relatives. Many parents think that if they name a guardian for their minor children in a Will and something happens to them, the named person will automatically be able to use that inheritance to take care of the children. Unfortunately, that’s not what happens.

When the Will is probated, the court will appoint a guardian to raise the child; usually this is the person named by the parents. But the court, not the guardian, will control the inheritance until the child reaches legal age (18 in Virginia and most states). At that time, the child will receive the entire inheritance. Most parents would prefer that their children inherit at a later age, but with a “simple Will,” you don’t have that choice, nor would a “simple Will” in this situation make anything simple. Once the child attains the age of majority, the court must distribute the entire inheritance to the child in one lump sum.

A much better strategy is a Revocable Living Trust, the preferred option for most parents and grandparents. With a Revocable Living Trust, the person(s) you select as successor trustee(s), not the court, will be able to manage the inheritance for your minor children or grandchildren until they reach the age(s) you want them to inherit. In addition, each child’s needs and circumstances can be accommodated, just as you would do. And, assets that remain in the trust can stay protected from the courts, irresponsible spending, and creditors (including divorce proceedings).

To learn more about estate planning for your specific situation, you should make an appointment for a no-cost introductory consultation with Mr. Farr.

Hop to see you soon,

Commander Bun Bun

Why Every College Student Should Have an Incapacity Plan

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Q. My 18-year old daughter, Madison, will be a freshman in college in the fall. At her high school graduation party, my friend Phil told me that he is already doing estate planning for his own daughter, and he told me that it is really important and I should do it for my daughter. Is this really something that a college student needs? My daughter doesn’t own any property or have any assets, except the used car I bought her for her birthday, which is actually still in my name so it doesn’t really belong to her. Does someone this young and with no assets really need an estate plan?

A. Graduating from high school and getting ready for college is an exciting time in a young adult’s life. However, with all the preparation that is necessary, most young adults and their families overlook one of the most important things they should do upon turning age 18: incapacity planning, which some attorneys call estate planning. Incapacity planning is typically done as a part of estate planning, but can also be done on a stand-alone basis outside of planning for the distribution of estate assets upon death.

Few 18-year-olds and their parents consider the need for an estate plan, simply because, as you mentioned, they do not have estates or families to plan for. However, your friend Phil is doing the right thing in being proactive. Why? Because in the eyes of the law, your daughter is now an adult, which makes having certain medical and financial documentation in place critical.

Here’s an example to help explain why: Let’s say two college students are coming home from a party and are in a car accident. One is seriously injured and unconscious. His or her mom and dad get a call that night, and jump into the car and set out for the hospital, fully expecting to talk to the doctors, sign off on medical care, and make key decisions during the child’s recovery. Although the parents expect to have a voice in the medical decisions, they come to find out that once children reach the age of majority, privacy laws generally protect their medical and financial information. In other words, parents are no longer entitled to see their child’s medical and financial records and make most decisions on their behalf.

In most cases, parents incorrectly assume that because they are paying for college or if the child is still living under their roof, that they have the right to make legal decisions, but that isn’t so once they turn 18 and become adults. The Health Insurance Portability and Accountability Act (HIPPA) protects the privacy of all adults’ medical records and may prohibit even parents from receiving medical information or making informed decisions for the child – even if that child is unconscious and unable to communicate. And, this is regardless of whether the child is living at home or is financially dependent on you.

What sometimes happens in these situations is that physicians will identify a parent as a health care advocate who has authority to make decisions on behalf of an adult child. But identifying a parent may not be easy in blended families where divorced parents and stepparents may not agree on a medical course of action. And this may happen when time is of the essence and every second counts.

Therefore, it is important for young adults to set up an incapacity plan that appoints trusted individuals to make medical and financial decisions in the event they are unable to do so.

Types of Documents a College Student Needs

At a minimum, here are the documents every college student should have:

1. Advanced Medical Directive

An Advance Medical Directive (which includes a Medical Power of Attorney) authorizes another person (called your “Medical Agent”), to make decisions with respect to your medical care in the event that you are physically or mentally unable to do so, as certified by two physicians.

This document allows a student to name an agent (presently his or her parent or parents) to receive vital healthcare information and make healthcare decisions for the student in the event the student is unable to do so, and permits a student to specify certain treatment preferences regarding such care. This document only becomes effective when a student cannot (or is unwilling) to make health decisions for himself or herself.

