Bert: Welcome to “Make It Last,” helping you keep your legal ducks in a row and your nest egg secure with your host, Victor Medina, an estate planning and elder law attorney and certified financial planner.
Victor J. Medina: Hey, everybody, welcome back to Make It Last. I’m your host, Victor Medina. I am so happy to join you. On this episode I’m going to be talking about something really important. In fact, it’s the core of how I got started as a planner, focusing on estate planning and elder law.
We’re going to talk a little bit today about the difference between what’s estate planning, what’s elder law, why elder law is important, and, moreover, as we see the incidents of Alzheimer’s and dementia rise and rise, why it’s so important to pre‑plan for your long‑term care, both on the legal and the financial side.
We’re going to be covering that later in the show. I think it’s going to answer a lot of questions. In fact, if you’re listening to this show, one of the things you can do is…Almost everybody that I know knows somebody that is dealing with the consequences of dementia or Alzheimer’s. They’ve got that as an issue in their life, or friends of theirs, somebody like that.
If you’re listening to this, one of the best things you might be able to do today is go ahead and send a copy of this or point people out to this episode because this is going to help clarify a lot of questions for them, help them answer questions about how to navigate this. It might be one of the more important shows that we do, so I’m really excited to tackle that today.
Before I get started, I wanted to talk a little bit about my little journey that I have been going [laughs] on, personally, in terms of my search for new car. I leased a car for the last three years now. Just to explain the whole leasing versus purchasing thing.
As a financial planner, I’m also often asked, “Which is the right thing to do?” For me, leasing makes a lot of sense. Now, the reason for that is that I’m able to largely cover the cost of the lease as an operating expense of the company. I’m able to use that as a write‑off in a way that I can’t do if I purchased a vehicle.
If I just purchased a vehicle, I’d have to depreciate it, and it’s not as beneficial. We go ahead and we lease. The truth of the matter is that I don’t use a lot of miles whatsoever. I’m able to get by on about 10,000 miles a year and that’s that I take trips to the airport. I really don’t even watch the mileage.
I go driving all over the state in the car for one or more of my children’s athlete activities. It seems like the most miles [laughs] that I put on the car are going to swim meets and going to soccer tournaments. Otherwise, driving to the office and back. For what I do, I don’t travel that much. Anyway, I lease the car, low mileage and able to get by with it.
I know that for the car that I have now, I pre‑ordered it. I built it. Then they then built it and then they told me it was ready. They shipped it up from South Carolina and I had it delivered. It took, I don’t know, two or three months to get done. It was something I knew I had to plan ahead.
Well, my lease is going to end up in November. Beginning of November I’ll be done with my lease. This time around, I’m trying to lease something a little bit less expensive than what I leased the last three years. I’m in the process of trying to find that perfect car that will fit all of the things that I’m asking for it to do.
For instance, the last car that I had was an SUV, and my wife’s car is a very large SUV. It’s to cart our three kids, and all their hoodlum friends, and their equipment. Over the last three years or so, I’ve gotten very used to sitting up high, which is a way I make up for the fact that I’m not a tall man. I will sit in a [laughs] high car and I’d gotten used to that.
I dropped my car off for service and they gave me a loaner. It was a smaller Sedan. I sat down low and I thought to myself, “Oh my goodness, the whole world is going to crush in on me.” I think I got too used to sitting up high, but then it really comes down to, which are the various SUVs.
I am so confused at this point in time. I have looked at every…I’m a researcher, I’m a planner, this is what I do. I just don’t go by instinct. I’ve gone in and I watched every “New York Times” episode that’s been on there for…Well, they do a video thing. Tom Voelk does a video thing and I love his style.
I’ll watch the video and I’ll check out what he has. I’ve seen every one of the SUVs for the last three years, no closer. I’m no close deciding what to do. I can’t tell you if I want a luxury SUV, if I want a standard SUV. Do I do want a full size? Am I OK with a compact? No clue. No clue what I’m going to get. I do know that I like them with technology in there.
Those of you who know me personally know that I am a big geek when it comes to the stuff I’ve got. Everything in the office has got an Apple logo on it. I get the Apple thing. First time that it’s offered, a big shiny, I go right after that. I need to get that. I spend some premium dollars on my technology because it works and because it’s fun.
We were looking at a Jeep Grand Cherokee. “If you’re looking at Jeep Grand Cherokee, well, you must be looking for the Limited Model.” I think the Limited Model’s the one up from the base, and they have like five models. It’s the Laredo, the Limited, the Trailhawk, the Overland, the Summit, the SRT. He just sized us up and assumed that I would be on the lower end of the scale of that.
