What Is Planning For Elderly And The Disabled?

1. What Is Planning For Elderly And The Disabled? • Planning for the elderly and disabled focuses on clients or their dependents who by reason of age, disability or both, require specific health care and financial planning • This is an area that requires the practitioner to deal with a variety of personal problems and decisions of the client or dependent, often on a time sensitive basis

2. When Is Planning For The Elderly And Disabled Appropriate? • Planning should always be undertaken where, by reason of age or health, there is a real possibility the individual will become mentally or physically incapacitated • The need for this planning is often speculative • This area also covers the problems of medical care and support for persons who are unable to support themselves

3. What Are The Requirements? • Planning scenarios for the elderly and disabled include: • Provision for management of the financial affairs of the client or dependent in the event they are unable to manage it themselves • Durable powers of attorney • Revocable living trusts • Nominations of a guardian or conservator • Providing for support of individuals who, due to age or health are no longer self-supporting and have not accumulated sufficient assets to provide for their cost of living

4. What Are The Requirements? • Planning scenarios for the elderly and disabled include: • Providing for long-term healthcare, including possible institutional care • Protecting property from claims of the state or federal government for reimbursement of healthcare costs • Planning for the dramatically different tax results depending on the client’s year of death, between now and 2011

5. Tax Implications • Planning in this area is not particularly tax driven other than the changing estate and gift tax rules • Special tax benefits for the elderly that should not be overlooked • Persons over 65 and those who are blind are entitled to an increase in their standard income tax deduction • Widows and widowers may use joint income tax returns for two years following the death of a spouse • Taxpayers supporting dependent family members may be entitled to additional dependency exemptions on their income tax return

6. Tax Implications • Special tax benefits for the elderly that should not be overlooked (cont’d) • There is a dependent care credit available for certain employment related expenses • Taxpayers (of any age) who sell their personal residences are entitled to an exclusion once every two years for up to $250,000 ( $500,000 if married filing jointly) of gain realized on the sale

7. Issues In Community Property States • As a general rule, each spouse has a legal duty to support the other spouse, and both community and separate property can be used to provide for such support • Community property assets can be used to pay the debts and obligations of either spouse incurred during the marriage

8. Issues In Community Property States (cont’d) • If one spouse becomes incompetent, the law varies as to whether the other spouse may take over sole management of the assets or has to work with a guardian or conservator for the incompetent spouse

9. What Federal Programs Are Available? • Social Security disability benefits • Supplemental Security Income (SSI) for needy persons who are elderly, blind, or otherwise disabled • Medicare, which provides medical benefits on the basis of age of the person • Medicaid, which provides medical assistance based on need • Medigap is private insurance purchased to cover some or all of the expenses not covered in Medicare Part A or Part B

10. What Is A Special Needs Trust? • A trust established by a client who has a disabled child receiving SSI benefits, or other forms of state or federal assistance • The purpose is to permit payments by the trustee to cover non-basic needs of the disabled person, which will not affect their eligibility for public assistance

11. What Are The Eligibility Requirements For Social Security Disability Benefits? • Any individual who is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment may be entitled to Social Security benefits if the individual: • Is under age 65 • Has been disabled for 12 months, is expected to be disabled for at least 12 months, or has a disability which is expected to result in death

12. What Are The Eligibility Requirements For Social Security Disability Benefits? (cont’d) • Any individual who is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment may be entitled to Social Security benefits if the individual: • Is “fully insured” under Social Security • Has 10 years (40 quarters) of employment under Social Security, or has worked under Social Security for as many quarters as there are years since reaching age 21 and before the year in which disability occurred

13. What Are The Eligibility Requirements For Social Security Disability Benefits? (cont’d) • Any individual who is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment may be entitled to Social Security benefits if the individual: • Has worked under Social Security for at least five of the ten years (20 out of 40 quarters) just before becoming disabled, or if disability begins before age 31 but after age 24, for at least one-half of the quarters after reaching age 21 and before becoming disabled (but not less than six) • Files an application for disability benefits, and • Completes a five month waiting period or is exempt from the waiting period

14. Guardianship or Conservatorship • Guardianship is a fiduciary relationship created by law for the purpose of enabling one person to manage the person, or the estate, or both, of another person (the ward) when the law has determined the ward is incapable of managing his person or estate • minors, or • adults legally adjudged incompetent to act for themselves • A conservator is another name for a guardian of only the ward’s estate (property) and is in charge of investing and managing the property

15. Living Will, DNR, DPAHC • Living will: A medical directive enabling an individual to direct in advance, the type of healthcare (s)he desires in the event the individual is no longer able to communicate their desires with respect to life-sustaining medical treatment when in a terminal condition • DNR: Do not resuscitate order authorizes a healthcare provider to withhold CPR or other measures to restart a patient’s heart or breathing

16. Living Will, DNR, DPAHC • DPAHC: Durable Power of Attorney for Healthcare can be both an advance directive as to healthcare and a proxy directive, permitting the named agent to make healthcare decisions even when the patient is not in a terminal state, but may be incompetent to make such decisions