A diagnosis of Alzheimer's or other form of dementia is an emotional and difficult time - not just for the person diagnosed; their entire family feels it.
As hard as it may be - it's important to do some proactive long-term care planning. A 58 year old client of mine had just been diagnosed with Alzheimer's. He was about to inherit over $700,000. We set up a Medi-Cal Asset Protection Trust (MAPT) to ensure that he will qualify for Medi-Cal and protect his assets for his children.
So it's crucial to plan as soon as possible after a diagnosis. Unfortunately, the suffering of dementia is often made more difficult when family members do not plan enough for the progression of the disease.
You Need An Effective Durable Power of Attorney In Place (a 2 page checklist form won't cut it).
Besides planning for the financing of long-term care, other documents need to be put in place, such as the Durable Power of Attorney ("DPA"). While the person still has legal capacity, they need to sign off on a Power of Attorney appointing a financial agent to act for them when they do lose capacity. Without that document in place, a family member will have to go to court to get appointed as a conservator. This a slow-moving and expensive process - something to be avoided.
The typical DPA used by many attorneys is what as referred to as the "Statutory" form - a two page checklist form where you can check off broad powers to give to your agent in the event of incapacity. This simply doesn't cut it when it comes to elder law issues, such as Medi-Cal planning and further estate planning. Our DPA has very specific provisions that permit the agent to do the types of planning we have described here. It could end up costing an estate hundreds of thousands of dollars if the right provisions are not in place. The quality of the documents matter!
Our Living Trusts Include Supplemental Needs Trust Provisions. Why That is Important.
It's never too early to plan for disability. Consider this situation: we have a married couple in their 70's; where the husband is declining with dementia. Wife suddenly dies and under their living trust, all assets pass to surviving spouse. The problem here is the surviving spouse won't qualify for Medi-Cal should the need arise for nursing home care in the next few years. What if their living trust had supplemental needs trust provisions? Instead of the trust assets passing directly to the surviving spouse - it would pass into a Supplemental Needs Trust for the benefit of surviving spouse. It would not be considered his assets for purposes of qualifying for Medi-Cal. So, should nursing home care be required - instead of a spend-down of his assets (at about $90,000 + a year); Medi-Cal would cover it.
So you see - not all living trusts are the same. And that's why it makes sense to see an attorney who not only specializes in estate planning, but also elder law.