I took the opportunity to correct him a little bit. Mostly as a chance to help explain to my son how people’s preconceived notions about what you look like might impact who you can be to them. What I learned from that…I didn’t talk to my son about it there. I said, “Well, I just got done leasing about a $75,000 car.
“I’m not really worried about keeping the cost low, I just want the right car for me.” It embarrassed the salesperson, as he deserved to be embarrassed for making the assumption. Then we went out and I test drove the car and I liked it. Not sure I’m going to settle on it, as you know. I already told you, really confused about it.
I didn’t talk to my son about the interaction. I did talk to my wife about it and what the assumptions were, based on the way that I looked, about what I would be doing. By the way, dressed well. I’m dressed for Saturday, but collared shirt, wasn’t going in a ratty t‑shirt or anything like that.
The long the short of it was she told me that my son had brought it up to her that he recognized it, and he saw it for what it was, which I wasn’t really sure a 13 year‑old was going to be able to do. It merely got me thinking, first of all, how proud I was of my son and his ability to be aware of what’s going on in the world.
He’s got a very sensitive antenna to people and interactions. That made me so proud to see that going on, and the opportunity to make sure that we are looking at people for who they are, with no preconceived notions about what they want or they want to do. When we set up meetings with people downstairs, our clients…I’m upstairs and downstairs, the office is downstairs.
When we set up those meetings, we’re really in there seeing people fresh, with fresh eyes. We need to come into that experience with no preconceived notions about what they want to do or where they want to go. That’s really served my companies very well because we’ve been able to be flexible to whoever’s come in front of us and provide them with what they need.
We need more of that. We need more of that in the general interactions with people where we are, first, coming from a position of needing to learn more about them rather than reaching conclusions.
Victor: That was something made really important in the car shopping. Rest assured, more car shopping coming in the radio [laughs] show, I’m sure, because I haven’t settled on what I’m doing. There’ll probably be other life lessons there.
When we come back from the break, I’m going to talk to you about the difference between estate planning and elder law, the intersection between that, Alzheimer’s disease, and dementia, and how we can make sure that your legal and your financial planning are up to speed with what you need as you come into that world. Stick with us, we’ll be right back with Make It Last.
Victor: Welcome back to Make It Last. I’ve been talking a little bit before about this idea that we need to come into the world with some fresh eyes and how it impacted me, personally, doing some car shopping.
It’s got a lot of utility in what I do from day‑to‑day in the business of being an estate planning attorney, elder law attorney, financial planner, and really helping people, giving them an outside perspective on it.
Not a week goes by where we’re not having a meeting with somebody who’s being impacted by the devastating effects of Alzheimer’s or dementia. This becomes the most common way where people are starting to face the need for long‑term care. It’s prevalent.
The statistics say that we’re going to get nearly double the amount of people suffering from Alzheimer’s and dementia by the year, I think, 2024. We’re looking at a very short timeframe in which we are going to see this disease accelerate.
It’s devastating because not only does it have the impact of ripping apart families as people lose contact with being able to recognize folks and maintain their own care, but the cost associated with that are immense. The costs of, essentially, being a caregiver, a custodian on a 24/7 basis with somebody.
Those, as you imagine, can be quite devastating. My job, where the firm comes in, is really to come in as a fresh set of eyes that it doesn’t come with being stuck inside a particular mindset to dealing with somebody on a day‑to‑day but can come from the outside, more top‑level view, and help them navigate this very strange world.
For most people, coming in as a caregiver for somebody with dementia or Alzheimer’s is a first‑time job on that. Some people have the unlucky experience of being married to someone whose parents also went through that. They might have got it once already, but that’s not often the case. Often, what happens is one person goes through that. You do it once and you never do it again.
When you do that for the first time, everything can seem so, so strange. One of the things that I try to impress on people when we are out there speaking in the community…I do a lot and a lot of talks. One of my biggest…I don’t want to call it really charitable, because we don’t charge for it. I go out and I speak.
In fact, if you’re a member of a support group or somebody that needs a speaker on legal and financial things, that’s something that we do. You can go ahead and contact Medina Law Group. Contact me at the radio station. Do some way of getting in touch with us, and we’d love to come out and talk to you a little bit more about it.
In any event, one of the things I do is I go out and I speak. When we look at the speaking stuff that we do, I try to impress upon people that there’s a difference at this point in time between what we would call estate planning and what I call elder law planning.
