By WILLIAM B. HOWELL
When planning for our personal and family future, considering the things that could befall us physically, there are several items to consider. Looked at simplistically, there are three situations that need your attention.
Death. When you pass away, any assets that you may own at the time will need to be dealt with. The simple ways of putting someone’s name on as a beneficiary may be satisfactory, or it may lead to complications, particularly if that person passes away before you do. There may be court involvement (probate of your will) that you would just as soon pass up, and there may be other issues that you would prefer your family to not have to deal with.
Some people elect to have a Living Trust as a method of avoiding probate and providing for the distribution that they choose without court involvement, delay, and expense.
Incapacitation. Many of us will become incapacitated due to a stroke, or Alzheimer’s disease, or other types of dementia. What would happen if you should become incapacitated for a period of time before you pass away, unable to manage your personal affairs, pay your bills, or handle your assets? Who would take over? And, more importantly, how they would be able to act on your behalf.
Some people rely upon a Durable Power of Attorney, and that will many times suffice, but not always. No one under our state law is required to honor a Power of Attorney, regardless of how well written. Some people elect to put someone else’s name on their account so that named person can deal with their assets if they become incapacitated. While that has a disarmingly simple sound, it can lead to big problems because that action exposes the assets to that named person’s creditors—be it their divorce, car wreck, bankruptcy, or whatever.
Many have chosen to use a Living Trust to grant authority to a trustee to be able to handle their business affairs in the event they become incapacitated, and to do so without the complications of other alternate methods. In short, a Living Trust cannot be turned down as a Power of Attorney can.
Nursing Home Care. Being required to be cared for in a nursing home is not going to happen to everyone, but in the future—based upon current projections—the percentage of people that will be looking at spending some time in a nursing home is approaching 50 percent.
The question then arises: How will you pay for it? This can be a very expensive proposition. There are three ways of paying for nursing home care.
The most popular method and the one that most people think they will utilize is referred to as “private pay.” That means paying out of your assets for your long-term care. That may be an alternative if you have lots of money and if you don’t mind spending it that way.
Another alternative, and one becoming increasingly popular, is a policy of long-term care insurance. This is a way of paying for that nursing home stay without depleting your own resources.
Of course, the third way is to become totally impoverished (which most people in the private pay situation do eventually) and then they have their nursing home care paid for by the government under the Medicaid program. There are some planning options for this last alternative, but they must be done with great care and precision.
Planning in any of the above three areas is imperative. It is important not only for your well-being, but for the well-being of your family—and, most of all, for your peace of mind.