At What Age Should I Start Elder Law Planning?
The question we are asked most in our Elder Law practice is: at what age should I start my elder law planning? Unlike many other aspects of our lives, there is no one answer – no “one size fits all” solution. The correct answer is as diverse as our clients and as their specific answer circumstances. What is right for one family in one situation may be entirely wrong for another family. However, if we had to give a general rule, we would say “the sooner the better.”
One of our primary focuses as Elder Law Attorneys is shielding a family’s assets from the high cost of nursing home care. Because of this focus, we are necessarily concerned with our clients’ mental health as well as their physical health. We think seniors between the ages of 65 and 70 should consider Elder Law Asset Protection strategies. Most of these seniors are still in relatively great health. Consequently, we have the benefit of time – time to establish the plan and time to let the statutory look-back period run out. We are always concerned with the 5-year look-back period since the changes to the Medicaid laws made timing of asset protection strategies a critical issue. In addition to their good health, this group of seniors typically has adult children who are mature enough to understand the importance of planning and of their role in the plan, which role is typically as Trustee of a Medicaid Trust.
As many of you already know, we frequently use trusts to protect assets in the context of Elder Law planning. We have our clients transfer their assets into a Trust. In most cases, seniors have the necessary comfort level, faith and trust in their adult children to allow for the use of trusts in their estate plan. Since the adult children will manage the trust assets, the age and maturity level of the appointed children as well as their relationship with the senior are also important factors.
For younger seniors in this age group we often suggest staggered or staged Medicaid trust planning. First, we transfer the senior’s house into a trust right away. Then, as the seniors get older, liquid assets are added. We start with the home because the home is usually the seniors’ largest asset. It is also the asset our senior clients most want to end up in their children’s hands. Asset Protection planning with a home is straightforward and has no effect on a senior’s lifestyle. Other than the change in title of the home from individual name to trust name, the senior will not notice any change at all. There is no impact whatsoever on the senior’s daily life.
It is a much different scenario when seniors are placing their life savings into a Medicaid trust. As seniors get older and have less of a need for large bank deposits or investments accounts, assets can be transferred to the irrevocable trust because there is less of a need for those assets. The benefit to starting an Asset Protection Plan at age 65 is that the senior is virtually guaranteeing that his/her children will receive an inheritance.
Then, there of those of us who tend to procrastinate when it comes to setting up Wills or Trusts or doing other types of planning we all know we should be doing. Thus, many of the cases we see are already in what we call the “crisis planning” stage. Typically, the senior who waits until age 85 to consider planning is usually doing it at this crisis stage or is doing it because they have seen a close friend or family member lose the bulk of their assets due to nursing home admission. Unfortunately, many people first start to think about asset protection only on the day before they enter a nursing home. In these cases or where there are health issues dictating that nursing home admission is imminent, then more aggressive planning must be undertaken.
After they have signed all their elder law and/or estate plan papers, our clients tell us about the peace of mind they have knowing their plan is in place. On the other hand, crisis planning is nowhere near as beneficial and you can never be sure of the results. Consider this: if at age 65 your house is transferred to an irrevocable Medicaid trust and you make it past the 5-year look-back period, the full value of your home is permanently protected from nursing home costs. And, more importantly, you have guaranteed your kids an inheritance. This type of planning can be done at any age; however, the risk of needing nursing home care is always present as we advance in years. The risk of losing everything is an unnecessary risk that you don’t have to take.