The reason stems from the fact that most estate planning attorneys are concerned with death‑related planning. They want to have a good will in place. They want to make sure there’s a power of attorney in place. If you’ve read my books, you know that we really believe in trusts. We think that trusts are the right vehicle for people. Rich or poor, the trusts work better than wills.
Anyway, that’s what they’re focused on, is just making sure ducks are in a row so that when something happens, when they pass away, things happen in an orderly fashion. That’s the majority of what they’re dealing with. In any event, that’s not elder law.
Elder law is really about helping people navigate this landmine field of things that can happen if they become sick or if they become incapacitated. Many times, we get the opportunity to do that as a preventative planning matter. We’re able to meet a family before there’s an event.
Based on our experience, and our education, and maybe, sometimes, their own experience, based on that, we are able to give them a plan that helps navigate that landmine field before anything happens. That happens enough that it’s a regular part of what we do, but there’s also this huge part of our practice, which is helping people who are in crisis.
Crisis is really defined as there being a long‑term care event that is pressing, and present, and which requires attention right now. Most of the time it has to do with dementia‑related issues. Sometimes it’s like a Parkinson’s or a COPD thing. For the most part, it’s Alzheimer’s and dementia that someone has required care.
That care is getting to the point where they need to do something about it. There are times that people see us very early in that process, as soon as diagnosis has been made. That’s not as crisis as people who come and see us when someone’s about to move into a long‑term care facility like an assisted‑living facility or a nursing home.
That’s fire in the kitchen time, because they’re writing out checks. They’re stroking checks, $8,000, $9,000 a month. They really need to make sure that they protect their assets so that healthy spouse has a maintained quality of life, and that the other person has some choice in stuff they can receive.
I’m going to walk you through what are the elder law planning principles and what you should be thinking about if this is your first time through. If you’re listening to this and you’re somebody who’s currently in this situation, you have a family member diagnosed with Alzheimer’s, first, my sincere sympathies to what you’re going through.
We see so many client families. I’m very aware of how difficult your life is right now. If that’s not you and you know somebody, one of the best things you can do is share this episode with them. Give them a copy or a link to this. Tell them to go and listen, because there’s going to be some practical steps that they can do.
The first thing we need to do is make sure that we have some foundational legal documents in order. One of the foundational set of documents is the ability to manage finances and make healthcare decisions. You’re going to think about that largely as a power of attorney and an advanced healthcare directive.
The common wisdom that is shared is that everybody should have a power of attorney. There’s a lot of people that receive that message. They go out and they get a power of attorney, but what they get is not an effective power of attorney. They download a form off of the Internet and they’re looking at just one or two pages worth of provisions.
Whereas, our power of attorney is about 26 pages long. The reason for that is that we want it to be as broad as possible, covering as many situations. Those shorter powers of attorneys are not effective when you go to use them.
We want to check that there’s a power of attorney, which will help us manage financial matters, make decisions about whether to be placed into an assisted living‑facility, or pay a caregiver, or apply for benefits, or create a trust, or any of the other number of things that might be in this long document.
We want to have that document in place. We also want the healthcare directive so we can make healthcare decisions. They’re usually two separate documents both in New Jersey and in Pennsylvania, which are the two states that I’m licensed in. I’m also licensed in New York, but we don’t do as much work there.
In those two states, they have particular forms for their healthcare directives and they’re state‑driven forms. We want to use those forms whenever possible. There’s also the federal privacy rules, HIPAA, which stands for the Health Information Portability and…Privacy and Accountability Act. That’s what it is.
You need one of those two so that you can access even things like billing records. It’s not enough to have the documents, though. You check if there’s the documents in there. I already told you that they should be pretty robust, good documents. They should be things that were signed more recently, but you want to field test it, especially if the person still has capacity to sign a new one.
This a recent diagnosis, and they still have the ability to sign new documents, you want to go and update these or change these. Here’s a great example about the difference between an elder law attorney and an estate planning attorney. An estate planning attorney is going to include a provision in here. I’m just going to go real wonky on you on nerd‑related power of attorney.
They’re going to include a provision that allows you to gift up to the annual exclusion. That’s a whole set of tax planning thing, which allows you to make gifts up to $14,000 per year and allows you to transfer that and do some self‑dealing. That’s an estate planning power of attorney. An elder law power of attorney will allow you to make unlimited gifts, specifically into trusts.
The difference between the two is that someone who’s an elder law attorney who drafts that second one with the unlimited gifting provision, they’re somebody that’s actually been using powers of attorney and realize that, in order for it to be effective, I need to be able to make gifts greater than $14,000.
