Old and stale documents just don’t work, and if that’s what your loved one with Alzheimer’s has, they could be in trouble. Financial institutions like banks and brokerage houses are demanding fresh documents when dealing with both powers of attorney and revocable living trusts. Let me share with you what this all has to do with Medicaid and long term care for those with chronic care needs like Alzheimer’s.

If your loved one has a power of attorney for property, it typically says that someone else can act for them. That’s a good thing. However, because Medicaid has extremely complicated qualification rules, someone acting on their behalf may need to make some changes to the way their assets are held.

Usually, a financial power of attorney does not allow the agent acting for your loved one to modify their estate plan or create other documents that can protect them and their healthy spouse from going totally broke. If your loved one is in a nursing home or incapable, they need a powerful power of attorney. This is not something you can just download off the internet, because you have to understand the Medicaid rules and how to use a powerful power of attorney.

What about revocable living trusts? During the last few years, it has become extremely popular among estate planning attorneys to create a joint revocable living trust for married couples. It makes perfect sense from a traditional estate planning standpoint. It’s cheaper than creating two trusts. It may be easier to administer during your loved one’s life.

The downside is that if one of the couple becomes disabled (as is the case with dementia, over time), this trust most often transforms itself into an irrevocable trust. An irrevocable trust will not allow the healthy spouse to make changes in the way the assets are held. The healthy spouse may be forced to spend an excessive amount of assets to care for the ill spouse before he or she can qualify for Medicaid.

Let’s face it: most traditional estate planning documents are wills – and a will does nothing until the owner is dead. If your loved one faces two to five years in long term care, and they are alive but incapacitated without a powerful power of attorney, nothing in the will can be changed. In addition, nothing in their financial life (IRA’s, 401k’s, annuities, life insurance) can be adjusted, because they’re still alive! Your loved one’s will can’t be used to help them or those they love. On top of that, a will must be probated when they die.

If someone can’t make any changes, they could wind up on Medicaid with no other resources. Medicaid l limits personal assets to a maximum of about $2,000. All but a tiny sum will be taken away from your loved one to pay for nursing home care. They will be allowed to keep a totally inadequate amount, which the government refers to as “a personal needs allowance” of $30 to $60 a month. For a woman, how often can she get her hair done for $30 to $60 a month? For a man, how are they going to replace their hearing aid if it gets stepped on and broken? Or get new dentures when the nurse’s aid wraps them up in the sheets and takes it down to the laundry? Or replace their glasses? Your loved one may be dependent upon their children or grandchildren to provide those things, because they may be out of money and out of options.

Nobody wants to be out of money and out of options. Our job is to help you and your loved one reach your goal to receive quality health care and preserve their options. When you are dealing with Medicaid, you really need to have a plan that takes into account more than just a person’s eventual death. You need a plan that looks ahead to protect their spouse and loved ones so they do not become excessively impoverished by never-ending long term care costs.

Your loved one needs a power of attorney that allows their agent to be able to take very special actions to protect them and their loved ones. They need powerful documents, which authorize their loved ones to change the way your assets are held so as to provide the best protection for them and their healthy spouse when they inevitably need long term care.

If you want me to review your loved one’s current documents (wills, trusts, powers of attorney, etc.) to make sure they give you the protection you deserve, call my office for a consultation at (913) 338-5713. Estate and Medicaid planning is not a Do-It-Yourself project.