Colin: What is elder care and how is it different from a state planning? What should you know if you have aging parents? And let's be honest, and many of us do. It's a tough conversation to have - "Mom, dad. How would you handle a significant illness? Are you prepared legally, financially? Because emotionally, it's a really hard situation." The good news is that with proper planning helping aging parents navigate this tough period can help reduce stress and anxiety on everyone. This week, I conducted an interview with an elder law attorney in Maryland, stick around, and you will see the interview in its entirety and learn why elder law planning is different from a state planning when it makes sense and what's steps to take.
Colin: Colin Exelby, certified financial planner here and I provide financial planning for business owners and their families that just makes sense. I own the virtual advisory practice celestial wealth management and help clients all over the country plan for their futures. And you know what, according to data from the census, the oldest baby boomers will turn 76 next year, and by 2030, all baby boomers will be at least aged 65.
Now, many of us are helping our aging parents, both health-wise, financial-wise, making those decisions and planning for aging parents is becoming a larger and larger portion of people's wealth planning. Unfortunately, in the planning profession, we often get approached far too often when it's too late to do ideal planning, and that's why I have a special treat for you. I called in an expert to share her knowledge and help you see the forest through the trees. Welcome, Nicole Hewitt.
Nicole: Oh, thanks for having me, Colin, excited to be here today.
Colin: Awesome when Nicole is the founding partner of HWK law in Timonium, Maryland, and Nicole, why don't you just ever give everyone a little overview of what you do and who you serve?
Nicole: Great, so I serve families. I work with families to help them with their estate planning, and also with a very specific focus on elder law, planning, and families that have special children or family members with special needs for special needs planning. And then with all of that is preparing for asset protection in the future and how to minimize taxes through this momentary process.
Colin: Great. So I think a lot of people listening are going to ask ==what in the world is elder care planning, I mean, it's different than a state planning. Right?
Nicole: Right. It is different, but it is a type of estate planning. Elder law planning really has a focus on how do we protect assets and how do we prepare to protect our family as we age and get older.
Colin: Okay, and that you're right, that is different than just a state planning. When should someone reach out to their financial or legal adviser to discuss Elder Care Planning? Maybe you know, there's a certain age or certain things like when should you reach?
Nicole: Well, it's funny because elder planning can actually start, you know maybe in your 50s when you're considering a long-term care policy, whether that's 40s or 50s, or whatever age, that's kind of your first step. I - if you're really looking for elder planning, and you wanna do some pre-planning when you're past that kind of long-term care age. We are looking maybe mid-60s to 70s or early 70s. I mean, if you're still in good health, that's really the point where you want to explore elderly uh elder law planning and really educate yourself and what the options are.
Colin: That's a good point because we talk a lot with clients when they're in their 50s about long-term care, and it's always an interesting discussion. Full of questions but that's typically when it's most affordable to get those policies or to make a decision that you're going to sell funds and what it means. If you do those different kinds of things, so it's good to know that you know, this is much different than having that discussion. This is about more sophisticated stuff. If you have elderly parents, older parents and you start to see signs either physically or mentally, that things are starting to decline, what are the first steps as a child that you should take?
Nicole: The first step for certain would be to make sure that they have a good financial power of attorney and an advanced medical directive for health care. So if they have a power of attorney that was done prior to 2010 in Maryland, really important that they get a new one, October 1st of 2010 is when the law changed. So definitely need the new form, and then a medical directive making sure that the right decision makers medically are in place, and those individuals are named to help mom, dad, family members financially and medically.
Colin: I've definitely seen those powers of attorney from before 2010, so yeah, that's really important, but in addition to that, things change right? People that you put in these directives here may not be capable. Right?
Nicole: Correct. They may not be living, they themselves may be sick, so really important to look at them and update them because as an illness progresses without these documents, the only other option, if somebody cognitively, you know, cannot act for themselves is a full-on guardianship, which nobody wants for time-consuming. They're expensive. you have court oversight at that point so these two basic documents, if you can help family members get those in place and any future planning is possible and can be done. the documents.
Colin: Perfect, okay, I mean, that's a great place to start, and so if you notice that your aging parents are beginning to show these kinds of science, either mentally or physically, and you want to, you want to discuss that with them. You have any tips for people on the best way to begin the conversation with an aging parent?
Nicole: This is probably the hardest part and the biggest thing that I hear from children is my parents don't want to talk about it. They don't want to talk about finances. They don't want to talk about the legal aspects of things a lot of times. It's oh, it's all taking care of and as many people know, all taking care of is not really that, so I suggest small conversations. Don't start with some big in-depth conversation of - "Where are your documents, what do you have?". Maybe it's a conversation if you've done already done your own documents to say - "Mom and dad. I've done my documents when I let you know I've done them. It's really free. We've been through the process and you know what if you've done". You maybe have a power of attorney, and if you haven't done your own documents, maybe it's - "Mom or dad, you know I'm thinking about doing these things. Who did you use? What do you recommend?" And then that kind of pulls things out with putting the focus on yourself and not on that.
Colin: That is great. I mean, that obviously, you have experience with those conversations and working with people on them, but you know they're probably not best had over a couple of bottles of wine or at thanksgiving, I assume.
Nicole: No, no, no. Now, when the whole families at the table ever thanksgiving dinner. Not a good time, but that is actually a great time to observe, though, but I find that thanksgiving maybe Christmas time where you haven't been in, you know your parents' presence, you know for an extended period of time, that's a great time to observe. We get a lot of pause like in January. Oh, I was with mom or dad over Christmas, and they don't really seem to be doing well, so observed during those times. Don't ask the deep questions.
