“Our greatest glory is not in never falling, but in rising every time we fall.”
What is Elder Law?
Elder law refers to a highly specialized and fast-growing area of legal practice which emphasizes those issues affecting the increasing aging population. However, elder law also encompasses related issues affecting the family members of the elderly, as well as incapacitated and disabled persons, regardless of their age. The specialty of elder law originated in the 1980s as the complex legal issues relevant to the elderly, specifically the necessity for Medicaid and long-term care coverage, were beyond the scope of practice for general legal practitioners. However, it can be dated back to the Older Americans Act originally signed into law by President Lyndon B. Johnson in 1965, which resulted in the creation of the Administration on Aging. Today, the field is also referred to as “elder care law” and the lawyers as “elder care attorneys.”
The major categories typically encompassed by elder law are: estate planning, probate administration, guardianship, conservatorship, protective matters, Medicaid, disability and other long-term care issues. Other issues found under the umbrella of elder law include such areas as trusts, estate-related litigation, protection against elder abuse, neglect, fraud, capacity issues, end-of-life planning, retirement planning, Social Security benefits, Medicare and Medicaid coverage, consumer protection, nursing homes and in-home care, powers of attorney, physicians’ or medical care directives, declarations and powers of attorney, landlord/tenant needs, real estate and mortgage assistance, various levels of advice, counseling and advocacy of rights, tax issues, and discrimination.
Why should I consult an elder law attorney?
An elder law attorney is experienced in a broad array of matters in order to competently guide clients toward meeting their objectives and avoiding unintended consequences which often occur when attempting to undertake matters on one’s own even with respect to seemingly “simple” affairs. Such guidance includes:
- Assessing a client’s circumstances taking into consideration laws regarding tax, social security, Medicare, Medicaid, SSI, state property laws, and recommending the best course of action.
- Ensuring that the laws affecting you or your loved one are applied correctly and utilizing the changes in laws over time on your behalf.
- Drafting wills, trusts, and other documents to ensure that a person’s wishes are carried out even if he or she is not able to provide personal direction at some future time.
- Providing advice regarding the best course for long term care planning.
- Advising regarding end-of-life issues, continued independence of an elderly or disabled individual, and financial matters.
- Appropriate planning in order to keep financial and medical decision-making within a family, thereby avoiding the need for guardianship.
What is an estate plan and why is it important? What if I only have minimal assets?
Planning for the future is important. Doing so enables a person to make their wishes known and avoid the fears of the unknown. However, estate planning is not just about who your assets will be distributed to. A well-drafted estate plan provides a sense of security and comfort about a host of issues including but not limited to: who will be authorized to manage your medical and/or financial affairs if you should become incapacitated, who will be appointed as your guardian and/or conservator should one be necessary, who will care for your minor children if something should happen to you and your spouse, what are your wishes regarding your end-of-life care, and how do you wish for your last remains to be disposed of. Most people should execute the following estate planning documents:
- a last will and testament (and possibly a revocable living trust);
- a medical power of attorney;
- a financial power of attorney; and
- a living will.
You need an estate plan if any of the following apply to you:
- You have any assets regardless of their value.
- You want to ensure that in the event of your incapacity, a person of your choosing has the necessary legal authority to make medical decisions on your behalf and manage your assets for your benefit.
- You have children, a spouse, or a parent who may need care and/or assistance with financial management.
- You do not have children or a spouse to provide for your care.
- You want to contribute to a charity.
- You want to disinherit a family member.
- You have opinions about how your end-of-life care should be managed.
Why shouldn’t I use an online legal service to create my estate plan rather than an attorney?
Many people are lured by advertisements claiming that they can save time and money by drafting their own estate plan using an online legal service. However, it is likely that using an online legal service will not generate a suitable estate plan that will accomplish your objectives and thus, should be used with caution. As an example, you could go online and learn how to do the electrical wiring in your house, but would you feel comfortable sleeping in that house knowing in the back of your mind that the house might burn down? Only a qualified trust and estate lawyer can interpret the myriad of laws dealing with property rights, taxes, wills, probate, and trusts and the best options for preserving funds for disabled or spendthrift beneficiaries. In fact, there have been numerous lawsuits filed against these services in at least three different states for the unauthorized practice of law, and many such services have hidden costs.
