July 2, 2012
Preparing for Your Own Old Age
By Cliff Ennico
www.succeedinginyourbusiness.com

It's no secret that the elder support system in the United States leaves a lot to be desired.  But it really hits home when you and/or someone you love has to deal with it.

My 83-year-old mom suffered a massive stroke in March of this year, and after extensive consultation with her doctors and other experts, we decided that it was time for her to go to a skilled nursing facility (formerly known as a "nursing home").
     
You would think this would be an awful experience.  It really wasn't.  After visiting several facilities, we decided on one that was owned by a "friend of a friend of a friend" of ours.  We later learned that the facility was one of the highest ranked in the entire state.
     
I have to say that the care my mom is being given is nothing short of fabulous.  Even she doesn't talk as much about wanting to "go home" and live an independent life  - we all suspect she's having too much fun.  The people at this facility are extremely helpful and responsive, and are completely "on top" of their game.  When Mom developed a minor eye infection, the facility's staff called in a local eye doctor and had the matter taken care of before I even knew about it.  Now that's service.
     
We have been lucky so far, but it hasn't all been beer and skittles.  Shortly after Mom was admitted, we learned that the Power of Attorney we were relying on to handle her financial affairs wasn't properly prepared.  That required a new Power of Attorney, which had to be paid for out of our own funds as Mom's accounts had already been pledged to Medicaid under Title XIX of the federal Social Security Act.
     
We also discovered that Mom had made no plans for her funeral.  For the same reason, that will have to come out of our pockets as well.
     
The whole experience with Mom has been an eye-opener.  With people in America living longer and healthier ("age 90 and over" is the fastest growing segment of the American population right now), there's a good chance most of us Baby Boomers will run out of money before we die.  Forget about leaving a legacy to our children and grandchildren - we'll be lucky if we have anything to pay for nursing home care before we "spend down" and Medicaid kicks in.  In Mom's case, it took only three months to wipe out her life's savings.
     
Most of us are woefully unprepared for the business and financial challenges of an extended old age.  Based on my experience with Mom, here are six things I plan to do differently before it's my turn - things that all of us need to do NOW to make things as easy as possible for the next generation:
     
(1) Keep Updating Your Will.  An out-of-date will is as good as no will at all.  When cleaning out Mom's apartment we found an old (but still current) will from 1997, one we knew did not reflect how Mom would want to dispose of her assets today.  You should update your will at least every five years, and more often if you have "life changes" (such as divorce, a new marriage, new job, new kids or grandkids).
     
(2) Get a PERFECT Power of Attorney.  Do NOT use online forms.  Get an attorney to prepare this for you, and pay the going rate to make sure this document is "letter perfect."  Know exactly where the original Power of Attorney can be found, as many banks and other financial institutions will want to review the original (not a copy) before they will let you close out bank or brokerage accounts.
     
(3) Pick Your Nursing Home Now.  Visit several local facilities, and give your kids a document letting them know your preferences, as well as any facilities you want them NOT to consider.
     
(4) Buy Long-Term Care Insurance.  Many nursing facilities will not take patients who have no funds to spend down before Medicaid kicks in.  Having long-term care insurance (sometimes called Medigap coverage) helps you hold on to more of your assets longer, and slows down the "spending down" process, so that you have a better chance to pick the facility you want.
     
(5) Prepay Your Funeral Expenses.  You can't pay for these once you apply for Medicaid.  Most funeral homes will allow you to prepay your burial or cremation expenses.  Do it now.  You are not only making things easier for your kids:  you may be "locking in" funeral costs at today's rates.
     
(6) Consolidate Your Bank Accounts.  Medicaid requires copies of all bank account statements going back five years, and it takes bloody forever to pull all of that paperwork together.  Keep the number of accounts to an absolute minimum.  Consider closing down traditional IRAs and other retirement accounts if the remaining balances are small.  Make sure your kids know exactly where your accounts are, and the names of bank managers you know personally.
     
Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of Small Business Survival Guide, The eBay Seller's Tax and Legal Answer Book and 15 other books. Permission granted for use on DrLaura.com. 

Posted by Staff at 7:02 AM