We have all heard the saying “life is full of regrets”. I have compiled a list of the most common regrets that I often hear from clients, but more often, their family members, during my practicing as an elder law and special needs planning attorney. If you have neglected any of these topics, my hope is that you will take proper measures before it is too late.
1. Failing to prepare a proper power of attorney and statutory gifts rider.
I frequently explain to my clients that one of the most important documents I can prepare is a power of attorney (“POA”) and statutory gifts rider (“SGR”). Failing to have these documents, necessitates a guardianship proceeding, which is costly and burdensome on family members.
A good illustration of the impact of not having a POA and SGR usually involves a spouse who is incapacitated and requires care. Usually, we are planning to apply for Medicaid to cover the cost of such care and that planning might involve the transfer of assets from the ill spouse to the well spouse. If no POA and SGR exist, we must commence a guardianship proceeding to effectuate the planning. This results in the family having to privately pay not only for legal fees associated with the guardianship proceeding but for the cost of care until the guardianship is completed.
2. Ignoring the five-year look-back period.
The five-year look-back period is the five-year period preceding the date you enter a nursing home. If you transferred assets during this period, you will be ineligible for Medicaid for a certain period based on the value of the assets transferred.
The five-year look-back period must be contemplated where clients intend to be proactive in preserving their assets. The optimal planning technique is to create a Medicaid Trust, usually for a house, and in some cases other assets. If you create a Medicaid Trust and transfer your assets to the trust, the assets transferred to the trust cannot be counted as available assets for Medicaid planning purposes after five years from the date of the transfer. If you don’t have long-term care insurance, it is borderline foolish not to consider this planning technique. Clearly, if you wait too long, the five-year look-back period becomes an issue as you age.
3. Excluding family members or other loved ones from financial and estate planning matters.
Finances can be complicated at any time of life, but an illness or cognitive impairment can cause financial matters to become overwhelming or even unmanageable. Discussing one’s finances is commonly considered taboo, even within a family. Keeping one’s financial information close to the vest, however, can have unforeseen consequences. Often it falls on family or loved ones to piece together the financial picture like a jigsaw puzzle, but without an image to follow. A missing piece can have dire implications. Being unaware of certain income and assets could, for example, delay eligibility for a spouse’s or parent’s Medicaid benefits or result in the denial of an application or affect the distribution of a loved one’s Estate pursuant to their final wishes.
4. Creating a team of professional advisors and counselors.
Professional advisors and counselors exist in many areas in part because it is nearly impossible to know everything about everything. One issue we often see are clients who are proficient at preparing their own income tax returns, but don’t account for changed circumstances, for instance, their incapacity. When this happens, family members who may not be as experienced, struggle because they now have to form new relationships. I advise clients to form these relationships early in their lives so their family members have someone to turn to.
Salvatore M. Di Costanzo is a partner with the firm of Maker, Fragale & Di Costanzo, LLP located in Rye, New York, and Yorktown Heights, New York. Mr. Di Costanzo is an attorney and accountant whose main area of practice is elder law and special needs planning. He is a member of the National Academy of Elder Law Attorneys and a frequent author and lecturer on current elder law and special needs topics. Since 2013, Mr. Di Costanzo has been selected each year by the rating service, Super Lawyers as a New York Metro leading elder law attorney.