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E13: Wills, Deeds, Trusts, Powers of Attorney, Oh My!

Get your legal house in order with a will, a Ladybird deed, a living trust, and powers of attorney for finances and medical decisions.  Get 'er done.


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GET LEGAL BEFORE THE HOLIDAYS!

In this episode, we discuss how and why it is important to get your legal house in order with a will, a Ladybird deed, a living trust, powers of attorney for finances and medical decisions, and more. By not taking action, you are making a choice. You are choosing to have the state make decisions for you and your belongings. Control your outcome.  Make your wishes known and maintain control over your life. Knowledge is power, and action is control. Now is a great day to get your legal house in order.

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Attorney Keith Leuty, a partner at Barnett & Leuty, PC, and legal assistant VeeCee Spears, joins us this week to discuss the legal documents you need at each phase of your life. This episode contains the information you need to start the critical conversation and get your documents in place. Do it now, before the holidays, and particularly now, before it's an emergency. Protect your rights and your loved ones. 

Their website can be reached at Civil-Law.com.

I debated breaking this episode into two due to the density of content and episode length of an hour and eight minutes. Ultimately, I figured you could make your own decision to listen to the whole episode or skip ahead to the parts relevant to you and your situation. Find chapter markers below so you can skip ahead. I have a handout to pass out that relates to this episode, but it will have to wait until next time as I am on fumes just getting this episode out.

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RESOURCES FROM THIS EPISODE

1.  DOWNLOAD Senior Medical & Housing Information for Making Informed Decisions About Your Care in Texas Guidebook

2.  Check out our resources page, where you can download additional guides at DoLIFESpeechPathology.com

TRANSCRIPT

Keith: I've jokingly said to many people before I wish I had learned more about auto mechanics when I was young. My dad, bless his heart, tried to teach me, but I was not interested, unfortunately. I can look under a car engine, and I know the basic parts, but somebody who's really experienced could tell: ‘Wait a minute, this engine may be running, but if you try and get out on the highway on this, there's a piece missing down here that's important that's gonna cause you to crash.’

So experience and knowledge. There's a reason that you go to law school for three years and not three months, and there's a reason why they charge so much for law school.

It is well worth your time to get somebody who's experienced and do it right because you can't afford to get it wrong.

WELCOME, KEITH LEUTY AND VEECEE SPEARS

Genevieve: Welcome Keith Leuty, and welcome VeeCee Spears. Thank you so much for being here today. Our topic today is the legal stuff behind aging and perhaps what our folks need to know about and maybe some things they weren't aware of.

So, Keith, I would love for you to start anywhere you wanna start. I've got a hundred questions, but I'm gonna let you take it away.

Keith: Sure. I'll just jump in with both feet, and thanks for having us on. We always look forward to the opportunity to try to educate people on maybe things that they're not aware that they need and maybe they didn't know that they needed.

A LAST WILL AND TESTAMENT

Keith: So where we usually start with folks, of course, is a very familiar legal document that most everybody's heard of. It's a last will and testament, but not everybody understands why it's so important to have a last will testament. A lot of it has to do with what happens if you need it and you don't have it.

I've told many people before that when a person passes away, everything that they own is known as their estate. And passing ownership of that estate to whom they choose, whether it be a spouse or children or somewhere else, can be fairly straightforward, or it can be kind of a bumpy ride. If a person has a last will and testament in place, it definitely creates some predictability regarding the time frames and the costs that are gonna be involved in order to transfer that ownership. If a person does not have a last will and testament in place, you don't have that predictability. It could go any number of different ways. And typically, we tell people that the costs, you could probably expect the legal costs anyway to at least triple, and your time frames could jump from a fairly, relatively short amount of time to do those transfers to upwards of a year. Or even, in some extreme cases, multiple years, you're still trying to legally pass along those assets.

Genevieve: I guess we all need a will.

Keith: Yeah. It's, it's a good idea to have it. Some people believe that if you have a will, you have to take it through the probate process. Probate is when you take it in front of a judge and get it authenticated to carry out the terms of the will.

It's not necessarily true. Many people have a will, and it never actually sees the inside of a courtroom, but it operates on the theory of ‘it's better to have it and not need it than to need it and not have it.’ The next two documents that I tell everybody that’s really important that you have, and this probably regardless of your age or your condition, and that's your two powers of attorney.

STATUTORY, DURABLE POWER OF ATTORNEY, AND MEDICAL POWER OF ATTORNEY

Keith: As long as you have the ability to make your medical decisions and your financial decisions, you'll do it yourself. But what if the day came either through accident or illness or something else when you couldn't do that? Well, if you have a medical power of attorney in place, then you have a legal document that's going to designate the person of your choice to make those medical decisions for you.

And the same thing with financial power of attorney. Who has the ability to access my money and pay my bills or receive funds on my behalf? Or even they could do real estate transactions on my behalf. So you wanna have that person designated because if you don't have those two documents in place and you had an accident or illness, the only other legal recourse would be to seek guardianship through the court system.

IF YOU DON'T HAVE A MEDICAL POWER OF ATTORNEY, YOU WILL BE GRANTED A GUARDIAN BY THE COURTS TO MAKE DECISIONS ON YOUR BEHALF

Keith: And guardianship is, just, you don't want to go there. Trust me, and the legal fees are astronomical. Your time in court in front of a judge is just gonna be dominating your life, probably. And even if the guardianship is eventually granted someday, then you have to keep going back and asking the judge for permission for everything that you want to do on behalf of the incapacitated individual.

And so I've compared it to entering into a lifelong game of Mother May I, if you remember that game that we played when we were kids. And all along the way, every time you go back to court, you're paying your guardianship attorney to draft all the documents that are necessary to file with the court.

So the easy way to avoid (guardianship) is to have a medical power of attorney and statutory, durable power of attorney, also known as a financial power of attorney, in place. They're relatively inexpensive basic documents that you can get from any competent estate planning attorney.

Genevieve: Sounds easy. And straightforward. But what is different with a trust?

WHAT IS A TRUST?