That’s just where the rubber meets the road. I can’t stress to you enough the need to be visiting with somebody who focuses on elder law exclusively because elder law is its own subspecialty of estate planning.
Until you actually have been working with these documents, you’d understand that the form book that you got when you became a baby lawyer ‑‑ brand new, newly‑minted lawyer on a power of attorney ‑‑ that’s not going to work in an elder law context. We want the right document for there.
Not only do we want to make sure the provisions are in there, we want to field test it with the financial professionals. That means we want to go to those banks and to those brokerage houses, we want to test out that power of attorney, and say, “Is it effective?” because, if somebody still has the ability to sign a new one, now is the time to update it in case you figure out that is not effective.
Victor: Listen, when we come back, I’m going to hit the next part of the elder law planning, which is…We’ve talked about some base level documents, making sure that there’s a power of attorney.
That’s all I got left for this show, so we’ll get as deep as we can with the time that we got left. Stick with us, we’ll be right back on Make It Last.
Victor: All right, everybody, welcome back to Make It Last, where we’re talking about the difference between elder law and estate planning, and what we can do when there’s somebody in the family that’s dealing with all Alzheimer’s or dementia, and how we can help get their hands around what they need, so some basic steps to get there.
In the prior segment, I just covered making sure you have a good power of attorney in advance health care directive. Now we’ll give you the legal standing that you need in order to help manage these financial matters and these health care matters, but that’s not enough.
One of the next steps that you’re going to need to do is actually understand where the finances are. So many times people keep their…For a good reason, maybe they keep their finances shrouded, they’re keep it hidden, and there’s little pockets of money in accounts and things that are in there.
One of the most important things that you can do, if you have a family member, specifically a parent, who is getting a little bit older up there, is have a down‑to‑earth conversation with them about the need to understand where everything is.
You don’t need to know it all right now, but they need to take the steps to make sure that things are in one place, like a document, a spreadsheet that talks about everything that they have and that it’s regularly updated, and that you know where that is in case tragedy strikes.
One of the biggest benefits for people making sure that we’re doing both the legal and financial planning for them, that we got both things under our umbrella, is that it helps the next generation know where everything is and being able to work with one counselor that allows them to really understand how to manage that stuff and where it is.
Not just when they’re sick, but when they pass away from one generation to the next. You want to go through that and have an interview. Go through statements.
One of the best things that you can do is look at the end of a fiscal quarter because most financial institutions, as well as insurance companies, will send out quarterly statements about what account values are, so getting into the mail somewhere after the end of the fiscal quarter.
The fiscal quarter ends at the end of March, at the end of June, at the end of September, and at the end of December. The next two weeks after that is when you want to be looking for financial statements, specifically things that are mailed. This world is very different than maybe just even five years ago.
A lot of people are choosing to get their statements just on email and reducing the amount of paper that they receive. If we can dive into somebody’s email and check the email statements over that period of time when emails are sent from financial institutions, that’s how we can put that together.
If your loved one has not done it already, you’re going to want to make sure that you can go ahead and access that stuff and put it in a spreadsheet. Sorry, [laughter] I lost my train of thought there for a second. You want to be able that you can put your own spreadsheet together.
You want to know where that stuff is, and you want to know…being able to track it on a regular basis. That’s on the assets side. The other thing you want to do is to help manage the expenses, so there are some day‑to‑day things. Now, realize I have not gotten to the actual care stuff yet.
This is to just so you can get your hands around the day‑to‑day and not let something slip. You don’t want to be late on property taxes, and then have a lien against the home, and all kind of crazy stuff that happens. You just want to get your hands around that as quickly as possible and automate that.
Put that on a bill pay, if you can log in to the banking program, and set that up to go automatically out, so you don’t have to think about that. You know what comes in the income, what assets that are there, and you’re helping to manage that. That’s the way to get your hands around what finances exist.
In the first section, we talked about getting the right documents to get power. Now we’re getting our hands around what’s there and handling the day‑to‑day expenses. Now we have to think about, going forward, what kind of care is needed. In an elder law setting, specifically with dimension and Alzheimer’s, what you’re talking about is custodial care.
The kind of care that somebody really needs is the ability to, I don’t know, babysit them. We need the ability to make sure that they’re being fed, that they shower, that they change their clothes, that they’re toileting correctly. That all depends on the level of need, but that’s what we would call custodial care.