Moreover, computer programs and forms cannot provide the wide range of legal advice necessary to assure that the form is correct, that assets passing outside of your will or trust are properly handled or consistent with the terms of your will or trust, that state law nuances are taken into account, or that relevant tax, legal and personal issues are properly addressed. Most importantly, such online options cannot cater to the particular circumstances and needs of you and your family and can provide you with a false sense of security. Estate planning documents are afforded great significance because they assist you in carrying out your wishes with respect to your important affairs and they have lasting financial and emotional consequences on you and your family. Mistakes made in the drafting of estate planning documents can profoundly alter familial relationships and has the potential to result in unnecessary hostile litigation.
Why is it crucial for me to have an estate plan if I have minor children?
Many parents put off estate planning because they do not think they have significant assets to protect and they believe that they have plenty of time to accumulate wealth and plan for it at a later date. However, in failing to create a proper estate plan, many parents cannot adequately protect their children when in fact, children are the greatest assets that parents have and are an integral part of the estate planning process. All parents, with or without a great deal of assets should have an estate plan in place to set forth their wishes for their children which includes, among other things, designating a guardian to care for their minor children in the event that something should cause their incapacity or they have an untimely passing. If there is no plan in place, the court will appoint a guardian to raise your children based on what it deems to be in the best interest of your children.
Unfortunately, the court-appointed guardian may not be the person you would have chosen to care for your children. For these reasons, it is imperative that you designate a guardian in your estate plan to care for your children should something happen to you. It is also important to designate alternate guardians (referred to as successor guardians) in the event that your initial choice of guardian is unable or unwilling to take on this role. In addition to the benefit of designating a guardian, your estate plan is also important because it enables you to create a trust for your minor children (referred to as a minor’s trust) which designates a trustee to manage your assets for the benefit of your minor children. Such a trust avoids a conservatorship necessitating supervision by the court over your minor children’s inherited assets, and gives you the ability to outline how much money your children will receive, the age at which they will receive the inheritance, and to an extent, how they are to spend this money (ie. for college or for the purchase of their first home). Who you appoint as the trustee of the minor’s trust for your children may be different than the individual you have chosen as their guardian, especially if the guardian is not good with money.
What does intestacy mean?
The term intestacy refers to the process by which your assets will be distributed at your death if you die without a will. In that case, you are referred to as having died “intestate” and the Colorado legislature has enacted relevant statutes which determine who will inherit your assets and when they will inherit them.
What is a will?
A will is a legal document signed by a person setting forth their wishes with respect to the distribution of their assets after death. A will only has authority after a person dies. Everyone with minor children should have a will so that they can designate who they want to care for such children if something should happen to them. A will is also useful in that it can encompass a testamentary trust to administer assets after death for beneficiaries while avoiding death taxes. It is a common myth that executing a will allows one’s estate to avoid probate. This is not the case. One must do additional planning in order to avoid probate. It is helpful to speak with an experienced estate planning attorney who can provide this guidance.
What is a trust?
A trust is a document created by a person (referred to as the settlor) setting forth an agreement between that person and a second person or entity who administers or manages the trust pursuant to the terms of the trust agreement (referred to as the trustee) for the benefit of a third person or entity (referred to as the beneficiary). There are various reasons to create a trust including but not limited to avoiding probate, supporting the special needs of minors or disabled individuals, protecting funds for a spendthrift beneficiary, holding title to out of state assets in order to avoid probate in such other state, ensuring income for a surviving spouse, planning for gift and estate tax, transferring property, supporting a charity, planning for public benefits such as Medicaid and long-term care, and paying for education. A trust can be established in a will (referred to as a testamentary trust) which does not get created until death or established during a person’s life for the settlor’s own benefit (examples include living trusts, irrevocable life insurance trusts, and charitable remainder trusts) or for the benefit of another person (one example is a special needs trust or a support trust).
What is a revocable living trust?
A revocable living trust is a substitute for a will which allows a person to control the management of their assets during their life (by titling their assets to the trust upon its creation), and a designated trustee to manage such assets after the person’s death. There are numerous advantages to a revocable living trust including the unification of all of a person’s assets in one place, death tax avoidance as well as the avoidance of the probate process and thus, the involvement of the court in the administration of the a person’s assets after death. If the trust is a revocable trust, the testator (person who executed the trust) can amend or revoke the trust at any time. A living trust can also be irrevocable. The main advantage to an irrevocable living trust is that it has tax advantages that a revocable trust does not have. However, an irrevocable trust does not have the flexibility offered by a revocable trust.
What is a medical power of attorney/healthcare power of attorney?