For added peace of mind, we register the Advance Medical Directives of our clients with DocuBank. We’ve heard too many horror stories, and we want to ensure that doctors and loved ones can immediately obtain your Advance Medical Directive so that our clients can get the best care.

2. General Financial Power of Attorney

A General Power of Attorney is the most important legal document that a person can have, and is an essential part of every Incapacity Plan and Estate Plan. A General Financial Power of Attorney (always “durable” when used in connection with estate planning) authorizes your agent, sometimes called “Attorney in Fact,” to act on your behalf and sign your name to financial and/or legal documents.

With a General Financial Power of Attorney in place, a designated agent could pay bills, handle insurance claims, maintain bank accounts, and take care of other financial matters for a young-adult, if the need arose. The power may become effective immediately or it may be “springing” – which means it only becomes effective upon the occurrence of a later event (e.g., a student’s incapacity as certified by two physicians).

3. Authorization to Disclose Protected Health Information.

The Health Insurance Portability and Accountability Act (HIPAA) sets out rules and limits on who can look at and receive an individual’s medical information. This document authorizes healthcare providers to disclose a student’s medical information to certain named individuals. In the unfortunate scenario where a student experiences a medical emergency, this document would give parents, or another named individual, the authority to receive information from healthcare providers regarding the student’s healthcare status and related information.

Why Now Is Also a Good Time to Update Your Own Estate Plan

When your child was under 18 years old, you could rest assured that, if you were to pass away before your child became an adult, your child would be taken care of by the guardian named in your Will (you do have one, right?).

Now that your child is no longer a minor, it is an ideal time to rethink your estate plan. Why? Because if you pass away, your child will not automatically be sent to live with a guardian. This could be a scary thought if your child still struggles to cook ramen noodles.

How A Trust Can Protect Your College Student

When you leave money and/or property in your Will to your college student, there’s a good chance your child might just blow it all on frivolous purchases, because the rations part of the human brain is not fully developed until age 25. If by chance your child saves the money wisely, the could still be taken away years later by creditors or a messy divorce.

If you don’t have one already, a Revocable Living Trust gives you control over what happens to the inheritance money. It will also keep the cash out of the hands of creditors and future ex-spouses. In addition, you can use a trust to spread out the cash your college student receives over time. For example, you might want to split up the money into yearly payments, or distribute a percentage of the trust at specific ages (for example, 33% at age 25, 50% of the balance at age 30, and the remaining balance at age 35).

Another thing parents can do is to create an incentive trust to motivate your child to do well when you’re no longer around to give your famous lectures. With an incentive trust, you’ll choose a trustee to manage your trust, and distribute funds when your beneficiary meets your requirements. For example, you might want to give your children a sum of cash when they graduate college, when they get married, or when they get their first full-time job after college.

Incapacity Planning is Important for Everyone

We here at the Farr Law Firm have strategies in place to help adults of all ages plan for themselves and their loved ones, whether you’re a young-adult, a middle-aged person, or a senior. If you or members of your family have not done Incapacity Planning or Estate Planning, or if you would like to make updates to your existing planning documents, please contact us as soon as possible to make an appointment for a no-cost initial consultation:

Fairfax Estate Planning: 703-691-1888
Fredericksburg Estate Planning: 540-479-1435
Rockville Estate Planning: 301-519-8041
DC Estate Planning: 202-587-2797

Why Every College Student Should Have an Incapacity Plan

Happy Graduate Laughing

Q. My 18-year old daughter, Madison, will be a freshman in college in the fall. At her high school graduation party, my friend Phil told me that he is already doing estate planning for his own daughter, and he told me that it is really important and I should do it for my daughter. Is this really something that a college student needs? My daughter doesn’t own any property or have any assets, except the used car I bought her for her birthday, which is actually still in my name so it doesn’t really belong to her. Does someone this young and with no assets really need an estate plan?

A. Graduating from high school and getting ready for college is an exciting time in a young adult’s life. However, with all the preparation that is necessary, most young adults and their families overlook one of the most important things they should do upon turning age 18: incapacity planning, which some attorneys call estate planning. Incapacity planning is typically done as a part of estate planning, but can also be done on a stand-alone basis outside of planning for the distribution of estate assets upon death.