Making sure that we’re taking care of them and we’ve got custody over them. Those really come down to two different kinds of care. You can have care in the home, home‑based care, where there’s either a home health aide that comes to visit on a regular basis, or someone who’s a live‑in, or it’s an assisted living facility. Those are basically it.
At this stage, you’re not really considering a nursing home yet because a nursing home is 24/7 skilled nursing care. It’s a very high level of care. What somebody needs in most of the situations of all Alzheimer’s and dementia is custodial care which can be managed at a lower level.
If somebody’s a wander risk, if they’re wandering in the middle of the night, if they’re fall risk, those are the kinds of things…Here’s another situation. The care giver that lives there, specifically a spouse. Husband’s got Alzheimer’s and the wife, it’s too draining on her to continue to provide this care.
The first thing I want to tell you, as somebody that deals with families like this every single day, you’re not alone. It’s OK. I know it’s very emotionally difficult to admit some form of defeat. That’s what it really feels like, like you’re giving up, but it’s OK. This person that you’re caring from wants you to be OK and doesn’t want you to be impacted by providing that care for them.
I spend some time helping the people realize that they need to bring additional care on. Sometimes, when that care is too much to handle in the home and we need that space, as difficult as that is, we need to think about moving from home‑based care to assisted living. That’s really where we’re providing that care provided by somebody else, and it can get expensive.
Home‑based care is probably $75 a day minimum up to maybe $220 a day maximum for a full day. That’s in there, and you would break that up, multiply that time with the numbers of days that you have it.
If you have to live‑in in there on a week‑to‑week basis, you could be anywhere between $900 and $1500 a week that you’re paying for live‑in. You multiply that out, maybe $6,000 a month. Once you’re looking at an assisted living, that starts about $5,500 a month and it goes up from there.
If you need the higher level care, which would be called an adult daycare or lockdown unit for somebody that’s a real wander risk, you might be looking as much as $8,500 or $9,000 per month just for a single, so it can get pretty expensive.
The last thing that I’ll leave you with is now that you know that you’ve got the base‑level documents on place, you’ve got your financial things in order, and you’re examining the level of care that you need, which, by the way, if you really want to know what’s appropriate, one of the best things that you can do is go seek out a geriatric care manager.
A geriatric care manager is somebody that can make an assessment and help provide that information that you don’t have about what level of care is appropriate based on their experience. You don’t want to come with me for that. I see a lot of cases, but I don’t know medications, care needs. This is what we leave up to a social worker or a nurse.
One word of warning. In my experience, the geriatric care managers who are independent and don’t run home health care agencies provide the most subjective analysis, so you want to look for somebody that’s just in the business of geriatric care management and is not in the secondary business of selling you home‑based care services. Separate those two things out.
I’m a big believer in objective fiduciary best interest. That’s what we talked about here. We talk about it ad nauseam. The same thing in the care arena. You’re definitely going to want to make sure that you are getting that assessment done so that you have some sense of what the right level of care is for somebody as you decide between home‑based care and assisted living.
The last thing I’ll leave you with is get thee in front of a practicing experienced, they do this every day, elder law attorney. Those individuals are going to help you understand how to create a strategy to maximize how much you save, what quality of life you give a healthy spouse, what kind of options you can give down the road.
Sometimes, just spending money until there’s no more money isn’t as good an option as having a strategy in place. There are any numbers of plans that we’ve put on place. There isn’t a situation where we get confused any longer. Every situation’s slightly different, but we’ve been there before. It’s just like the contractors that I brought into my house. It was built in 1878.
They’ve never been in that house before, but they’ve been in enough old homes to know how to fix a problem when they see it, and that’s what you’re looking for in an experienced elder law attorney. You want somebody that’s VA accredited.
We really do believe, as you might imagine, that having somebody that’s got some financial savviness is an important part, too, because you got to integrate the finances and the assets together.
Working with an experienced elder law attorney, somebody who’s competent, who’s done this, like what we do ‑‑ 150, 200 cases a year on this stuff, seen thousands of cases already. That’s somebody you want to get in front of to make sure that you have the right strategy in hiring a professional. I think it’s one of the wisest things that you can do.
All right. We’re done for this week. Thank you so much for listening to Make It Last. If you liked the show, please rate it on iTunes list highly. Leave some five stars on there. If this is a subject that you know somebody else is struggling with, please, please, please be friend to them and share this episode with them.
Thank you so much for joining us in Make It Last, where we help you keep your legal ducks in a row and your financial next egg secure. We will catch you next Saturday. Thanks much. Bye‑bye.
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