What you NEED to know about Elder Care Law; Protect Your Assets Now

Welcome to another edition of We're Talking Money. We've got a great show today. We're going to talk about something that a lot of you are wanting to know about, but you probably aren't thinking to ask all of the questions that we're going to cover today. We got a special guest in-house today, Lisa Salinas Mondello. She is one of 19 attorneys in North Carolina that is a certified elder law attorney, so there's not many of them. If you want to work with one who truly understands what all of this elder law planning is about, you want to work with one that's certified. Stay tuned. We're going to dig into what elder care law looks like and what you need to know when we come back.

Welcome to We're Talking Money. Lisa Salinas Mondello, welcome to our studio. Can't wait to get into this interview. How are you doing today?

Very good. Good to see you.

Good, it's good to see you too. Folks, I'm not kidding when I tell you we've got a real treat for you. We're going to just dive in. Lisa, what is an elder law? What is all of that?

That's a good question. An elder care attorney or elder law attorney, certified elder law attorney, covers all areas of estate planning, asset protection planning, public benefit planning. We take a person basically from birth to death. So what does that mean? It means that we're estate planners. Think about death and taxes. An elder law attorney is going to be thinking about the middle point.

So if you think about your life in three columns: first column, you're healthy, everything's great, you're doing pre-planning. And the middle column is the bad column. Nobody wants to get there. That's the I'm disabled column, there's a crisis column, I've become hurt column. And then the last column is death: probating your estate, trust administration, probate administration, winding things down or up for your family, and making sure that your objectives are being met when you're at end of life.

So you've just heard that estate planning and elder care planning, they are similar, but they're not synonymous. And so it sounds to me like you need both. Now, Lisa has scratched the surface. We're going to dig a little deeper. Do you need both, Lisa? Do you need estate planning and elder care, or are they separate, or is this one in the same?

Do need both. And the reason is is that 40 percent of us, they say, are going to need some type of long-term care. So that means that many of us won't be lucky enough to die in our sleep. So that means we're going to get older or there's going to be a crisis, and if our plan doesn't address crisis, then our plans are not comprehensive enough.

Well, that's a great way to say it. So if there's crisis, clearly there needs to be more planning. But some people go through life, and as you and I know, they procrastinate. Nobody wants to talk about death, and sometimes people don't want to talk about life if it involves long-term care. Granted, those are not the best or most fun subjects to talk about, but what happens if people fail to talk about it? It seems like, as long as I've been in the wealth management business and you've been in law a long time, things can unravel pretty quickly if people fail to plan.

You're correct. The issue is if we don't make a plan, then we'll be subject to the state of North Carolina's plan, and what the state decides will happen to our assets when we die might not be what our intentions are. If we're married, we might want to protect our and provide for our spouse. If we're in a second or third marriage, we might have children we want to protect or leave something to, or we might also want to provide for our spouse and our children.

But death is almost the easy way out. It's more about what happens in a crisis, whether it be by disease or by accident. If we don't leave a clear map, a clear direction for our family, they're not going to know what to do, and there could be bickering. We might not have family harmony, which then puts us in a different place where we're going to rely on the state once again to decide what's best for us.

I've said to clients for decades, if you want the worst will in the world, let your state write it for you. When the state gets involved, they have no idea about family dynamics. They don't really care. They're just simply going to do whatever the letter of the law says, and that may or may not be, probably won't be, in accord with what a patriarch or matriarch really wanted for their family.

True, that is true. And we often find that when a will is probated, if the will is outdated, that the family doesn't understand. They don't know what went wrong. "Mom or Dad promised me this," or "I thought my spouse was going to do something different." And then they die with an old will that does not outline what their clear intention might have been to their family. And this again causes it litigation, which causes expense, and that makes it really hard for the family.

You just hit something: probate. And everybody wonders about probate. Is it as bad as what people think? They say it can be rather costly, it can take a long time. Why would you want to avoid probate, and is that really doable? Because it's talked about a lot.