Keith: So a trust is a tool that many people will choose to use when they want to do everything that they can to avoid going through the probate process. And, just to explain, the probate process, depending upon what state you're in, can be horrific, or it can just be bothersome or somewhere in between.

HOW LONG DOES PROBATE TAKE TO PROCESS IN CENTRAL TEXAS?

Keith: Now we live in central Texas. And in central Texas, our judges here in our local counties have done a pretty good job of streamlining the probate process. If you have a will in place, you probably are only gonna spend about three, maybe four months going through the probate process.

Some of that is just waiting on a court date. But it's fairly predictable and streamlined. I'm told that in some places like California, probate can be several years and involve a whole lot more money and a whole lot more time. So, to answer your question about a trust, a trust is a legal entity that is created. Just think of it like a bucket, and you're gonna put your assets into this bucket.

You're gonna title those assets in the name of that trust. And then when you die, instead of having to go to court and get a judge's signature and have lawyers involved in everything else, whomever you've put in charge of that bucket, also known as your trustee, simply dumps out the bucket.

And the reason people will do this and create a trust like that is that it's quick. I mean, you could dump out the bucket the very next day after someone passes away and distribute those assets. And it's also private. Not everybody realizes that when you have a last will and testament, and you take it through the probate court, that becomes a public document.

A LAST WILL AND TESTAMENT IS A PUBLIC DOCUMENT

Keith: If somebody was nosy enough and wanted to, they can go online and pull up your will and see what you left to whom. A trust is a private document that is not built to see the inside of a courtroom, so your trustee would simply distribute your assets quickly and privately. And so that's the biggest difference, is that one is made to go inside of a courtroom and the other is made to avoid going inside of a courtroom.

IS THERE A COST DIFFERENCE BETWEEN A WILL AND A TRUST?

Genevieve: How does a family decide between the two? Is there a financial decision that they have to make where one is significantly less expensive than another? Or what other considerations do they have?

Keith: I think cost usually will play a big role in it. A basic will is going to cost a lot less than a trust is. Now legal documents are one of those things that it depends upon whom you're asking to draft the documents for you. There’s not a set rate, but I say shop around and try and find an attorney who's willing to and has the expertise, first of all, especially when drafting trusts that they've got a long track record of drafting trusts, and then this isn't their first one.

But besides financial considerations, I think that the well, honestly, that is the biggest one. I think VeeCee, you have been in a lot of those meetings with me. If something stands out to you, that is usually one of the deciding factors, all things being equal.

But then I start thinking about places like California, where it is the big element. I'm told people who moved to Central Texas from California, and we have quite a few, will tell me that they got a trust, and it wasn't the money issue. It was the time issue.

And once they come to Texas and we tell 'em, “Hey, our probate process is three or four months, many of them will decide, ‘you know what, we're just gonna go with a will here instead of a trust.’ So, some combination of time and money.

A TRUST IS A PRIVATE DOCUMENT

VeeCee: Well, I think the privacy with the trust is an important factor as well because your assets become a public document. And it seems to me that fraud is such a problem right now. And I think the more things you keep private, the less you have to worry about.

Keith: Yeah. The other thing about the trust is it depends upon the type of trust that you're looking for. Now, I've got a book over here on my shelf, it's called the Big Book of Trust, and it's about this thick, and it probably names a hundred different types of trust that can be created for different things.

Revocable Living Trust = Speed and Privacy

THREE COMMON TYPES OF TRUSTS

Keith: And I'm glad nobody ever quizzes me on what all of them do because we really focus on maybe three types that we see people do. The first type is simply called a revocable living trust. Some people know it as a family trust and they're fairly common. And the reason people get those is exactly what we've been talking about, the speed and the privacy.

Supplemental Needs Trust or Special Needs Trust

Keith: The second type of trust that is very common it's referred to as a supplemental needs trust, or some people will call it a special needs trust. And those are very useful if a family has an adult child who maybe has special needs and the family is taking care of that adult child, of course, but they want to have some type of plan in place as they age.

What happens to my special needs child when I die? I want them to have access to any and all funds available through government programs. But if I leave them my money in a will, then they're not gonna be eligible for those government funds. So a supplemental needs trust is the answer to that problem where you, again using the analogy of the bucket, put the assets into this bucket, and you name somebody else. Many times it could even be a sibling of the special needs child. Put them in charge of that and say, “look, this money is to take care of your sibling,” but the sibling (the special needs child) never legally owns those funds, so, therefore, they're not disqualified from some of the government programs.

Medicaid Asset Protection Trust

Keith: And the third type of trust, and this is the one that VeeCee and I, in particular, do a lot of, is called a Medicaid Asset Protection Trust. And a Medicaid Asset protection trust can be the difference between people having to spend down their nest egg, their life savings or not before they can qualify for certain government programs through the VA if they have a military tie-in or through Medicaid.

Genevieve: Is that something available in all states, or is it just for Texas, the Medicaid trust?

VeeCee: Medicaid is available in all our states, but each state has its own state plan. I know the rules for Texas, and I can certainly advise you on those rules. Some are similar, but then some are very different.

So it's kind of hard to generalize that in Texas, there's a tremendous benefit to having your assets placed in a Medicaid trust. And if you do it like five years before you have a need, then there's no look back on transferring those assets. And so you still have whatever you want to leave behind for your family members.

You still have those assets available to them and accessible to them. It's there by design, you know, the legislature has to pass all our rules for the Medicaid program. And we're a pretty conservative state overall, but we also respect our homeowners and our families that have worked hard and earned their money.

You don't want them to feel like their care is jeopardized. Maybe because they didn't save any money, they can still get care. And if they did save money, they don't have to spend all of it for their care. They can have some money to pass down to their family members because in all the years I've been working in long-term care, I have never seen someone say, “I saved my money to pay for my nursing home.”

They always want to pass on what they have worked hard to earn to their family members whom they love and who are precious to them. And I think it's a lovely thought and a lovely gift to them.

Genevieve: Keith, please tell us again the name of that trust.

Keith: It's called a Medicaid Asset Protection Trust. It is a type of an irrevocable trust. As contrasted with a revocable trust (the family trust is a revocable trust), which means that you set up that trust and you can change it as often as you like.