Few 18-year-olds and their parents consider the need for an estate plan, simply because, as you mentioned, they do not have estates or families to plan for. However, your friend Phil is doing the right thing in being proactive. Why? Because in the eyes of the law, your daughter is now an adult, which makes having certain medical and financial documentation in place critical.

Here’s an example to help explain why: Let’s say two college students are coming home from a party and are in a car accident. One is seriously injured and unconscious. His or her mom and dad get a call that night, and jump into the car and set out for the hospital, fully expecting to talk to the doctors, sign off on medical care, and make key decisions during the child’s recovery. Although the parents expect to have a voice in the medical decisions, they come to find out that once children reach the age of majority, privacy laws generally protect their medical and financial information. In other words, parents are no longer entitled to see their child’s medical and financial records and make most decisions on their behalf.

In most cases, parents incorrectly assume that because they are paying for college or if the child is still living under their roof, that they have the right to make legal decisions, but that isn’t so once they turn 18 and become adults. The Health Insurance Portability and Accountability Act (HIPPA) protects the privacy of all adults’ medical records and may prohibit even parents from receiving medical information or making informed decisions for the child – even if that child is unconscious and unable to communicate. And, this is regardless of whether the child is living at home or is financially dependent on you.

What sometimes happens in these situations is that physicians will identify a parent as a health care advocate who has authority to make decisions on behalf of an adult child. But identifying a parent may not be easy in blended families where divorced parents and stepparents may not agree on a medical course of action. And this may happen when time is of the essence and every second counts.

Therefore, it is important for young adults to set up an incapacity plan that appoints trusted individuals to make medical and financial decisions in the event they are unable to do so.

Types of Documents a College Student Needs

At a minimum, here are the documents every college student should have:

1. Advanced Medical Directive

An Advance Medical Directive (which includes a Medical Power of Attorney) authorizes another person (called your “Medical Agent”), to make decisions with respect to your medical care in the event that you are physically or mentally unable to do so, as certified by two physicians.

This document allows a student to name an agent (presently his or her parent or parents) to receive vital healthcare information and make healthcare decisions for the student in the event the student is unable to do so, and permits a student to specify certain treatment preferences regarding such care. This document only becomes effective when a student cannot (or is unwilling) to make health decisions for himself or herself.

For added peace of mind, we register the Advance Medical Directives of our clients with DocuBank. We’ve heard too many horror stories, and we want to ensure that doctors and loved ones can immediately obtain your Advance Medical Directive so that our clients can get the best care.

2. General Financial Power of Attorney

A General Power of Attorney is the most important legal document that a person can have, and is an essential part of every Incapacity Plan and Estate Plan. A General Financial Power of Attorney (always “durable” when used in connection with estate planning) authorizes your agent, sometimes called “Attorney in Fact,” to act on your behalf and sign your name to financial and/or legal documents.

With a General Financial Power of Attorney in place, a designated agent could pay bills, handle insurance claims, maintain bank accounts, and take care of other financial matters for a young-adult, if the need arose. The power may become effective immediately or it may be “springing” – which means it only becomes effective upon the occurrence of a later event (e.g., a student’s incapacity as certified by two physicians).

3. Authorization to Disclose Protected Health Information.

The Health Insurance Portability and Accountability Act (HIPAA) sets out rules and limits on who can look at and receive an individual’s medical information. This document authorizes healthcare providers to disclose a student’s medical information to certain named individuals. In the unfortunate scenario where a student experiences a medical emergency, this document would give parents, or another named individual, the authority to receive information from healthcare providers regarding the student’s healthcare status and related information.

Why Now Is Also a Good Time to Update Your Own Estate Plan

When your child was under 18 years old, you could rest assured that, if you were to pass away before your child became an adult, your child would be taken care of by the guardian named in your Will (you do have one, right?).

Now that your child is no longer a minor, it is an ideal time to rethink your estate plan. Why? Because if you pass away, your child will not automatically be sent to live with a guardian. This could be a scary thought if your child still struggles to cook ramen noodles.

