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Getting your legal house in order

January 25, 2007|by TAMELA BAKER

It's never too early to make plans.

And attorneys who handle a legal area known increasingly as "elder law" say the sooner people make arrangements for their later years, the better.

As people approach retirement, they should "get their legal house in order," said Hagerstown attorney Catherine Drummond.

Doing so can include estate planning and updating wills.

They should also be setting retirement goals, determining how they want to live and what it will cost, she said.

The planning needed will depend on the needs of the individual, said attorney David F. Spang, who practices in Waynesboro, Pa.

"Each individual's future is unpredictable," Spang said, but everyone should "try to have their affairs in some order."

While rules regarding estate planning, health-care provisions and protecting assets can be complicated and can vary from state to state, some issues to consider include planning for Medicaid eligibility, asset protection, guardianship, wills, power of attorney and advance medical directives.

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Spang said proper planning can save money on inheritance and estate taxes.

Generally, the more assets one has, the more complex planning can become, Spang said. The legal steps to be taken will depend on how an individual client wants to use the assets he has.

"A good lawyer is somebody who is tailoring his advice to specific individuals," Spang said.

People need not wait until they've built up assets to begin making contingency plans.

"The basics are anyone who has started a career should have a living will and power of attorney," said Martinsburg, W.Va., attorney Charles F. Printz Jr.

Money matters, health concerns

Drummond suggested enlisting the aid of a financial planner to help make sure your financial goals for retirement are met.

Tax planning will help save money and can help preserve assets. Estate planning can save tax money for survivors, and help make sure your assets go where you want them to go.

Financial planning should include plans for paying for health care, all the attorneys said. One option to look at is long-term care insurance - it's an important tool in planning, Spang said.

"We will see more and more emphasis on long-term care insurance," Spang said, with the government adopting programs to reward people with long-term policies.

Drummond agreed, but cautioned that it's wise to talk to at least three insurers before settling on a plan.

"It's not one-size-fits-all," she said.

Seniors should have supplemental health insurance in place in addition to Medicare, she added. And since Medicaid is governed by a combination of state and federal laws, you should be aware of how it's administered in your state. If you're a veteran, find out what benefits are available to you through the Department of Veterans Affairs.

An area of particular concern, the attorneys said, is providing for people with special medical needs while preserving assets for other family members.

In planning, "you have to look at whether you're dealing with a single individual or a married couple," Spang said, and if you're planning for a couple, efforts should be made to preserve some assets for the healthier spouse.

Such planning should be done in advance, however, because federal rules require that, for example, if a person requires nursing home care, his own assets must be spent before programs such as Medicaid kick in. And "once it's already happened, there's not a lot you can do" to preserve assets, Printz said.

There are various methods for easing that burden, Printz said, such as estate planning and gifting of property. But they should be done sooner rather than later, he cautioned.

Provisions should be made for making decisions if you can't make them for yourself. Assigning someone power of attorney will authorize that person as an agent to make decisions as listed in that document.

"Power of attorney" can take different forms. A "springing" power of attorney, Drummond said, becomes effective only upon a triggering event.

A "durable" power of attorney will authorize your agent to continue making decisions if you become incapacitated. Power of attorney is valid only during a person's lifetime, Drummond added. The estate executor takes over upon death.

For medical decision-making, doctors are encouraging people to file advance medical directives, Spang said. An advance directive is a written expression of a person's desire for medical treatment, used in cases where the person becomes incapacitated and is no longer is capable of making decisions.

If these arrangements are not made in advance, Drummond said, a court will have to appoint a guardian to make both health care and property decisions.

"It's always hard to do this stuff when you're in an emergency situation," she said.

Planning can even include pre-paying for a funeral, Spang said, a step that can ease the burden on a healthy spouse or other survivors.

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