A medical power of attorney (otherwise known as a durable healthcare power of attorney) is a document which enables a person (referred to as the principal) to appoint someone they know and trust as their agent (also referred to as attorney in fact) to make their personal and medical decisions including medical treatment, personal care, and placement in the event that the person is unable to do so themselves. The agent’s powers may take effect immediately, or only upon the occurrence of a future event, usually a determination that the principal is unable to act for themselves due to mental or physical disability. The latter is called a “springing” power of attorney (this is less common). A power of attorney may be revoked as long as the principal is mentally competent, but the revocation must be in writing. If a person becomes incapacitated for any reason and does not possess a medical power of attorney, they will likely require the court appointment of a guardian.
What is a living will?
A living will (also referred to as an advance medical directive) is a document which enables a person to set forth his/her wishes with respect to end-of-life decisions such as the use/withdrawal of life support, artificial nutrition/hydration or other support measures if the person is in a terminal condition (ie. without reasonable hope of recovery), should such person be unable to express these wishes.
What is a financial power of attorney/general power of attorney?
A financial power of attorney (otherwise known as a durable general power of attorney) is a document which enables a person (referred to as the principal) to appoint someone they know and trust as their agent (also referred to as attorney in fact) to make their financial decisions including management of their income and assets in the event that the person is unable to do so themselves. The agent’s powers may take effect immediately, or only upon the occurrence of a future event, usually a determination that the principal is unable to act for themselves due to mental or physical disability. The latter is called a “springing” power of attorney (this is less common). A power of attorney may be revoked as long as the principal is mentally competent, but the revocation must be in writing. If a person becomes incapacitated for any reason and does not possess a financial power of attorney, they will likely require the court appointment of a conservator.
Can I change my estate plan after I execute it?
There are numerous reasons why a person may want to change or revoke their prior will or trust including a change in circumstances or changes in probate and tax law rendering certain provisions ineffective. As long as the testator (the person who executed the will) or settlor (the person who created a trust) is mentally competent, he or she can amend or revoke their will/trust. Changes or additions to a will can be most easily accomplished by adding a codicil. A codicil is a document amending an original will, with equally binding effect. Thus, a codicil must be executed with applicable law, using the same formality as the original will. Wills cannot be changed by simply crossing out existing language or adding new provisions, because those changes do not comply with the formal requirements of will execution. Similarly, a trust can be updated with one or more amendments. To avoid frequent changes regarding the disposition of an individual’s personal property, a will can specify that personal property (other than money or real estate) is to be distributed in accordance with instructions provided in a separate document (often called a Memorandum of Tangible Personal Property) which can be updated as often as needed without requiring a formal codicil or revised will. Similarly, other documents including medical and financial powers of attorney and living wills can be amended at any time.
Can I nominate more than one person as my agent under my power of attorney, as my personal representative/executor, or as my trustee (otherwise known as fiduciaries)?
Yes. One of the best ways to ensure that your estate planning goals are carried out is to appoint one or more successor fiduciaries in your estate planning documents in the event that your principal fiduciary is unable or unwilling to take on or continue in the role in which you appoint them. By doing so, your estate planning documents remain in effect despite this change in circumstance and you will not be forced to amend or re-draft such documents. There is also the option of appointing more than one person as co-fiduciaries. However, this decision should be made with the advice of counsel depending on the situation.
What is a guardianship and a conservatorship and how do they differ?
A guardianship is a court proceeding in which the court appoints a guardian to take care of another person who is unable to care for themselves (referred to as the Ward). Ordinarily, a guardian is appointed for a minor or incapacitated person who is incapable of make decisions regarding their personal care, and medical treatment. A guardian can be a family member or a professional and may be authorized to make decisions regarding a person’s health care, residence and education. The appointment of a guardian requires a court finding of incapacity of the Ward.
A conservatorship is a court proceeding in which the court appoints a conservator to manage the assets and financial/legal affairs of another person who is unable to manage their property and affairs themselves (referred to as the Protected Person). A conservator can be a family member or a professional and may be authorized to make decisions regarding the management and use of a person’s assets and property. The appointment of a conservator does not require a finding of incapacity.
Under both proceedings, the evidence presented to support the appointment must be “clear and convincing,” which is a higher legal standard in the law. Medical documentation regarding the disabilities and impairments must be provided. The authority of the guardian or conservator may either be limited or unlimited depending on the circumstances and degree of impairment or incapacity of the Ward or Protected Person. A person may require both a guardian and a conservator or one or the other depending on their needs and circumstances. During a guardianship or conservatorship proceeding, the person alleged to be incapacitated or in need of protection is referred to as the Respondent until an appointment is made.
What if I have a family member with a disability or special needs? Do I need to do something different in my estate plan?”