MEDICAID ASSET PROTECTION TRUST IS AN IRREVOCABLE TRUST

Keith: An irrevocable trust is a little bit different in that I compare it to maybe building a brick wall that you're gonna use pretty solid stuff and put it in place, and you're not planning to change it or tear it down. There, of course, are ways that if you absolutely had to, you could, but you're not creating it with the idea that, “Oh, we'll revisit this once a year and see if we need to tweak it a little bit.”

It puts the bucket in place with the idea that this is gonna stand firm for the remainder of the individual's lifetime who sets it up. Again, it's with the goal of trying to make them eligible for Medicaid benefits without having to spend all of their life savings in order to do so.

The benefit of this particular type of trust is that Medicaid cares about your countable assets. You know, VeeCee and I have done seminars that last for hours just on Medicaid and how it works because it's so complex.

This type of a trust can convert countable assets into non-countable assets under Medicaid rules.

Genevieve: There are a lot of rules, there's a lot of subtleties, and you know, you always hear you need a will or you need a trust, but you both have been able to illustrate that there's a lot of shades of gray.

HOW DO YOU DECIDE BETWEEN A WILL OR A TRUST, AND DO YOU NEED AN ELDER LAW ATTORNEY?

Genevieve: How would someone determine if they wanna do a will or a trust? Do they need to go to an elder law attorney? How would someone find the right attorney that's going to help them get these legal documents in place?

Keith: Well, first of all, I tell 'em if you're in central Texas, call us.

Genevieve: Of course. Well, of course!

Keith: If you're in another part of the state we also do zoom calls and phone calls, and we can help people who are not actually living in central Texas. But I'm guessing that you're asking the question for people who are in other states, where's a good, reliable place?

HOW TO FIND AN ESTATE ATTORNEY THROUGH YOUR STATE BAR ASSOCIATION

Keith: I usually would start with most state bars where in most state bars, the attorneys have to register. They will have something on their website that would allow you to say what type of an attorney you're looking for. And many of them will even give you a list of attorneys who practice in that area.

And the other thing Genevieve, before I got back into elder law, I actually worked at the Texas State Bar in the Chief disciplinary counsel's office for about six and a half years. And that is the office that is responsible for bringing some type of discipline to the profession and punishing attorneys who do unethical things.

I bring that up because you can look on any state and should have the ability to make sure that your attorney's not always getting in trouble with the state bar and doing unethical things. That information is available through a search engine on the state bar website in whatever state you're in.

LOOK UP THE ATTORNEY'S DISCIPLINARY HISTORY

Keith: So if you're thinking about going to see an attorney, I encourage people first look up their disciplinary history, make sure that you're not stepping into a hornet's nest of trouble. Having said that as well, it was my experience in my six and a half years working for the state bar that probably 95% of the attorneys out there are honest, hardworking people, just trying to help folks and make a living.

It's those other 5% that you gotta look out for. Their names keep popping up over and over again. So, depending upon the complexity of what you wanna do, I think that if you just need a very simple will, there's a lot of attorneys that will be able to help you with that. If you are really wanting to develop an estate plan, and this doesn't mean that you have a whole lot of assets, but you want more of a big picture planning, I would say look for somebody who actually advertises that they do state planning or elder law.

And if you are trying to become eligible for Medicaid benefits, don't go to an attorney who doesn't know Medicaid. That is definitely a field that is very complex and it's easy to get lost in the jungle if you don't know what you're doing. So look for an attorney who has been around the block a few times with that and can answer your questions because there are decisions to be made that are life altering decisions when you start moving assets that you saved your entire life.

And you need somebody who's gonna take the time. I know I tend to sometimes give a long answer to a short question, but I also encourage people. I think that it's incumbent upon our profession, lawyers, doctors, accountants, people who are dealing with such major topics with people that it can affect their lives.

FIND AN ATTORNEY WHO HAS A GOOD 'BEDSIDE MANNER'

Keith: Find somebody that's got a good bedside manner. I'm borrowing that from doctors, but find somebody who listens to you. Find somebody who's gonna take the time to explain and answer your questions and have time for you and not just shuffle you out the door because it's time for the next appointment.

Those are the kind of people that you want to entrust with something as important as the topics that we're talking about.

HOW DO THE PLANNING NEEDS CHANGE WITH AGE, OFFSPRING, AND ASSETS?

Genevieve: How about age ranges? Somebody newly married. Does the planning for the will versus the estate, does it change throughout a lifetime and accomplishments and assets?

Can you talk a little about are there different buckets for different age ranges and you know, what their needs are and because maybe somebody's just getting started out, they just got married, they're not thinking, you know, long term, they don't have a lot of assets maybe to start with, but then kids come along so then it's different. What would you say about that?

Do the planning needs change depending on where you are in your life?

IS YOUR KID 18? GET A MEDICAL POWER OF ATTORNEY!

Keith: Absolutely. And that is a question that comes up frequently. People will ask me, ‘Hey, my son or daughter just turned 18. Do they need a will? Do they need power of attorney’? And I tell 'em, ‘well, okay. It’s a trick question, but the answer is, first of all, tell me about their assets’.

You know, if they are independently wealthy at age 18, then yeah, we need to probably do a little more estate planning than if they have a part-time job at a fast food restaurant, and that's their entire income level. So, from the time a person turns 18, I would like to remind parents, when you send your kids off to college, that they may not need a will if they don't have assets.

They could use a financial power of attorney, certainly, but I would not put that in the crucial stage. What I would put in the crucial stage for that kid going off to college who's 18 or 19 years old, is a medical power of attorney. You absolutely want your college-aged kids, if you're sending 'em off to college, to sign a medical power of attorney.

Why is that important? Well, you still see your 18 year old and I have an 18 year old, you still see them as your child, but the law says no, that's an adult. And so if the worst case scenario happened and you got the midnight phone call from somebody at a hospital saying your 18 year old or 19 year old is at the hospital, there's been an accident and you throw on your slippers and rush out the door and get to the hospital.

