Answer: The need for proper estate planning exists at all ages due to the uncertainty of what life events may occur. As one ages, the need to plan increases because of the risk for a medical event that may prevent proper planning. For example, if a client does not have a power of attorney or proper estate transition in place and has a stroke, they may be unable to execute these documents after the fact. If this occurs, then we would have to either file a guardianship matter or open a probate estate. Either of these involves court involvement, which is more costly to the client and could have been avoided with proper planning. Thus, getting proper planning done before a medical emergency is imperative.
In Indiana, there are two different types of Medicaid scenarios. The first involves a situation where there is a married couple and one of them enters a nursing facility or needs Medicaid assistance while the other one is still at home (“community spouse”). In this scenario, one of the biggest rules that many people do not understand involves what we refer to as spousal impoverishment provisions. Many of my clients in this situation come into my office worrying about losing their home or running out of financial resources due to their spouse being in a nursing home. With proper planning and the use of these spousal impoverishment rules, we are able to ensure that the community spouse’s home is protected and that they will have sufficient assets to continue to live. Unfortunately, we see too many situations where clients continue to play these bills without seeking assistance early in the process and no longer have sufficient resources for the community spouse.
The second scenario we often deal with is where a single person needs Medicaid assistance. Indiana currently has a five-year “look back” provision regarding any transfer of assets (both singles’ and couples’ cases), so many clients feel that they have wait until someone is in the nursing home they have no options.
This belief is also untrue. Although there will be some consequences to making a gift within the five-year time period, we are still able to protect assets for the individual’s future needs and also for their heirs. Again, too many times we see clients who are under the impression that there is nothing they can do and spend all of the individual’s assets on care prior to seeking our assistance.