Long Range Planning vs. Crisis Action

A certain percentage of the elderly are going to be faced with a health care problem
that requires payment for long time care. Those services are not cheap, even if in the home, instead of an institution. What long range planning can you do so that your family is prepared for a sudden medical event such as a stroke, or gradual debilitation due to physical or cognitive decline?

The first step is to recognize that debilitation or death can happen to any of us, young or old. The second step is to get health care and exercise. The third step is having financial and legal documents in place so that your spouse, children or other trusted person can handle decisions for you if you cannot. A living will, often called a healthcare directive is a must.

Whether you are twenty five or ninety five, you want that reliable family member to make health care decisions if you are unconscious, or otherwise unable to make them yourself. And it is wise to have a backup, in case the first person you choose becomes incapable or dies, that way a court appointed conservator will not be necessary, because that is what will happen if you have not named the people you want in a health care directive.

The next step is to name your spouse, or a child or another reliable person as your agent under a durable power of attorney, to handle all your financial affairs if you cannot. It’s fairly safe to say that any typical husband or wife can save all their assets if one of them suddenly needs long term care. To do that the power of attorney should permit gift transfer of assets to spouse, or children, or other persons you choose. It is critical to have language that allows a court to issue a Qualified Domestic Relations Order, which authorizes a transfer of qualified money, such as IRA’s, and 401K’s into the name of the healthy spouse without paying income tax. Many people have a huge part of their retirement nest egg in such assets, and the ability to transfer them to the healthy spouse, without paying income taxes is a huge step to keep the healthy spouse out of the poor house.

In addition, depending on age, health and martial situation of children and grandchildren, a standard will may not be enough. For example, if one spouse is likely to need long term care, it is ideal for the healthy spouse to do a will with a trust inside it, that can protect a substantial portion of the family’s life savings if the healthy spouse dies before the sick one.

If families have indications that long term care may be needed, long range planning
would include getting comprehensive advice on what care is available at home, where it can be obtained, and what government programs, such as VA Aid and Attendance, the Connecticut Home Care Program for Elders, or Medicaid can pay for that care. This is where long range planning really pays off because if solid planning is done, these government programs can be the difference between a spouse, or a parent staying home, or having no option but a nursing home.

The primary goal of long range planning is to keep a loved one in the best living situation possible. The secondary goal is to save the families life savings for the healthy spouse or the children. If proper long range planning is done, both goals can be met.