And you walk in and you say, My baby, my baby, where's my baby? And the doctor's gonna say, ‘That may be your baby, but that is a grown adult. And unless you have medical power of attorney, I can't share any information with you’. And one o'clock in the morning, when you're standing there in your slippers, is not the time that you wanna suddenly say, ‘You know what? I should have gotten that medical power of attorney for my college kid.’ So it starts for me with the crucial stage with the medical power of attorney.

OUT OF THE HOUSE AND EARNING A LIVING? GET A DURABLE POWER OF ATTORNEY IN PLACE

Keith: Once a person is out and earning a living, okay, great time to get a will and great time to get the durable power of attorney in place.

GOT KIDS? ESTABLISH A DESIGNATION OF A GUARDIAN IN THE EVENT OF YOUR ILLNESS

Keith: When you get married, of course, you would want to revisit all of that because now you have two people potentially earning and assets to divide up when you start having kids. There's another document that you'll want to consider getting, and that would be a designation of Guardian in the event of your illness.

Now your will is gonna address the issue of what happens if I die. Who's gonna raise my kids? Well, if your spouse is still living, your spouse will, but there's not anything in the will that addresses what happens. If I'm in an accident and I'm in a coma, but I'm not dead, who's got legal authority to go enroll my kids in school or consent to any medical procedures that they might need?

All the things that parents do, all those decisions. So with the designation of Guardian, there would be a court hearing involved where a judge would actually make those decisions. But exhibit number one that's gonna be presented to the judge is this document that you have signed because you know the people in your life. Who is trustworthy? Who would raise your children according to your values and standards? And so you want to have that document in place to speak for you if you cannot speak for yourself, again in the event that you're alive, but you can't care for your children at the moment.

HAVE A HOUSE? ESTABLISH A LADYBIRD DEED (A TRANSFER ON DEATH DEED)

Keith: So I guess the next step comes when people start purchasing their house. And that's a document we haven't talked about yet, and it's actually one of my favorite documents we have here in Texas, and it's called a Ladybird deed. Other states have something very similar called a transfer on death deed.

And some states like Texas actually have both. But the idea behind the Ladybird deed and the transfer on death deed is that when you die, if you own real estate, at some point somebody has to sign a deed, deeding your ownership in this real estate to somebody else. If you left your ownership in that real estate in your will, then it would come at the end of the probate process.

And that could, again here in Texas, it would be three or four months down the road. And if you're in California, it could be years down the road before that transfer takes place. The Ladybird deed is meant to skip around all of the court and probate and make that transfer happen very quickly.

AVOID THIS DOOMSDAY SCENARIO

Keith: Typically, just as quick as you could get a death certificate down to the county clerk's office, and that's usually three or four weeks. Why is that important? Okay. Imagine this scenario, and granted this is a doomsday scenario that I have, but I'm sure it's happened before. You have a young couple in their mid-thirties, they've got two children and a dog and a little house with a little white picket fence, and life is going great and they both are employed and it takes two incomes to pay the mortgage that they've signed.

They signed a 30 year note and they're planning for their future. Suddenly, one of them is killed or dies unexpectedly. Now you've got a surviving spouse who's trying to take care of the kids, doesn't have enough money from their own income to pay the mortgage, and so says, “well, I guess we better go put the house on the market and sell.”

But they can't put the house on the market because if they're in Texas or another community property state, each spouse owns one half of that house. So when the first spouse dies, the house is now owned by, the surviving spouse still owns their half, and the deceased spouse’ estate owns the other half.

And so the surviving spouse cannot sell the house when they only own half of it. And if they have to wait to go through the probate process, that's gonna be, at least around here, three or four months down the road. So now you've got a surviving spouse who can't pay the mortgage, can't sell the house, and starts getting foreclosure notices from the bank.

Hopefully, maybe you've got a friendly bank that's willing to give you some slack, but you can't count on that. So, how do you stop the foreclosure from happening? Well, there's always chapter 13 bankruptcy. So potentially you've got a surviving spouse who just lost their lifelong partner, is faced with a crisis trying to figure out how to stay afloat, and they're going down talking to a bankruptcy attorney to stop the foreclosure on their house.

Okay. That's the doomsday scenario. Ladybird deed doesn't bring back the spouse, which is the real horror in this story. But it does allow the surviving spouse to get custody, full ownership of that house within three or four weeks in a practical matter, not in a legal matter. It happens instantaneously, but it takes a little while for the paperwork to go through and be able to get that house on the market and avoid the foreclosure and avoid the bankruptcy and all those other things that I just talked about.

So, when you get to the point where you have a house, you need to think about the fact that especially if you have a mortgage on that house for a young couple, get a Ladybird deed, put on it, or transfer on death deed, put that on the house and do everybody a favor in your family so that they're not having to wait if something suddenly needed to happen with that.

Okay, I'll take a breath and let somebody else talk.

Genevieve: I know, right? No, I'm just soaking it in. I'm taking a bunch of notes. Fascinating. Keith, let's move on to the next phase in someone's life. The next phase would be they're getting ready, maybe getting ready to retire.

HOW DO YOU PROTECT YOURSELF LEGALLY WHEN YOU ARE READY TO RETIRE?

Genevieve: Their kids are adults. How do their needs change legally? How do they protect themselves? How do they maintain what they’ve worked so hard for?

Keith: Yeah, once we get to talk, talking about people who are of retirement age, typically these people will have a nest egg of some sort that they've saved up. Many of them will have a house that they've even paid off the mortgage on.

And some people even have multiple properties and they're now concerned with health issues and how they're gonna pay for any health issues that come up because obviously the way that people are made, our bodies tend to start wearing out the older we get. For some people it's worse than others, and the costs are involved.

How are they gonna afford it? What type of insurance do they have? Is Medicare gonna play a role? Do they have private insurance? What if they decide that they're tired of mowing the yard, they're tired of the house that their kids grew up in. They don't need all that room anymore, and they're ready to sell the house and downsize, or even move to assisted living and let somebody else make their meals and do their laundry.

