Lately, many of our clients have been asking what’s the difference between an estate plan and elder care plan. So I wanted use this blog as an opportunity to discuss both of these and distinguish between the two. It doesn’t matter if you’re rich and famous or living paycheck to paycheck, you need to have an estate plan and elder care plan. You don’t want the government making decisions for you, and so it’s important to make a plan.
Why Do You Need an Estate Plan?
I’ve never heard of someone who intentionally wants the government deciding who gets their property when they die. That’s why everyone needs an estate plan. You may not have a large amount of assets, but most people have a home and a vehicle. Even if you only have a small amount of property, you need an estate plan to determine who is going to get it when you pass.
To further explain why you need a plan, I like to use this example of a man on his second marriage. This husband wants his two children from the first marriage to receive something when he passes. He also wants his current wife to receive something. If he doesn’t have a will, his current wife will receive one-third of his property and his children will split the other two-thirds. Instead of letting the law determine how his assets are divided, it would be better to have a will and not leave those decisions to the government.
Estate Planning Essentials
1. Durable Power of Attorney
This document, which is only effective during your lifetime, gives someone power over your property. If you are unable to make important decisions regarding your finances and property, the person you designate as your durable power of attorney will be able to do so. If you’re not able to pay your bills, this person is allowed to do it for you.
2. Advanced Directive for Healthcare
Also only effective during your lifetime, the advanced healthcare directive allows someone to make important decisions regarding your health and well-being. It appoints someone to make healthcare decisions for you if you are unable to do so. It also states whether you want to be kept alive by artificial means if you’re in a persistent vegetative state.
3. Last Will and Testament
Unlike the first two, this document is only effective upon your death. Your will determines who will be the personal representative or executor of your estate. That person will go the probate court when you pass and notify the court that they have been named as the executor of the will. The court will then appoint that person to gather the assets, pay the bills, sell any properties that need to be sold, and then distribute the property to the named beneficiaries inside the will.
Why Do You Need All Three?
Here are a few examples that help explain why all three of these estate planning documents are important. Let’s say you’re a single parent with minor children. If you’re incapacitated, who is going to pay your bills or make your medical decisions? Who is going to take care of your children if you unexpectedly pass? All those situations can be addressed with a durable power of attorney, advanced healthcare directive, and a will.
Let’s say that you have an adult child who is headed to college. Unless that child signs something saying you do, you don’t have access to their college records. You also wouldn’t be able to make medical decisions for them if something happened to them at college. Although kids in college may still be financially dependent on their parents, they still need these important documents in place. Anyone over the age of 18 needs a durable power of attorney and advanced healthcare directive.
If you don’t have a durable power of attorney and you become incapacitated, your family will have to go to the courthouse and file a petition for conservatorship. This is expensive, time consuming, and can be prevented by having the proper estate planning documents in place. Likewise, your family would have to go the courthouse and file for guardianship if you don’t have an advanced healthcare directive.
What Is An Elder Care Plan?
An elder care plan is a critical part of a senior’s long-term care. It’s often the most overlooked aspect of planning. We spend a lot of time planning home ownership, retirement, college education for our kids, vacations, and more. But the average person spends very little time thinking about long-term care planning. This often results in knee jerk reactions and having to plan in times of crisis, which is never easy.
Families need to make an elder care plan a priority to make sure their parents’ (or grandparents) health, well-being, safety, and security are handled. We help clients with elder care plans in a wide variety of ways. The first thing we do is make sure they have all the above mentioned estate planning documents in place.
Secondly, we determine how the clients will pay for long-term care if that need arises. Statistics say that 70% of us will need long-term care at some point in our lives. That could be nursing home care, at-home caregivers, or assisted living. All of these are expensive. At-home care usually costs around $5,100 a month, assisted living averages $4,500 a month, and nursing home care can be a whopping $9,000 plus a month.
And these costs don’t include your normal living expenses. If you own a house, you still have property taxes, utilities, upkeep, and maintenance costs. If you have a spouse or dependent, you need money to take care of them. You don’t want them living in poverty because you have to go into a nursing home or assisted living facility.
How Do We Create an Elder Care Plan?
To begin establishing an elder care plan, we first look at personal care. That’s one of the most important things that we address with our seniors. We want to make sure their health, maintenance, safety, and security is handled appropriately as they age. We want to make sure they have the medication management, nutrition, and meal support they need. If they’re unable to drive, we want to make sure they have someone to go buy groceries for them and take them to medical appointments.
Money management is another big one. There are far too many scams out there that take advantage of seniors. We want to make sure they don’t get caught in one of these scams and lose a significant portion of their estate. We also look at social interaction. This was a big issue during the COVID pandemic when social interaction ceased. We want to make sure seniors have social interactions because it is so vital to their mental health.
Lastly, we look at asset preservation for your parents or grandparents. We determine ways to get help paying for long-term care, so their entire estate is not depleted. We look to protect the spouse that isn’t going into long-term care, and ensure that their standard of living is preserved.
Using Checklists for An Elder Care Plan
Developing an estate plan and elder care plan with parents or grandparents can be difficult and tenuous. No one wants to talk about this stuff, but it’s necessary. We like to use checklists to make the process easier for all parties involved.
Checklists allow you to track the progress of planning. We want to start by organizing your mom and dad’s paperwork. We want to have all their legal documents in one place that’s easy to access. If their wills or other estate planning documents are outdated, we want to generate updated versions. These documents need to be in the hands of the family members responsible for executing them.
We also need a financial checklist. If your parents use online banking, make sure you know their passwords and are able to access their accounts. Also be sure to have info regarding any trusts, bank accounts, investments, credit cards, and life insurance policies they have. I recommend getting a three-ring binder to keep documents for every account they own.
Lastly, a healthcare checklist is needed. Make sure you know all your parents doctors and the medications that they take. Have their health insurance cards where they’re easy to find. Also put together a list of all your parents’ advisors. This would include accountants, tax advisors, financial advisors, and more.
In the case something happens to your parents or grandparents, we want to make sure that all the heirs have a road map for success. A solid elder car plan will do that. If you’re a co-agent with another sibling or relative, make sure both of you are on the same page about the elder care plan. Usually doctors and hospitals only like corresponding with one of the agents, so decide who will be in charge when that time comes. Although several family members may be involved, correspond ahead of time and determine who will be the one to communicate with medical staff.
Contact Us So We Can Help!
If you need assistance with an estate plan or elder care plan, complete this form or give us a call at (229) 226-8183. If you’d like to see this blog in video format, you can watch it below. Please be sure to SUBSCRIBE to our YouTube channel and click the bell notification button so that you’re notified each time we publish a new video.