How to Preserve and Protect Your Wealth While Honoring Your Final Wishes
“If something happened to me, what would happen to my family?”
I know this question is on the minds of many of the clients at Keen Wealth. It’s also the question that inspired my guest on today’s podcast, Polly Bartle Blomquist, to transition from family law to elder law and estate planning.
“After I had kids, I realized the gravity of parenting,” Polly remembers. “Really, families did not know the process by which to ensure that their families were protected, and I became passionate about that. I learned everything that I could possibly learn and then went out on my own and started practicing estate planning.”
On today’s show, Polly shares her expert tips for preserving wealth, protecting your best interests, and creating a legally durable legacy plan that will honor your last wishes.
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1. Protect your finances.
Once you’ve chosen beneficiaries and established a will or trust, Polly says that the next step in preserving wealth is creating two different but equally important power of attorney documents.
The first is for financial purposes. You can either create a financial power of attorney that goes into effect immediately, or a “springing” power of attorney, which requires two doctors to certify that you are incapacitated before it becomes active.
While the springing power of attorney sounds safer, Polly says that it does have some drawbacks. “Our banks are really reluctant to utilize these documents,” she says. “They're afraid of them because there's so much liability. Then, imagine a crisis situation. Mom or Dad is in the hospital, trying to get two doctors to come in and agree and sit down and sign a letter of incapacity is a little challenging.”
As you advance in age, Polly believes it’s probably best that you make your power of attorney document immediate.
2. Protect your end of life wishes.
The second power of attorney document you need is a health care power of attorney, alongside a living will.
“The durable power of attorney for healthcare gives someone you choose the ability to make healthcare choices for you,” Polly explains. “Those are always springing. Doctors have to declare you incapacitated because doctors want to communicate with you until they absolutely cannot, and then at that point, that's when your family steps in.”
The living will or health care directive is the document that your health care designee will use to guide the choices they make about your health care. Polly says, “You're in a persistent vegetative state, you have had a traumatic brain injury and there's no reasonable likelihood of recovery, what would you want the dying process to look like? Each person might feel differently about that. One person might feel as though they want all options taken to save their life or preserve their life. Another might say, ‘No, I would rather you just let me die naturally at that point while keeping me comfortable.’”
While we associate these plans with old age, Polly says that you should make sure all of your children over the age of 18 have powers of attorney in place as well. “Imagine your child going off to college and they have some major health incident,” Polly says. “You walk into that doctor's office, they're not going to talk to you because the child is 18 years old. Unless they've signed some sort of document to say that they can talk to you, you can't make choices and decisions for them.”
3. Plan ahead for your health care.
As life expectancy continues to rise, so do health care costs. And while no one wants to end their retirement in a nursing home, today’s seniors have to prepare for the possibility that they might need care at the end of their lives that their loved ones can’t provide, and that Medicare isn’t going to cover.
Long-term care insurance is one option we discussed on a previous podcast, although Polly says that these policies are becoming less generous and more of a hassle than they were in the past.
As for Medicaid, you need to meet the physical requirements proving you need coverage, and the financial requirement of having less than $3,000 in assets individually, or $6,000 for a married couple. Depending on your state of residence, certain assets are exempt, like one vehicle and up to $600,000 in interest in your home. But you can’t just sign over your other assets to your family to meet those low thresholds. Medicare is going to check your last five years of finances and any major gifting they find will make you ineligible.
Your best option is to plan ahead. At Keen Wealth, our clients’ health care needs factor into the emergency “buckets” of assets we establish and the annual withdrawal rates we plan. Another option is to create a Medicaid Asset Protection Trust to divest yourself of your assets legally in anticipation of needing Medicaid.
But if your needs are sudden and urgent, Polly says it’s vital that you call up a professional.
“It's extremely important if Mom needs to go into the nursing home tomorrow that you call an elder law attorney,” she says. “Let them know what is going on and see how they can help. Even if we haven't done five-year planning, there is crisis planning that can be done. And in those crisis plans, we can typically preserve for a married couple around 75% of the assets.”
Maybe the most important takeaway from this conversation is that building your nest egg is really just the first step in your lifelong financial planning process. What happens after you retire is just as important to my team at Keen Wealth and requires just as much careful planning and decision making. Come in and talk to us about options for preserving wealth to make sure you and your loved ones get the care you need when you need it the most.
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Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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