It is common for families to have a family member who has a disability or special needs. While the government provides financial assistance through Medicaid, Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI), it is rarely sufficient to meet all of the needs of the disabled. Special needs planning, and specifically, a special needs trust is a crucial legal tool which holds assets to care for and protect the elderly and persons with disabilities while allowing them to continue to receive their government benefits. Failure to plan for a disabled family member could jeopardize his/her government benefits. There are numerous advantages to special needs planning and the use of a special needs trust including:
- preserving eligibility for government benefits;
- providing funds to pay for “extras,” (e.g., homes, handicap-accessible automobiles and travel);
- protecting a case settlement from being immediately depleted due to the high cost of health care;
- keeping assets within the family; and
- giving family members much needed peace of mind by providing funds to care for their loved ones who may not be able to care for themselves.
What is a Special Needs Trust/Supplemental Needs Trust/Disability Trust?
A special needs trust (also referred to as a supplemental needs trust or disability trust) is a vehicle used to protect funds on behalf of a disabled person (referred to as the beneficiary) to provide for the beneficiary’s special needs without disqualifying them from public/governmental benefits such as Supplemental Security Income (SSI) and Medicaid. Due to complicated and ever-changing Medicaid rules and regulations, a special needs trust must be carefully crafted and properly created to insure it effectively carries out its purpose. There are three types of special needs trusts:
(a) Self-settled/first party special needs trust: a trust established using the disabled person’s own assets, a lawsuit settlement, or a bequest from another person. When the disabled person dies or recovers from the disability, there is a mandatory payback provision to the state Medicaid agency.
(b) Third party special needs trust: a trust established by a third party, usually a parent or other relative, and is funded with the assets of persons other than the beneficiary. The person who creates the trust can direct how the assets will be distributed upon the death of the disabled person. This type of third party trust can also be created in a person’s will. Such a trust is referred to as a testamentary special needs trust (because it is created in a person’s last will and testament). A testamentary special needs trust is funded with assets of the deceased person (also referred to as the testator) for the benefit of the named beneficiary. The testator can direct the distribution of any assets that remain in the testamentary special needs trust at the death of the beneficiary.
(c) Pooled Special Needs Trust: a trust managed by a non-profit organization for a group of disabled individuals. The pooled trust is funded with the assets of the disabled person and the assets are then pooled with other pooled trust beneficiaries’ assets with the goal of lower administrative costs and to allow the larger pooled principal to be increased for investment purposes. However, each beneficiary’s assets are segregated into separate accounts. Upon the death of a pooled trust beneficiary, his/her funds are retained by the non-profit organization. The largest pooled trust in Colorado is administered by the Colorado Fund for People with Disabilities (http://www.cfpdtrust.org/).
What is probate and should I avoid it?
Probate is the court procedure used to administer the estate of a person who has passed away (referred to as Decedent). The probate process enables the transfer of the assets which are titled in the decedent’s name at death to the beneficiaries of the decedent’s estate through the appointment of a personal representative (also known as executor) who stands in the shoes of the decedent. It also allows for creditors of a decedent to file claims against the estate to collect their debts and for interested parties to “contest” the will. The process of administering a Decedent’s estate which includes collecting the Decedent’s assets, paying off the Decedent’s debts, and distributing the assets to the Decedent’s beneficiaries, is called “probate administration.”
Is it a good idea to title all of my assets in joint tenancy to avoid probate?
It can sometimes be beneficial to title one’s property in joint tenancy (ie. putting another person’s name on the title to the property along with your name) so that one’s assets transfer automatically to the surviving owner (referred to as the joint tenant) in order to avoid probate. Most commonly, joint tenancy is utilized between spouses. Usually this is done with respect to real property or financial accounts. However, while there are circumstances in which this might makes sense, doing so without proper planning can be disastrous. The joint tenant of your property is not just a signer, but he or she is actually a ½ owner of your assets. Thus, a joint tenant can clear out all of your bank account without your consent. Additionally, a creditor of the joint tenant can execute judgments against the joint tenant’s interest in your property. If you intend to leave specific assets to more than one child, but you have only one child as a joint tenant on an account, that account will go only to that child.
What are non-probate assets?
There are certain assets of a Decedent which do not need to pass through the probate estate because they pass directly to the beneficiary to whom they are designated at the Decedent’s death. These are called non-probate assets. They include assets held in trust, property titled in joint tenancy, bank accounts with pay on death designations, and other assets with beneficiary designations such as life insurance policies, retirement accounts and annuities. Such assets generally transfer directly to the surviving joint tenant or named beneficiary without probate oversight.