How A Trust Can Protect Your College Student

When you leave money and/or property in your Will to your college student, there’s a good chance your child might just blow it all on frivolous purchases, because the rations part of the human brain is not fully developed until age 25. If by chance your child saves the money wisely, the could still be taken away years later by creditors or a messy divorce.

If you don’t have one already, a Revocable Living Trust gives you control over what happens to the inheritance money. It will also keep the cash out of the hands of creditors and future ex-spouses. In addition, you can use a trust to spread out the cash your college student receives over time. For example, you might want to split up the money into yearly payments, or distribute a percentage of the trust at specific ages (for example, 33% at age 25, 50% of the balance at age 30, and the remaining balance at age 35).

Another thing parents can do is to create an incentive trust to motivate your child to do well when you’re no longer around to give your famous lectures. With an incentive trust, you’ll choose a trustee to manage your trust, and distribute funds when your beneficiary meets your requirements. For example, you might want to give your children a sum of cash when they graduate college, when they get married, or when they get their first full-time job after college.

Incapacity Planning is Important for Everyone

We here at the Farr Law Firm have strategies in place to help adults of all ages plan for themselves and their loved ones, whether you’re a young-adult, a middle-aged person, or a senior. If you or members of your family have not done Incapacity Planning or Estate Planning, or if you would like to make updates to your existing planning documents, please contact us as soon as possible to make an appointment for a no-cost initial consultation:

Fairfax Estate Planning: 703-691-1888
Fredericksburg Estate Planning: 540-479-1435
Rockville Estate Planning: 301-519-8041
DC Estate Planning: 202-587-2797

Is Social Security or Medicare Running Out of Money? What the 2016 Trustees Report Has to Say

SS and med

Social Security is vital to Americans, providing workers and their families with retirement, disability, and survivors insurance benefits. Medicare is also an essential program for American seniors. Since its creation in 1965, Medicare has provided universal health care to millions. Both these programs play integral roles in our lives, and it would truly be a travesty if either of them stopped.

Each year the Trustees of the Social Security and Medicare trust funds report on the current and projected financial status of both programs. Last week, they issued their 2016 financial review of the programs, and it warns of shortfalls that could occur in the not-so-distant future.

Status of Social Security

Currently, sixty million people receive Social Security benefits totaling more than $74 billion each month, and the number of beneficiaries is expected to reach 76 million by 2025. Over the program’s 80-year history, it has collected roughly $19.0 trillion and paid out $16.1 trillion, leaving asset reserves of more than $2.8 trillion at the end of 2015 in its two trust funds. These are some of the highlights from the report, regarding Social Security:

•For now, Social Security’s trust funds are still growing. The combined trust fund assets will grow through 2019. Nevertheless, the population is aging, which makes more Americans eligible for retirement benefits, so even with interest earnings, the trust fund will gradually dwindle after 2019 and be depleted in 2034 if policymakers don’t act by then. Action in this case most likely means raising the Social Security tax rates, which is not popular politically, but is something that inevitably will need to be done.

The projected year of exhaustion is the same as last year: Social Security’s retirement and disability trust fund reserves are projected to be exhausted in 2034, the same year that was projected in last year’s Trustees Report.

What happens after the depletion of funds?: After trust fund depletion, annual revenues from the dedicated payroll tax and taxation of Social Security benefits will be sufficient to fund about three-quarters of scheduled benefits through 2090.

Social Security Cost-of-Living Adjustment (COLA) will increase slightly next year: Social Security will provide a modest cost-of-living adjustment, increasing benefits by two-tenths of 1 percent next year.

Social Security’s overall shortfall over the next 75 years is virtually unchanged from last year’s estimate of 2.68 percent of taxable payroll.

Status of Medicare

Medicare is the federal health insurance program created in 1965 for people ages 65 and over, regardless of income, medical history, or health status. Medicare plays a key role in providing health and financial security to 55 million seniors and younger people with disabilities. The program helps to pay for many medical care services, including hospitalizations, physician visits, prescription drugs, post-acute care, preventive services, and more.

The report warned of a “substantial increase” in Medicare premiums in 2017 for about 30% of beneficiaries. Under assumptions in the report, the standard premium, now $121.80 a month, would rise to $149, and the change could be announced just weeks before Election Day on Nov. 8.

