Why should you plan ahead?
Before we actually answer that question, Let’s first consider the obstacles to planning.
I don’t know where to start. It is all so overwhelming.
I don’t know whom to trust.
I don’t have enough time
I don’t have enough money--If you have over $2,000, you have enough to disqualify your loved one from government benefits
I'm hoping my loved one will improve and become self-sufficient.
These are all very reasonable statements, but all excuses that don’t help you or your loved one. It is critical to plan based upon the circumstances as they exist today, and build enough flexibility into your plan so you can adjust based upon the changes that may occur throughout your's and your loved one's life.
If we can’t overcome these obstacles, and you never plan, What happens? The Government Happens! Yes, the state and federal government have a plan for your loved one, and it is most likely not the one you would imagine for them. When you die the government’s plan begins to take motion:
1. The state will choose the people who will care for your loved one; their guardian or conservator and their trustee. The Guardian (also referred to as a Conservator in some states) will be responsible for day to day care and can be responsible for managing your loved one’s financial affairs. The trustee is responsible for managing your assets inside a trust and for the distribution of those assets. It is very possible that you and your loved one will not know these individuals. These people will be unfamiliar with your family dynamic.
2. With no forethought and with no planning the guardian and trustee will be blind in regards to the financial needs of your loved one. With planning, and our L.I.F.E™ Workbook you will have provided them an estimated budgetary guideline of your loved one’s income requirements and needs.
3. Your estate, regardless of size, will be distributed by the rules of “intestacy” in your state. This could mean that if you are divorced from your child’s biological parents and remarried, your current spouse will receive all your personal property and may not share it with your loved one. If you are not married, then your assets most likely will be distributed in equal shares to your children. In any fashion, your loved one may not receive enough to live on or worse, may receive nothing at all, and most importantly may be forced to forfeit all government benefits.
4. If the state cannot find a single home for all of your children, they could be sent to live in separate homes.
5. Regardless of the amount of money your loved one receives it is automatically subject to repayment of Medicaid for all healthcare previously provided
6. In addition to payback of Medicaid if their assets are more than $2,000 they will also lose SSI (Supplemental Security Income) and future Medicaid benefits
7. With these government benefits now gone your loved one’s standard of living will be dramatically reduced.
8. At this point, Medicare may be the only healthcare benefit available to your loved one. Unfortunately, the wait is 25 months – Can your loved one wait over 2 years for health care?
9. The government will also penalize your loved one if you have family and friends that want to help by providing financial assistance. Most of the time these financial gifts will be considered income or an increase in assets. Either way they will be used to payback Medicaid and if over $2,000 will be used to reduce or eliminate SSI and future Medicaid benefits
10. It is VERY important to note that not all your assets will pass through your will. There are a few that pass “around” the will by beneficiary. They include retirement accounts (401k, IRA, Pension Plans), annuities and life insurance. If your loved one is named as a beneficiary they will receive your assets and again risk losing their Medicaid and SSI. If your “estate” is named as beneficiary, your loved one will eventually receive these assets and those assets will be subject to repayment of Medicaid benefits, and will count against them in qualifying for future Medicaid benefits and SSI
11. The second to last item is one that most families I see have not thought about even if they have done some planning in the past. It is what we call our L.I.F.E.™ Journal or a letter of intent. It is a document that will direct your loved one’s future caregiver on your loved one’s day to day care needs, their past medical history and your hopes & dreams for them. If you do not take the time to do this then the future caregivers will only be able to do what they think you would want, instead of acting on your specific wishes.
12. The last item is what we call our Family Care Notice. This notice is general in nature but it notifies all those in your extended family and friends about the fact that you have taken certain actions to secure the life of your special needs loved one. It will provide them information about any trusts you have designed and how they need to change their wills and their wishes to ensure they do not provide your loved one with money in the wrong way that can put your loved one in a position with too many assets and force them to give up government benefits. It will also notify family and friends who those individuals are you are entrusting with your loved one’s care. For instance, the Family Care Notice will list your loved one’s guardian, secondary guardian, trustee and secondary trustee. The Family Care Notice will also thank your family and friends for their support and love for you and for your loved one.
Without a plan designed by you, with your goals and dreams included, then you are forfeiting the life you and your loved one seek. Just like your responsibility of caring for them each and everyday, it is your responsibility to ensure a high level of care continues regardless if you are around to provide it or not. The only way to put your mind at ease is to take action. The decision is yours!