Probate is a process when a person's will is submitted to the court. And once that will is submitted for probate, there are certain hoops one must jump through: filing documents, following the court's timeline. There will be fees. There'll also be property that might need to be sold or might be tied up from being sold, depending on the issues at hand. Most folks want to avoid probate because of the cost and the stress to their family.

And that would be, I guess, the win, would be avoiding probate. And when you avoid probate, if you're a family that likes privacy, nothing is public, generally, if you can get it away from probate, where in probate it could be somewhat public knowledge. Is that true?

That is true. And if a family was concerned about disharmony, then utilizing trusts and making your intent clear is really important, and then you don't have to be in the probate court. Although North Carolina is a state that allows you to do a living probate. So if a family knew that there was going to be problems when they died with family members, they could literally probate their estate prior to death.

And with a large estate, I think it's AARP, I had a quote at one point, it was cost your estate three to five percent to probate it. So that can be pretty significant. And when you went to school, and early in your career, you practiced law in Massachusetts, and I think you're still licensed there.

I am.

So up there, probate cost can be often just off the chain, I would imagine. And it's expensive here, but I've heard up north it's so much worse, so maybe here it's a little better. But probate is not fun, and nobody should go through it if they can avoid it, is my opinion. Do you agree with that?

I do agree with it. And most folks don't realize that when they open a probate in North Carolina, there's a 90-day notice that creditors have a chance to file a claim against your estate. So nothing really happens for the first 90 days, and then there are accountings and other reporting requirements to the court. And this can be really difficult, especially for people who have real estate or brokerage accounts or savings accounts.

And if they have property in multiple states, might have to probate in more than their home state.

That's right. If you have real estate in other states, or vehicles that are titled in other states, it could get messy with your probate, because you have to file another probate in that state.

What, at a very minimum, are the things that a person needs to be thinking about, anyone listening to our show, for basic estate planning, or even beyond the basics? What would you tell someone that they need at a minimum?

I always tell people to think about what their objectives are first. We start with that, then you build your plan. So your plan is like building bricks of a house. You have to lay your foundation first, and your foundational documents are going to include what we call a durable power of attorney, also known as a financial power of attorney. This is the document whereby you name a person to make financial decisions for you in the event you're unable to do so, or you give them immediate power to do so. Remember, if you name someone your power of attorney, they can take everything from you that's titled in your name. So you must trust that person, absolutely, no doubts.

The other foundational document is called a health care power of attorney. Some states call the healthcare proxy or directive. This document tells the medical community who will make decisions for you when you're unable to do so, whether it be permanently because you have a progressive condition, or whether you're getting surgery and you're just unconscious for an hour or two. This person will tell and determine where you live, the treatment you get, and where you basically lay your head at night. So this is very, again, important to create a chain of command that can be objective and will be able to follow your intent and not supplant your intentions with their own.

In addition, another fundamental document is the HIPAA document. You've probably heard of that. That's the one you fill out at your doctor's office. Fantastic, it's there, but when you end up in a hospital, they're not going to be able to get access to your physician's HIPAA form. So you need a general HIPAA form, one that your family can fax in to get information about you, to make sure that you're all right or what's happening. So that's going to be instant information to them.

The other foundation document that we recommend is a will. And in that will, you want to be able to, very least, be able to direct where your assets are going to go if you're going to go through probate; if you have children that are underage, who should be their guardian; or if you are the guardian of a supplemental needs person, who you recommend to the court should be the next guardian after your death.

In addition, depending on the size of your estate, if you own a home and you maybe have a retirement money or a savings account, you may need a trust. There's different types of trusts, but a basic trust could avoid probate and make transition of your assets easier for the people that you care about, and or your pets, because they're also part of your family.

Lisa, you've given our listeners the basics. We're going to switch gears now. We're going to get into what can be a bit more complicated and is often just misunderstood, and that's the elder care piece. I hear people always worrying about leaving assets behind, wanting them to go to the spouse, maybe to their children, and they always worry that nothing will be left if long-term care is part of their world. If it becomes a part of their life, then all of a sudden all bets are off, and they won't qualify for Medicaid because they're too wealthy.

