Incompetency Planning

There are times when an individual is unable to make responsible decisions about their personal care or finances. Examples are a child, an adult with a developmental disability, or an adult in a coma or suffering from dementia.

For many of us, the latter two are real potential outcomes to our lives, and arrangements should be made while we are mentally astute so that our preferred care and decisions can be passed on to someone we trust. Every one of us should think about and document who we would want making decisions for us in such cases, and how we want our care carried out.

living-will

 

IMPORTANT DOCUMENTS

  • A living will
  • Advance directive
  • Durable power of attorney

 

SOURCES OF AID

State financial assistance

Obtaining state financial assistance may help with the cost of care. In order to receive state Medicaid assistance, generally the individual must pass three tests that involve showing a need for care, an income need, and limited resources. The limited resources are usually restricted to not more than $2000, and depending on the type of asset and state of residence typically exclude a certain amount of equity in a home, personal property, a vehicle, and certain types of insurance and annuities.  For married individuals, there generally are special spousal impoverishment protection rules.  In addition, to prevent circumvention of eligibility requirements, Medicaid typically considers transfers of assets that have occurred in the previous five years, which may delay or reduce benefits.1

Trusts

There are certain irrevocable trusts, commonly referred to as special needs trusts, for the benefit of the individual, that will not be counted as resources under certain conditions. These trusts are often designated to support supplemental needs not covered by Medicaid, such as getting a haircut or travel expenses.  Common to the different trusts in this category is the requirement that the state receive all amounts remaining in the trust after death, not to exceed the medical assistance provided by the state during lifetime.

Planning for Child Care

If you have children, designating a guardian to care for their personal and financial affairs should also be a high priority. In the case of a child with a developmental disability, it is equally if not more important to plan their care.  While you are alive you can care for them, but on their own, absent your instructions, the state will step in and assign someone to manage their care and finances.

Getting a Plan in Place

It’s important to have a plan in place should an unfortunate situation arise in which you become incapacitated and can no longer care for or make decisions for yourself. You can work with a trust attorney to discuss your personal situation and legally document your wishes. A financial advisor can help you devise a solid financial plan that accounts for the financial obligations of possible future care.

 

Hewins Financial Advisors, LLC d/b/a Wipfli Hewins Investment Advisors, LLC (“Hewins”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. Hewins is a proud affiliate of Wipfli LLP. Information pertaining to Hewins’ advisory operations, services and fees is set forth in Hewins’ current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at www.adviserinfo.sec.gov. The views expressed by the author are the author’s alone and do not necessarily represent the views of Hewins or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Hewins, and Hewins does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Hewins of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.
OneBite Editorial Staff
OneBite Editorial Staff

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Incompetency Planning

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