And all of those kind of things that actually start sounding nicer the older that you get. And VeeCee is actually out quite a bit in our community visiting all of the different assisted livings and places or retirement communities and probably VeeCee, I should let you talk just a little bit about what you've seen and what people are concerned about and what's going through their mind at that point?

CONSIDERING ASSISTED LIVING

VeeCee: Well, yes, and many times the travels are involved in what their plans are at that time in their life. And frequently they would prefer to not have to hire a crew to come in and take care of their home. And what if the air conditioner went out and they start thinking about having a place that's theirs, that's not oversized and not terribly expensive, where they have no cares.

There's a maintenance crew there that takes care of everything and sometimes you have vision or other physical impairments and going to the supermarket is not all that fun. And sometimes in my mom's case, she couldn't drive because of macular degeneration, so it made it hard for her. She couldn't drive and she couldn't shop well.

So you have to start building a little bit different mindset. So if you go to one of these (assisted living facilities), they are like cruise ships on land. They have activities. They keep them busy. They take them on trips and they have speakers and they prepare their meals so they don't have to worry about going to the supermarket.

They don't have to worry about driving because they have transportation there to get them to medical appointments as well as take them to the winery and have an afternoon out and look at the country, and they even have transportation to take them to look at the Christmas lights. And you know, in the larger cities such as ours, driving's not always fun for older people.

And it's actually treacherous if you're trying to have a location that you're finding or if you're trying to maybe look at Christmas lights, you can't drive and look. So there's just so many opportunities that they don't think about. Many of them have little clinics there and many are run by geriatricians or there are nurse practitioners are there and they can get medical attention at the drop of a hat.

And they're beautiful. They get to interact with all their friends and have activities and they have all the hobbies you can imagine. And it just takes so much off of maintaining your house and keeping your cupboard stocked and making meals. And what if you're too tired to cook that day?

It's absolutely wonderful. I think the interaction with other people keeps them even younger.

PHYSICIAN'S DIRECTIVE

Keith: Agreed. There’s two other documents I haven't mentioned yet Genevieve, we tell people that everybody could benefit from having this just because they solve problems that you don't really think about.

And the first one is what's known as a physician's directive. For some people refer to that as a living will. I don't usually prefer that term myself, because people confuse living will and last will and testament. So we refer to it as a physician's directive, and that's a document that can prove to be very important if something ever happened and you were on life support and your doctors were saying, “look, the reason that you're still living is because we have you plugged into the wall.”

A PHYSICIAN'S DIRECTIVE TAKES THE BURDEN OF DECISION OFF OF THE FAMILY

Keith: The doctors don't want to base the scenario where they walk out into the waiting room and tell the family, ‘Look sorry, but this is the way it is. What do you want us to do?’ Because invariably the family is gonna be divided. You're gonna have those in the family who say, ‘Well, okay, if that's the way it is, then pull the plug’.

And you're gonna have those who say, ‘Don't you dare pull the plug. We'll see you in court if you do.’ And then you're gonna have the people in the back of the room who say, ‘I don't wanna be in charge of making that decision. I don't want that on my conscience.’ And it's all very understandable. And the one person whose voice really should matter in that moment, should be yours because it's your life.

Under what circumstances would you want to remain on life support?

Do you want them to delay? If the doctors are determining that your brain is not coming back, you have no brainwaves, and the doctors are convinced, do you want them to then start sort of a ticking clock and say, you know, okay, well wait 48 hours or 72 hours before you disconnect my life support just in case the doctors are wrong or a miracle happens, or do you want to delay doing it so that loved ones could fly into town and say their goodbyes?

And so that’s what it does, that document takes the burden off of your family members. Nobody wants to be the one to tell the doctor, “okay, do it.” So it's an important legal document to have.

DISPOSITION OF BODILY REMAINS

Keith: The other one that we haven't mentioned yet is called a disposition of bodily remains. And we find that, not surprisingly, many people will pass away and their loved ones all look at each other and say, ‘do you have any idea what mom or dad wanted us to do here?’

And they said, ‘No, it never came up over the dinner table.’ Well, this is a legal document where you can express your wishes. You appoint an agent to legally be in charge of your remains. Usually, it's a close family member of your choosing. And in this document you can express what your wishes are.

Some people feel very strongly about that. Some people don't. Some people will say, ‘Look, let my family decide. I'm good with it either way’. But other people say, ‘Look, I want to be cremated’, or ‘I wanna be buried under the elm tree on the hill’, or ‘I wanna be shot into space’. Whatever their preference is, the disposition of bodily remains document is a place where you can express that and your family will be very grateful because they don't wanna do something you wouldn't have wanted.

But if you don't let them know, and we've occasionally heard of stories of people (especially if you're dealing with somebody who's got fighting dementia and they're saying different things to different people) and they pass away and the family members are now arguing that no, they told me they wanna be cremated. No, they told me they wanna be buried. What are you gonna do? So this breaks all of the ties and or confusion. And by the way, I mentioned dementia and Alzheimer's because we're seeing more and more of that. Whenever I hear a family say that they had a loved one diagnosed with dementia or Alzheimer's, I tell 'em think about the fact that there is a window of opportunity that is closing.

We don't know how quickly it's closing, but there is a certain amount of time a person has to sign legal documents before they're unable to anymore because you have to be able to understand the documents that you're signing. And once they lose that ability, you may be stuck.

DO THESE DOCUMENTS NEED NOTARIZATION

Genevieve: So do all of these documents need notarization, does everything? Can you download documents off the internet, get 'em notarized and hold on to them?

Do you have to go through an attorney for all of these things?

AN EXPERIENCED ATTORNEY CAN DETERMINE WHAT IS IN AND WHAT IS NOT IN THE DOCUMENTS and CAN MAKE ALL OF THE DIFFERENCE

Keith: Yeah. Great question. And I get asked that one frequently. There are any number of sources. Some people can find stuff on the internet. There are other companies that advertise that, ‘hey, you can, for a fee, we’ll let you do the documents right there on your home computer.

As an attorney, I've seen a lot of people bring these documents into us and they say, Well, you know, look, we we're ready to have attorneys do it, but here's what we prepared online. And I just can't tell you how dangerous that is if you don't know what you're doing to be preparing legal documents.