What is long term care insurance and should I have it?
Long-term care insurance is a private insurance policy purchased to cover long-term care needs, such as home care provided by a paid caretaker, assisted living facilities or nursing homes. While it can be expensive, long-term care insurance can save a substantial amount of money when compared to the rising costs of long-term care. In choosing a long term care policy, it is recommended that the policy is underwritten by a company you trust to stand behind the policy financially and that the policy qualifies for Colorado’s Long Term Care Insurance Partnership Program. Thus, you should research several long term care insurance policies with different companies and compare them. It is advisable to work through a reputable broker who can advise you as to whether long term care insurance is right for you.
What is the difference between Medicare and Medicaid?
Medicaid is a joint federal and state program providing medical assistance to eligible needy persons. Medicare is health insurance for persons age 65 and older and for some disabled persons. The two programs are drastically different as to coverage, rules, and eligibility. Also, Medicare is essentially the same nationwide, but Medicaid differs from state to state.
What type of public/governmental benefits are available for those who are disabled, elderly or of low-income?
There are numerous public/government benefits/programs available to the elderly, disabled, and persons of low-income. Eligibility for such benefits can be extremely complex and vary case by case. However, a basic description of the most common benefits/programs are:
Medicaid: Medicaid is a means-tested medical assistance program cooperatively funded by the federal and state governments. The criteria for Medicaid eligibility are governed under both federal and state law, so these criteria differ somewhat from state to state. Further, different criteria apply to Medicaid benefits received in the community than to Medicaid benefits for long term care or Home and Community Based Services (HCBS) programs. In Colorado, individuals who qualify for SSI are considered categorically eligible for Medicaid. Thus, the eligibility criteria for Medicaid in the community are generally the same as for eligibility under the SSI program. To be eligible for Medicaid, an individual generally must pass three tests: the medical test, the income test, and the resource test. Each state has regulations regarding the treatment of trusts and transfers of assets by a beneficiary to achieve or maintain Medicaid eligibility.
Supplemental Security Income: Supplemental Security Income (SSI) is a financial needs-based public benefit program which provides income to persons age 65 or older or who are blind or disabled. Like Medicaid, an SSI applicant must meet strict income and resource tests to qualify. SSI is federally funded and governed solely by federal law. Although SSI does not pay for medical care, in Colorado, SSI beneficiaries will also qualify for Medicaid. An adult is considered disabled for SSI purposes under the same criteria applicable to general Medicaid. A child under age 18 is considered disabled for SSI purposes if he/she is diagnosed with a medical condition (including mental illness) that is expected to last at least 12 months or to result in death, and the child’s medical condition results in marked and severe functional limitations.
Social Security Disability Insurance: Social Security Disability Insurance (also known as SSDI) is the program through which disabled persons can receive Social Security benefits before reaching retirement age. Like retirement benefits, disability benefits are calculated based on work history, though there are exceptions for younger workers or those unable to have compiled a significant work history.
Social Security: Social Security is the nation’s federally funded pension plan for retirees and the disabled. The program provides a monthly payout to beneficiaries based on their work history, income and average income. Social Security is a broad term that is usually applied to retirement, survivors and disability benefits. The Social Security Administration also administers, funds or is involved with programs like Medicare and Supplemental Security Income. Other benefits may be available based on widow(er) status, dependency status and other criteria.
What is probate litigation and are there alternatives to litigation?
Unfortunately, elder and estate issues, like other matters, sometimes result in litigation and must be resolved in court. Such litigation issues include, but are not limited to:
- a dispute over the appointment of a guardian and/or conservator (often referred to as a contested guardianship/conservatorship);
- a dispute over the provisions of an estate plan (referred to as a will contest);
- a contest over the appointment of a fiduciary such as the personal representative of an estate or the trustee of a trust (referred to as fiduciary litigation) or a suit regarding the fiduciary’s breach of duties; and
- the exploitation/neglect of an elderly or incapacitated person or the misappropriation of their assets; and
Fortunately, there are numerous alternatives to litigation which have emerged to assist individual’s and family’s resolve their elder law and probate issues outside of court. Such alternatives, include family settlement agreements reached pursuant to the Colorado Probate Code which can be facilitated by an experienced probate attorney, and alternative dispute resolution options such as mediation, and arbitration. In fact, there has been a shift in the Colorado court system in which judges are more often than not, ordering the parties involved in the litigation to mediate their legal issues before a trial can be scheduled.
*This information is for general informational purposes only and does not constitute legal advice. For specific questions, you should consult a qualified attorney.