The following is an article from the August 2020 issue of "Get Your Ducks in a Row" Carolina Family Estate Planning's Free Newsletter. You can read the rest of the issue, as well as back issues of our newsletter online at www.carolinafep.com/library/newsletters/ or subscribe for free at www.carolinafep.com/newsletter.cfm
My grandfather, Bob, remarried after my grandmother passed away. (His new wife’s name was also Jackie, which can make family storytelling a bit confusing.) Bob had three children with my grandmother. Jackie had one son from a prior relationship.
My grandfather was a real human with his own merits and his own shortcomings. He hated confrontation, and he avoided making difficult decisions whenever he could. As many of you know, estate planning can involve some difficult conversations. So it took us until he was in his 80s to finally get him to sit down with a lawyer to update his estate planning.
In my grandfather’s case, he had a few tough questions to address: How would he strike a balance between providing for his wife and protecting his children? And how would he handle the all-too-common strained family dynamics between his three children? (another story for another day).
I helped with my grandfather’s estate planning, but at arm’s length: not only does he reside in another state, but there are too many potential conflicts of interest due to the family dynamics. So I helped my family locate and vet a well-regarded estate planning attorney to assist with his planning.
My grandfather was the proverbial ‘cat with nine lives.’ By the time he met with the attorney, he had an extensive medical history with numerous ailments, hospitalizations, and chronic conditions. So when the attorney asked whether he wanted to consider protecting his house and assets with a Medicaid Asset Protection Trust, my grandfather and his children assumed the likelihood was slim that he would outlive Medicaid’s 5-year lookback. He opted to create a Revocable Living Trust instead.
That was when he was in his 80s. He lived to be almost 96 years old. He outlived the 5-year lookback period more than two times over. But who could’ve known? We didn’t have a crystal ball. None of us do. We try to make the best decisions we can with the information we have.
Years later, as he lived out the final years of his life, he moved in with my aunt. I watched as she gradually traded in more and more of her own time and independence as his caregiving needs increased. She and I would spend hours discussing various options for obtaining caregiving assistance and what the plan of action would be when it finally got to the point where she couldn’t do it any longer.
I was still young in my estate planning practice when my grandfather did his planning. And while I wasn’t the one who made the decision not to pursue Medicaid planning, it has helped me shape the guidance I give our clients.
Because consider this: what would he really have lost if he had opted to put his house in a Medicaid Asset Protection Trust? Sure, the legal fees might have been a little higher (frankly, I don’t recall whether they were or not). But at the time, he was already in a situation where my aunt was helping with a lot of his finances and taxes. If things had gone only slightly differently, consider how frustrating and depressing it would have been for her to have to sell the family home to qualify for Medicaid assistance to help with the cost of his care (note: these rules vary by state). In the worst-case scenario, if he had needed nursing home care before the 5-year Medicaid lookback period had expired, my family might have needed to revisit the attorney to revoke the trust or see if there was an alternate course of action available.
My takeaways for you are the following:
- Don’t put off your planning such that your family gets caught in the same predicament we were about having to guess whether there was “enough time left.”
- But also, if you have put things off, don’t assume that it’s too late--none of us have a crystal ball.
And while I’m talking about estate planning, I’d venture to guess they’re true for a lot of other things in your life. Don’t take tomorrow for granted.
If you need help creating or updating a plan to protect yourself and your family, give us a call at 919-694-4437 and we’ll help you get started.