Because it's not only what's on the page, but it's what's not on the page. And I'll give you an example. In Texas, I used to teach a class on wills and estates for paralegals. And one of the things that I used to put on my midterm dealt with this. In Texas, it's very important that when you name your executor, the person who's gonna carry out your will, that you refer to them as an independent executive.

It's just one word independent, but it's very, very important because if you fail to have that word in there, then your executor will not be an independent executor. They will be a dependent executor by default. And the difference is night and day. An independent executor goes in front of the judge one time, gets the authority from the judge to carry out the terms of the will.

And if there are no issues or problems, never has to see a courtroom again. A dependent executor has to keep going back to the judge over and over and over again, asking for each step of the way. Judge, we now want to take the next step. Is it okay? Is it okay? Is it okay? That's one word that's missing in a document.

A lot of these places and companies that sell these things online or even offer 'em free online are trying to reach a mass audience and they're not state specific documents. And so they won't have those little nuances in there. And if you don't have those nuances, you really don't know what you have.

I would say at a minimum, if you're just determined that you are going to try to do this yourself, at least take them to an attorney and let the attorney look at them and tell you what you really have. Because so many of these documents, by the time you use 'em, you might be deceased or unable to sign a new and better one.

I've jokingly said to many people before, I wish I would have learned more about auto mechanics when I was young. My dad, bless his heart, tried to teach me, but I was not interested, unfortunately. I can look under a car engine and I know the basic parts, but somebody who's really experienced could tell, “Wait a minute, this engine may be running, but if you try and get out on the highway on this, there's a piece missing down here that's important that's gonna cause you to crash.”

So experience and knowledge. There's a reason that you go to law school for three years and not three months, and there's a reason why they charge so much for law school.

It is well worth your time to get somebody who's experienced and do it right, because you can't afford to get it wrong.

Genevieve: Yeah. Great point. Can't afford to get it wrong. So it sounds like if the word independent is left out and now they're considered a dependent executor, it's back to the Mother May I? In front of the judge.

Keith: But in pretty much every document there are things that we see all the time from the internet documents that are missing. And that's the first 10, 15 minutes of our meeting that we have with our client. We say, “Look what you have here is very insufficient and here are the problems that you're going to encounter if you don't do something about it.”

DO NOT RESUSCITATE: UNDERSTAND THIS DOCUMENT!

Keith: So there is one other document I wanna be sure that we talk about because there's some confusion about it and that is the DNR: the do not resuscitate.

Genevieve: Cause I would've thought that had something to do with a physician's directive.

Keith: No, no. Many, many people confuse these two documents. Remember the physician's directive or directive to physicians only deals with what happens if you're on life support.

Do you wanna stay plugged in or not? Very basic question. The DNR is a document. Many people will come to us when they schedule their appointment. Our paralegal will tell them, "bring any legal documents that you have from the past and let us review them.” And very often included in that pack of documents that people bring, they'll be a DNR stuck in there.

And I'll ask the person, I'll say, “Did you have surgery by chance? You know, and it doesn't even have to be serious surgery. It could be having your tonsils out.” And they say, “Yeah, how'd you know?” And I say, “Because you have a DNR, and it's very common right before you go into surgery when you're signing all these papers, that they'll put a DNR in front of you.”

And DNR of course stands for do not resuscitate, which means that if you flatline when you're in surgery and they’re unable to bring you back. That I guess that would be exhibit number one that they present in court at a medical malpractice trial saying, Well, they didn't really wanna come back, they signed this DNR.

DNR TELLS MEDICAL PROFESSIONALS TO NOT RESUSCITATE

Keith: But people get out of the hospital and they keep that DNR cause they think it's a valuable legal document. And I tell them, once you're out of the hospital, shred that thing, do not keep it. Do not include it with all of your other legal documents because if, hypothetically, you're walking down the street, perfectly healthy person, not a care in the world birds are singing in the trees and you have your DNR in your pocket and you trip on the sidewalk and hit your head and had a cerebral hematoma or something like that and went into cardiac arrest. If you have a DNR there and the ambulance shows up, what you're telling them is, “Do not resuscitate me,” even though you may have another 50 or 60 good years to live and they could have saved you.

You've got a legal document that they are now being told not to. And I've talked to some ambulance drivers before and how seriously they would take that in the moment. There are different factors that depend, but it's a not a document you wanna have around unless, as VeeCee says, you're ready to go to heaven.

In almost 20 years of practice, I've had three people who came into my office with the DNR and left with the DNR, and I didn't talk 'em out of it. One of them was quite elderly and just explained to me that pretty much everybody who had mattered to them had already passed away before them.

EXAMPLES OF WHEN TO HAVE A DNR

Keith: And they were ready. And I said, ‘okay, well then you maybe want to keep your DNR’. And I had another one who had been fighting terminal illness for a long time and was just tired of the fight and the pain and everything that comes with that.

And oddly enough, I had one. It was just early this year. In fact, it was a 63 year old woman who was in perfect health, and she said, “Well, it's just down to me and my daughter and she lives out of state and we rarely see each other, and I'm just kind of getting through the days and if the good Lord wants me tomorrow, I'm ready to go.” And I said, “Okay.”

As long as you understand what you have, that what you're telling doctors is even if you have the ability to save me, don't. So, if you're not at that point in life, and you want doctors to save you, you do not want the DNR, tear it up, get rid of it.

Genevieve: Does a notary/notarization make a document legal? Do you have to have a notarization on the document? And I realize you're speaking to people in different states, we’ll speak about Texas.

NOTARIZATION AND WITNESSES FOR DOCUMENTS

Keith: Now it depends upon the document. In Texas, a will, for example, needs to not only be notarized, but have two independent witnesses who are not beneficiaries under that will.

And with your powers of attorney, you can do those either with two independent witnesses or you can do them with a notary. And by the way, a notary is not doing anything other than saying when they stamp and sign their name, that they verified that the person whose signature appears on this document is who they said they were.

Genevieve: Gotcha.