The Medicare Hospital Insurance (HI) Trust Fund will have sufficient funds to cover its obligations until 2028, two years earlier than projected last year, but still 11 years later than was projected in the last report issued prior to the passage of the Affordable Care Act.

Medicare now spends an average of nearly $13,000 per beneficiary, and this figure is expected to exceed $16,000 in five years, the report said. High-cost drugs are a major driver of Medicare spending growth.

Part B of Supplementary Medical Insurance (SMI), which pays doctors’ bills and other outpatient expenses, and Part D, which provides access to prescription drug coverage, are both projected to remain adequately financed into the indefinite future because current law automatically provides financing each year to meet the next year’s expected costs.

Congress can easily close the projected funding gap by raising the Medicare payroll tax — now 1.45 percent each for employers and employees — to about 1.8 percent, or by enacting an equivalent mix of program cuts and tax increases.

As you can see, both Social Security and Medicare face long-term financing shortfalls. According to the report, although both programs don’t face an imminent crisis, policymakers should act sooner rather than later to restore long-term solvency. The sooner they act, the more fairly they can spread out the needed adjustments in revenue and benefit formulas over time, and the more confidently people can plan their work, savings, and retirement around those adjustments. Earlier action will also help elected officials minimize adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits.

Living on Social Security

The average Social Security retirement benefit is about $1,300 per month ($1,328 in 2015), and the maximum at full retirement age is more than $2,600 per month ($2,663 in 2015), but the exact amount you’ll get every month depends on how much you earned over your lifetime and how old you are when you start collecting. This isn’t much, when you consider cost-of living in this area. For suggestions on living on social security alone, please see our article on this subject.

What would happen if you or a loved one are living on Social Security alone and you or that loved one becomes incapacitated? Every adult over the age of 18 should plan ahead with an Incapacity Plan that includes a Financial Power of Attorney, an Advance Medical Directive, and an Advance Care Plan.

Medicare Doesn’t Cover Long-Term Care

Many of us don’t realize that Medicare does not pay one penny for long-term care. Medicare only pays for medical care delivered by doctors and hospitals, and in certain cases short-term rehabilitation which might take place in a nursing home.  When it comes to Medicaid, it gets very complicated to complete and file the application and, in most cases, it takes an experienced Elder Law firm, such as the Farr Law Firm, to help protect your assets first and then file for Medicaid. If you or a loved one need long-term care now or in the near future, the time to plan is now! Please call us any time to set up an appointment for a no-cost introductory consultation:

Fairfax Elder Law: 703-691-1888
Fredericksburg Elder Law: 540-479-1435
Rockville Elder Law: 301-519-8041
DC Elder Law: 202-587-2797

Critter Corner: I Am Nearing Retirement- What to Consider

Dear Angel,

The day I have been dreaming about for most of my adult life is almost here. In fact, at work yesterday, I met with human resources and my boss and started planning for my last days at work. With all this excitement comes some stress. As I near retirement, what are some things I should be considering? I want to make sure I didn’t miss anything.

Thanks!

Sue N. Imoutahere

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Dear Sue,

As your retirement date draws closer, you have probably spent some time thinking about how life will change once the day has come. If you are wondering where to begin with this part of your retirement picture, here are a few points that may help you focus:

  1. Review your living expenses: Your living expenses will probably change after you retire. Some areas, such as commuting and dry cleaning costs will decrease, and others such as travel and health care costs may go up. If you haven’t done so, it’s a good time to estimate your monthly budget and revisit it periodically, both before and after retirement.
  2. Consider your income sources: What amount of income will your IRA or employer-sponsored retirement plan provide for you? Do you have a pension? If so, what amount of income is it expected to provide? Does it provide an income stream to your survivor if you die? Social Security income and a strategy for claiming benefits need to be determined. You can obtain an estimate at the Social Security Administration’s website, ssa.gov.
  3. Consider health care and long-term care costs: As you age, health care costs often increase. Medicare will cover some of these costs but be prepared to pay deductibles, co-pays and co-insurance. Long-term care expenses may also be part of the picture at some point and can be very expensive. A review of the long-term costs in your area and how to pay for it is a must. It would be prudent to set up an appointment with Mr. Farr to discuss planning for long-term care.

Congrats on your impending retirement. I look forward to seeing you in the office!

Purrs,

Angel

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