And what I learned through all of these conversations is people are just simply uneducated when it comes to elder care planning. Yet they all want to protect. They all have one thing in common: they don't want their assets to be spent. In your opinion, what's the ideal client from a net worth standpoint? Who should be thinking about elder care planning? It's not for people with small amounts of assets, and it may not be for the super rich, but it could be.

Well, I think you made a good point when you said a little bit of assets or the super wealthy, because to each person what they have is precious to them, and each person wants to protect those assets for the people they love. So I think that pre-planning is always the best, if one has time to pre-plan. And that's where long-term care insurance can be extremely helpful, because it can buy time for a family to do more planning. So that's always something we look at. Life insurance products that people have been paying into can also be leveraged and can be used to help finance care, to buy people time to do more protective planning.

But when we think about where their wealth is, positioning the wealth so that the people that are in your chain of command can protect it in a crisis is very important. So pre-planning, I always say, if you can, you should. Crisis planning limits some of what you can protect. But again, we always go back to the foundational documents. If your foundational documents do not provide the authority for your chain of command to protect assets for you, they will be spent down.

So you need to be thinking about what if. How much do you have to have to protect? It depends on what is important enough to you, and what your objectives are, and who are you protecting it for. So each case is different, each individual is different. But I would say that for everybody, protecting the family farm might be super important. It might be your vacation home. It might be just a place that you call your regular home. It may be your trailer.

But sounds like it's best for them to get an expert's opinion first, before they decide that they want to just start all kinds of planning, particularly when they might not know very much about it.

Absolutely, it's important to talk to an expert. Sometimes I have folks come in who tell me not to worry because they've put everything in their child's name, or not to worry, they've cashed

everything out and it's in their safe deposit box or under their pillow, that's not a good idea. Or they've added their child's name as a joint account holder to all their accounts and they're all set. But the problem with those kinds of strategies is they don't realize that they've just exposed their assets to the creditors of the child or whomever they've added to their accounts or the title to their property. And when they've taken, they've liquidated assets to cash and put them in their safe deposit box, they haven't really protected them. There is a record of that happening. So I do think before they take action they should speak to someone who's qualified.

That's great advice. I wish I could have said it just like that, because that is something that more people need to hear. You mentioned farms. In North Carolina we have a lot of family farms. Someone had a farm and they've got some money, maybe they've got some IRA accounts, maybe they've got just a hodgepodge of things. Are those the types of people that should be seeking counsel at your level? Or more importantly, some people think they'll never spend through those assets. Can that be debunked?

So absolutely. When we're thinking about protecting real estate, we have to be thinking about taxes, and this is why giving your real estate, your farm, to your child probably isn't a good idea. Because when you inherited that farm, you probably inherited from a parent or a grandparent, and that you had something which is called a low basis, which means you got it for whatever the fair market value was when that person died. So your children benefit to inherit it from you when you die rather than given when you're alive. So that would be a good tax savings for folks. So that's one thing for folks to think about, is how did I get the property and what are the consequences, the income tax consequences of giving it away during my lifetime.

Other assets that people think about are cash. How do I protect my savings? How much should I have to protect? Again, you don't give it away. That's not a good formula, because one, you don't have the money anymore. It's not going to be there. When you give it away, guess what, they're going to spend it. So you want to have your assets where they can assist you when you need them, but putting protections in place so that if you do get sick, need a nursing home, you can protect some of those assets for your spouse or your children.

And then we're thinking about, okay, can I leave my assets to my son or daughter or grandchild? Are they able to manage those assets? If they're not able to manage them, what should happen to those assets? Where should they go? And that's something that really needs to be explored.

Hey, thanks for watching this episode. That was all about elder law. Now, this interview went longer than we anticipated, and as a result we ended up with about three shows from one interview. They're all great. I hope you'll tune in again. They're coming out in the next few weeks, so be on the lookout.

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