Keith: That they’re not an imposter. So that's the job of a notary, is they check the identification and they watch the ink hit the paper from that person. They're not even the ones verifying if the person truly understood what they were signing. That's up to the lawyer to do it.

I mean, a lawyer would be unethical if they let a client sign something and they weren't convinced the client knew what they were signing.

Genevieve: Got it. Yeah. Oh boy. So much to know! VeeCee, you've got to listen to all this today. What are your thoughts on all of this with all the various clients? You're a Medicaid specialist, you can walk somebody through the process.

VeeCee: Well, I think one of the main things that we do is we always make sure that our families understand the documents. They totally understand them. Because Keith leaves no I undotted and no T uncrossed. And they have an opportunity to ask questions and to clarify things.

And I think that's incredibly important because how can we know what your desires are if you don't tell them to us and explain what your desires are. And so I think that's another thing that's incredibly important in having someone do these things for you, is to be sure it's what you think it is and what the legal statutes do for you.

DON'T WAIT UNTIL YOU HAVE FALLEN AND ARE IN THE EMERGENCY ROOM TO GET YOUR DOCUMENTS IN ORDER

VeeCee: And, do it soon. Don't wait. Don't wait until you've already fallen and had an emergency room visit. Do it now when your mind is clear and you know what you want and you know what you want to happen. And that way you have your power of attorney.

So you sleep nights because you don't have to worry ‘is my dog gonna get taken care of’ or whatever it is, because you have made all of those wishes known and made them legal. And I think many times our clients feel more confident because they have taken care of that and they just don't have to worry about it.

They've got that like they want it. If something happens and they want to change it, we're here. We are glad to listen to them and get it changed exactly as they want it. And I think that many times they don't understand about managing their assets and that there are actually other ways than putting it in the bank and just letting your money sit there and to be able to have the ability to increase those assets. We actually have another team member that we work with that is an expert on managing trusts. He can help them to understand, because I'm not gonna give them financial advice.

And same with Keith. He's doing the legal advice now. I'll tell them all the rules about Medicaid and we can help them to understand if they can qualify for their VA aid and attendance benefits. But I just cannot help them manage money and they need someone that can. We have a great team member that can do just that. And many people have their own financial planners.

But many times, they don't understand what you're working towards in long term care. It's just a whole different set of rules. And so, I think that's another thing that is really helpful when one is trying to plan for their future, is to have a team that's working for you rather than someone that can't speak to the financial, and I can't speak to legal, but we still have every base covered when they come in so they can confidently get to the place where they want to be and not have to worry about things.

WILL VS. TRUSTS: A HYPOTHETICAL SITUATION

Keith: Genevieve, sometimes it helps to actually put things in terms of numbers. And I know at some of the seminars that we've given on Medicaid, if you actually demonstrate with some hypothetical numbers to show the difference between taking the time to go talk to an estate planning attorney and somebody who knows Medicaid and the difference that it can make.

So, if you don't mind, I'm gonna kind of create a hypothetical situation here. And for my hypothetical situation I'm gonna use a single individual. Because if we're talking about a married individual, there's a few more complexities and I don't wanna muddy the waters. I try and make this as clear as we can, but I will say this, if you are married and seeking Medicaid, it works to your benefit.

AN EXAMPLE BY THE NUMBERS

Keith: It's a good thing if you're married. Okay? But for my hypothetical I'm gonna take a single individual and say that they have an income between social security and retirement of $2,400 a month. Okay. We see a lot of folks who that's about what their retirement income is.

Some are more, some or less, but $2,400 a month. And let's say that they have a house and the mortgage is all paid off, and that house is worth maybe $400,000 down here in central Texas. That’s pretty reasonable. We have a strong real estate market. And say this person has a fall or a stroke or something that necessitates them needing full skilled nursing care, 24 hours skilled nursing care, not just assisted living, not a retirement community, but they need full skilled nursing care.

So in order to qualify for Medicaid without any estate planning, if you don't know what's available to you, what would happen? The average, depending upon where you live, can be expensive to pay for 24 hour care and obviously different states and different areas would cost less.

But down in our part of the world, seven, eight, $9,000 a month is fairly typical of what we would see of what it would cost. Now, if this individual needs $9,000 a month, to pay for the care that he has and his income is $2,400 per month. Then he has a shortfall, obviously, and it's easy to do the math on it.

It's over $6,000 that he's short every month. So where's he going to get that? Most likely the family is gonna look and say, ‘Well, if we sell the house, we have $400,000. That'll buy a bunch of funds.’ Yes, it will. How long, again, it's a math problem. What are you gonna do when the money runs out? Well, I guess we'll apply for Medicaid and get Medicaid to pay that difference between what his income is and what the cost of his care is.

What we tell people is if you take the time and meet with somebody who understands how the system works, you can set up a Medicaid Asset Protection Trust. You can put the $400,000 into this type of a trust. And even under a worst case scenario, you know, like a stroke where something needs to happen quickly, you could probably preserve between 60 to 65% of that money and not have to spend it on private paying for the room and the care that he needs.

So, I mean, 60% of $400,000 is $240,000 that you could potentially save somewhere in that neighborhood, 240K - 250K of their money, which could be used for other things to buy them nice things or to pass on to the kids and the grandkids, whatever else. If know what you're doing, go see an attorney who knows what they're doing with this and they can save that amount of money.

I say all that because these are not small numbers that we're talking about. The people who don't know would just spend, of the $400,000, they'd spend $398,000 out of private pay. Mom or dad would be down to their last $2,000 and then they would apply for Medicaid. It doesn't have to be that way.

If you can utilize one of these Medicaid Asset Protection Trusts, and by the way, if you're planning ahead five years in one day to be exact ahead of the curve and create this trust and put the money in it, then it's not 60 to 65% of the money that has been converted from countable to Noncountable. It is 100% of the money that has been converted, and you could save the entire $400,000. Sometimes it helps people, perspective wise, to know that it's really worth their time to sit down with somebody and say, ‘Hey, is this an option for me? I'm very interested in saving as much of my nest egg that it took me so long to build as possible so that my children and my grandchildren can enjoy it’.

Genevieve: Excellent example.

