Illness Requires Revisiting the Estate Plan by Elder Law Attorney Jane M. McNamara
There are numerous issues to consider when a loved one shows signs of a progressive illness, such as Alzheimer's disease or other dementia, Parkinson's, or numerous other catastrophic illnesses. Not only are there considerations regarding diagnosis, treatment, and long-term care, but there are important legal issues to consider as well. These legal issues vary upon the circumstances, but they often include revisiting the Estate Plan of the ill loved one and their spouse.
Often, senior couples established an Estate Plan years ago, which included a Revocable Trust (also called a Living Trust, or Inter Vivos Trust). When established, usually both spouses were healthy and such illness was never a consideration. Their intended purpose was only to avoid probate and ensure their assets passed to the surviving spouse, and ultimately to the couples' children. However, when a spouse becomes ill, the purpose of the Estate Plan must be evaluated, and appropriate changes made.
That same couple now must deal with a seriously ill spouse who may need nursing home care in the future, and possibly Medi-Cal benefits to assist with the high cost of such care. With the average private pay rate for nursing home care exceeding $4500.00 per month, life savings can be exhausted quickly. The passing of the assets to the surviving ill spouse will undermine the ability of the ill spouse to obtain Medi-Cal benefits to assist with long term care. Further, the original Estate Plan often does not name individuals to oversee the care and finances for the ill spouse in the event of the well-spouses' death. But with proper planning, such issues can be addressed.
Assets may be redirected, and not left directly to the surviving ill spouse. Special Needs Trusts may be established for the ill spouse to supplement public benefits, rather than disqualify the ill spouse from needed benefits. Other advance planning may be made in anticipation for future care in a skilled nursing facility, which may be required due to progressive illness. There are various options to consider based upon needs, assets, and health of the couple, as well as family circumstances.
As we all know, life is uncertain, and no one can predict that the ill spouse will pass away first. Unfortunately, many well spouses have unexpectedly passed, leaving all assets to their ill spouse who then cannot qualify for public benefits, or suddenly loose their benefits if already in a skilled nursing facility. Therefore, when faced with a catastrophic illness, it is essential that the Estate Plan is revisited, and any necessary changes are made to adequately provide for the needs of both spouses.
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