By Ronald A. Fatoullah, Esq. and Eva Schwechter, Esq.
{3:58 minutes to read} Most people understand that estate planning is something that they will need to address at some point in their lives, but many push it off for as long as possible. It is an understandable reaction, as it can be difficult to contemplate how one's assets should be allocated after death, and who should be appointed to make decisions in case the person becomes incapacitated. However, it cannot be stressed enough how important it is not to procrastinate in taking care of one's estate plan; early planning can save a person a significant amount of time and money in the long run.
Individuals planning for long-term care understand that in order to qualify for Medicaid, they cannot own non-exempt assets in excess of the applicable Medicaid resource threshold ($15,150 in 2018). Many are familiar with the 5-year lookback for all transfers effected prior to qualifying for nursing home Medicaid. Any gifts made by an individual prior to five years from the Medicaid application will be beyond the purview of Medicaid. Typically, the best way to protect one's assets is to transfer such assets to an Irrevocable Medicaid Asset Preservation Trust. Transferring one's assets to the Medicaid trust starts the five-year clock ticking for Medicaid nursing home eligibility. Therefore, once individuals approach the age of 70, it is recommended that they look into the option of an irrevocable trust to protect their assets should they require Medicaid in the future.
Additionally, all individuals, regardless of age, should plan for the possibility of incapacity. There are several essential documents to help handle a person's affairs once he has become incapacitated. The Power of Attorney is the most crucial document. It allows a person to appoint someone to make financial decisions on his behalf in the unfortunate event that he becomes incapacitated. Without a Power of Attorney, family members and loved ones would be unable to pay an individual's bills, manage his household, attend to issues involving real property, or assist him in qualifying for government benefits such as Medicare and Medicaid without going to court and initiating a guardianship, which can be a time-consuming and expensive process.
Another essential document is a Health Care Proxy. A Health Care Proxy allows a person to appoint someone else to serve as an agent for medical decisions. It ensures that an individual's specific medical treatment instructions are carried out. In general, a Health Care Proxy takes effect only when someone requires medical treatment and a physician determines that the individual is unable to communicate his wishes concerning treatment. This document is of specific importance if the person one wishes to appoint as an agent is not an immediate family member.
The importance of preparing a Last Will and Testament cannot be overlooked. A Will designates who will receive a person's property on his passing. Additionally, a person may want to avoid probate or tax consequences by placing his assets into a Trust. A person's Last Will and Testament is his legally binding statement on who will receive his property upon his demise, while a Trust is a mechanism for passing one's property outside of the probate system. Once a person is deemed incapacitated, he will no longer be able to execute a Will himself; in some cases, a Trust can still be prepared via the Power of Attorney. For both a Will and a Trust, it is preferable to execute these documents as early as possible, in order to make sure that one's estate is distributed according to one's wishes.
Creating and implementing an estate plan now will only serve to help you and your loved ones later on. An estate planning and elder care attorney should be contacted for assistance in developing an appropriate plan and drafting all necessary documents.
Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills, and real estate. Eva Schwechter is an elder law attorney with the firm. The law firm can be reached at 718-261-1700, 516-466-4422, or toll-free at 1-877-ELDER-LAW or 1-877-ESTATES. Mr. Fatoullah is also a partner with Advice Period, a wealth management firm, and he can be reached at 424-256-7273.
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