USING A MEDICAID ASSET PROTECTION TRUST FOR QUALITY OF LIFE EXPENSES

VeeCee: And that also makes extra money available to the family members if they have extra things, like maybe speech therapy, that they want to pay for them, but they're not offered at the nursing facility. Medicare and insurance only pays a specific number and they're only left with $60 for their personal needs each month.

So being able to set aside some of the family money if they want to have someone come in just to have a companion. If they want to have someone come in and do their nails and make them feel pretty or take 'em out on the grounds, then there's extra money there to have all those options for their loved one.

Genevieve: For quality of life. Yes. But it takes planning. That is the take home message. Absolutely.

USE AN EXPERIENCED FINANCIAL PLANNER TO MANAGE INVESTMENTS INSIDE THE MEDICAID ASSET PROTECTION TRUST

Keith: VeeCee mentioned before, another team member that we work with, our financial planner, our guy makes sure that whoever's kind of overseeing the money that's in this trust and helping with it understands how to invest inside of this type of trust.

It's a little bit different than ordinary investing. There are things that you need to know of how Medicaid is gonna look at different things, but the goal, of course, is that you put your money in one of these trusts and it grows, so that instead of at the end of your life, you're down to your last $2,000.

Maybe you’ve got $400,000 plus what you invested. I don't know how much it can grow. It depends upon the markets and everything. But wouldn't it be wonderful to actually put money into a trust? And when you die, there's more money in the trust because you invested wisely than you ever even put in there.

Instead of the opposite. If you're just paying out of pocket and not doing the smart things, then you're gonna have a lot less money to leave to your family or have available like VeeCee and you were talking about, for the nice things in life.

Genevieve: Terrific. Absolutely.

VeeCee: Sometimes there's stigma regarding 24-hour nursing care. But you know, things have changed so much through the years and the people typically that I run into that work in those institutions are there because that's what they love to do. So they get wonderful care by people that love them, and they're beautiful.

BE PREPARED BY UNDERSTANDING AND LOOKING AT NURSING FACILITIES

VeeCee: They're beautiful and spacious, and they have more things and activities that they can offer. And you know, don't ever let that stop you from thinking of that as an alternative because they're very welcoming and I know my mother-in-law spent three and a half years and she just loved every minute she was there.

She simply did. And it was because she had never had anyone care for her. She had always done the caretaking and they made her feel so special that she had such great value, that they loved doing those things for her. So there's a wonderful, whole new community that you meet when you get to that point in your life where you need to continue care that's not maybe at home.

Genevieve: And that's a great point. Set aside preconceived ideas. Go check it out. Absolutely. And do it before you need it.

VeeCee: I say I like it best to just drop in somewhere and just kind of see things as they're gonna be on a regular, daily basis and not have someone schedule a tour and have everything set up.

Genevieve: Right. They stage all the residents and the plants and, you know, here's our lovely facility.

VeeCee: Yes. Yes. And they're pet friendly. They can take they're little good friends that have been with them for so long.

Genevieve: And they're supportive to therapists coming in, whether there may be some therapists with the facility or like myself. When I worked in home care for so many years, I went into lots of different facilities and was able to get, you know, some continuity of care with the staff that was there and work with a nurse. There are options.

VeeCee: There are wonderful options. They're just wonderful options.

BE AWARE OF PRECONCEIVED (LEGAL) IDEAS

Keith: You mentioned preconceived ideas and it sparked something I meant to mention earlier and I wanted to circle back really quick because I'm always surprised whenever we go out and speak to an audience. I'll ask and I'll kind of pull the audience. The number of people who raised their hand and actually believe, this still shocks me.

Not everybody, but, I'll ask 'em, ‘Look if you and your spouse own a house together and one of you passes away, who believes that the surviving spouse is now the sole owner of the property’, and people will raise their hand.

They think that transfer happens immediately. And I once asked an audience member just outta curiosity. I said, “Why do you think that?” And the answer came back, “Well, I'm the only one with the key to the front door.” And I said, “Well, it doesn't work that way. There always needs to be a deed transferring.”

And that deed can either be put in place while you're alive, the Ladybird deed so it happens automatically, or it can be obviously deeded during your lifetime. You could just wake up one day, and deed your property to someone else, or it's gonna be done through an executor's deed. And the executor is only empowered to sign that deed at the end of the probate process.

IF YOUR SPOUSE DIES, THE PROPERTY MUST BE DEEDED TO THE SURVIVING SPOUSE -- THIS MUST BE DONE!

Keith: So, don’t believe that it happens automatically. At least once a year. We'll have somebody come in and they want to do their legal documents and they'll tell us that their husband or wife had passed away. And I said, "Well, what did you do about their ownership in your house?” And they look at me and they say, “Well, was I supposed to do something?”

I said, “Yeah, before we can do anything, before you could sell this property, we've got to take care of that issue first.” And there are easy ways to do it. Again, Ladybird deed, to me, is the easiest, fastest way. If you wanna do it the traditional by going through a will and executor's deed, that's fine as well. There's nothing wrong with it. It's just not as fast and it'll cost you a little bit more money.

Genevieve: So much great information. I wanna thank both of you for your generosity with your time today. I'm gonna type all this up. I'm gonna transcribe it. I'm gonna make pretty pictures and get the information out. I know I have learned so much. I thought I had a pretty decent idea of this and I'm continuing to learn. I’m grateful to both of you for your time.

VeeCee: Well, we’re honored to be able to help anyone, it’s certainly my pleasure.

Genevieve: Thank you. And thank you Keith. Any last words?

FREE CONSULTATION AVAILABLE WITH KEITH LEUTY FOR TEXAS RESIDENTS

Keith: Again, I just say for our audience that's local and may have more questions, feel free to contact us. We will sit down. We'll schedule a time here at our office to sit down with you and talk about your individual situation and we won't charge you for that meeting.

We just want you to be educated, have the information, and make the decisions that are gonna be best for you.

Genevieve: Love that. So in the show notes, I will be linking to the website and have contact information in there and they'll be able to reach out to you guys easily.

Thank you so much.

Categories: professionals to know, resources for seniors