Colin: I remember when I was younger and we used to go to grandma's house for Thanksgiving, that my father would have us in the car and would always have my grandmother drive, and he would sit in the front seat and he would test her to see whether she should still be driving. And I was always thinking in the back seat - "Could you do this without me in the car?". But it's you know, it's one of those things like you're saying, observe things. It is like, you know, you'll notice those things when you're together. So I think that's a really great point, and I'm still here. So it's all good,
Nicole: You made it.
Colin: So one of the things that I think people are really concerned about as they age, you know, they have assets, they've got pensions, they got things going on is if somebody becomes significantly ill for a longer period of time it becomes expensive - "Would they go broke? What would happen to the surviving spouse after many of the assets are used?". You know what can be done to protect that surviving spouse in that situation.
Nicole: So I guess the biggest thing I want to kind of hit at home today for people watching this is that if you are married. You have not done any sort of long-term care planning. You haven't done any sort of pre kind of set money aside type of planning to kind of factor in what Medicaid has as a five-year look back that there is a way for spouses to protect 100% of the assets with planning. One spouse is sick and the other one is healthy, so don't think that you have to spend everything, and that is what a lot of people think that you know - "We're going to go broke. We're not going to have any money for the healthy spouse". That is true. if you don't plan and don't call the right people, but make sure that you're consulting with a financial advisor with an elder law attorney to plan because you can protect those assets.
Colin: It's great advice. Now let's talk about a worst-case scenario. What if you didn't do any planning whatsoever and all of a sudden, a parent needs nursing care. What do you do? Do you just call local nursing facilities to talk to the nursing administrator and rely on their advice? Or is there something else that you should do.
Nicole: So I would say, number one, never rely on that administrator business office to advice. Because no, the whole of any facility is, they want to get paid and they don't care how they get paid, whether you're getting paid through you spending every time you have or if they're getting paid because you've applied for medical assistance. And now they're getting paid by the state doesn't matter, they just want to get paid. Their additional advice is going to be - "Okay, you have x amount of dollars you're going to pay for this long, and if you're still here, well then we'll help you apply for Medicaid when you're down to your last $2500 dollars" - not a good way to plan.
And that is the case, you know, you have a loved one that is going into a nursing facility, and let me clarify really important. We talk nursing level of care, we're talking assisted living or we're talking, you know. kind of living in like a nice, you know, senior community, this doesn't apply. This is when you're going for skilled nursing care is what you need. First call should be to - again an elder law expert to discuss what your options are, how do we protect assets and then how do we potentially get on medical assistance, whether it's immediately now or in the future.
Colin: Okay, so even if you haven't done any planning. Yes, there's still things that you can do, and you should still reach out to someone. You should just go off the recommendations of the facility.
Nicole: A hundred percent because you know, on average retail people depending on the situation that potentially you can protect in a non spousal circumstance and individual case, you can protect somewhere between 30% to 40% of the assets with some planning. So that could be huge. So if you have an individual that maybe only has $100 000 of assets to their name, wouldn't it be worthwhile to do some planning to potentially protect $30 000 of it versus doing no planning and having $2500 left.
Nicole: So there's definitely opportunity
Colin: Okay, and through this whole interview, we've been talking about spouses. So what if you're you know a wealthy individual or an individual with some means and you don't have a spouse, you don't have children? It's just you like, should you just not do any planning and just go into a facility and see what happens? Like what do you, what do you do in that situation?
Nicole: Doesn't matter where you fall financially, you should do some planning maybe different depending on your asset level. So if you are an individual and you have $5 000 000 dollars, we're probably talk to if you're looking at the same planning and sort of medicaid planning that we're looking for somebody that might have $300 000 dollars. You know the person with $5 000 000 dollars maybe looking - "Okay, how can we maybe get some money to a niece or nephew or a child? Or you know, maybe a charity in the future, how can we protect some money for that and then private pay, you know my cost of care also?". Then somebody that might have that $300 000 dollars, it might be more critical of - "Okay, how do we protect some serious money here because I don't want to get down to $2500 dollars and not have any money to pay for those extras that Medicaid doesn't cover?".
You know, a prime example that I have is that, you know, if you have some needs, some dental work, Medicaid solution for a lot of things is who the tooth not say. You know, get a bridge or a crown or get some dental work that you need. So if you have that money set aside, you've done some planning. You've got those money, you have money for those kind of extras that you may need to make sure that you actually have adequate care because really Medicaid provides just basic care.
Colin: Right. So I mean, that's an important point of this. It's not just protecting assets, it's about the quality of care that you want to have during that time. I wanted to make sure I heard you right. You would say if you need dental care and it becomes a more expensive option rather than getting that option. My tooth gets pulled.
Colin: That does not sound fun.
Nicole: The least expensive means to you know achieve that health care.
Colin: Gotcha. So even if you're not trying to protect assets for a family or for yourself, it makes sense to be exploring planning so that you can have the best care that you know that you can afford during that time.
Colin: Great. Well, this was a lot of information packed into a short period. This is a huge subject and a growing part of financial planning. I just want to say thank you for joining me today. if people want to get more information about you, your firm, and Elder Care, where should they go?
Nicole: You can go to our website at hwklawgroup.com or our phone number is 410-825-2255. Call us with any questions. We do consultations really want to make sure that people are educated and feel comfortable with their planning.
Colin: Well, thanks again Nicole for coming.
Nicole: Thank you for having me.
Colin: So let me know what you think. Are you already done with your Elder Care Planning? Let me know in the comments section. Do you have thoughts or comments and how to optimally do it? Let me know, put those in the comments. If you enjoyed this video, make sure you give it a like and of course,
Nicole: Make sure you smash that subscribe button.
Colin: Thank you, Nicole, and hit that little bell so you know, whenever I release a new financial planning video. Get clear, be clear.