Aging Options

Will Your Estate Plan Undermine Your Dream Retirement?

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Why is someone who creates legal documents for a living speaking out about the shortcomings of estate planning?

I have spent that last two decades watching people, including those with seemingly airtight estate planning documents , end up broke, a burden on their families, and forced into institutional care.

The same thing that happened to my in-laws, Bill and Vivian Wallace, was happening to the people who were coming to my elder law practice for help. Like Bill and Vivian, my clients had done everything the legal profession told them to do to prepare for their retirement.

Yet they were still in trouble.

Why?

Law school taught me that elder law attorneys are well-equipped to answer one question:

Where will the money to pay for an older adult’s long-term care come from?

This question is beyond the focus of traditional estate planning. In fact, the ability to answer this question is one thing that sets elder law attorneys apart from estate planning attorneys.

While law school taught me how to protect assets by helping an older adult qualify for VA or Medicaid benefits, it didn’t answer the questions about Bill’s situation that originally motivated me to go to law school. I was hoping that law school would show me how to have Bill’s care costs covered at home and how to bring him out of the nursing home. I didn’t learn that in law school, and that surprised me.

What I discovered is that law schools teach law. Law school taught me how to think. It taught me how to apply logic and case law to solve very specific problems for clients, and how to prepare certain types of documents. It didn’t take me long to realize that while law school taught me how to think like a lawyer and create documents like a lawyer, it didn’t teach me how to practice law. It didn’t teach me how to apply the law within the context of my clients’ lives. It didn’t teach me how to look at their situations through a systematic lens, or how to assess the impact the legal solution I had crafted would have on other people in their lives.

Some attorneys are perfectly happy staying in the narrow lanes carved out by their law school training. I was not. I could see that the legal work I did for my clients was impacting the lives of their family members, and not always in a good way. For instance, the Powers of Attorney I drafted for my clients (exactly as I was taught to do in law school) often created burdens for the people identified as their agents. No one talked about this in law school, but I saw the effects in my office every day. To the contrary, in law school they touted how a Power of Attorney helps people not become a burden on loved ones. This was not the reality I witnessed daily in my law practice. 

People Call Me When Their Dream Retirement Becomes a Nightmare

Law school taught me that Medicaid is available to pay for care, even care at home in certain circumstances. I learned that older adults who have little or no money don’t have much trouble qualifying for Medicaid. I learned that middle-class people can usually access Medicaid before they’ve spent all their resources if they know what to do. People who “know what to do” call someone like me—an elder law attorney who knows how to use legal planning techniques to help middle-class people qualify for Medicaid. It usually happens like this. 

The problem is that many families don’t ever find their way to an elder law attorney. The average family gets advice about Medicaid from a social worker in the nursing home or hospital setting. How much education does the average social worker have about the complex laws that govern Medicaid? The answer is very little.

Generally speaking, elder law attorneys help their clients answer one question—how to pay for care—while leaving many more questions unanswered. Where will I go? Who will care for me? Will I become a burden? How can I live at home if that’s where I want to be?

This was my question about Bill Wallace. My legal training hadn’t given me a good answer. What it gave me was the skillset to qualify a client for public benefits like VA and Medicaid, not how the money from those programs would be used after the person qualified.

I was determined to find an answer. Clearly, no one I was in contact with in the legal circles seemed to be looking for this answer. I needed to find a way to make things better, and easier for all the Bills and Vivians of this world because I was seeing more and more of them in my elder law practice every day.

Bill and Vivian’s situation had my brain functioning in problem-solving mode. I started thinking outside the legal box about the financial issues. I had spent about two decades in the insurance world. Might a solution be found there? Long-term care insurance was one way to address the issue, but it wasn’t for everyone. And even those who could afford it, no long-term care insurance could guarantee them to avoid nursing home care.  It was just a way to pay for the care, not a way to avoid nursing homes.  What if I offered a Medicaid-friendly annuity? Might that be one way to help middle-class families protect assets? What if I offered my clients both legal and financial solutions? Could that work?

I bounced the idea off attorneys in my network. Their reaction was swift—and negative. “You can’t do that,” one attorney told me. “That’s a multidisciplinary practice of law. It’s not allowed.”

My questions didn’t go away. They just increased.

Why weren’t elder law attorneys doing more to alleviate the suffering of older adults and their families?

Why were elder law attorneys (with a few exceptions) so reluctant to address their clients’ bigger problems?

Shouldn’t it be our responsibility to help our clients find these bigger answers?

Nobody seemed interested in looking at this.

The elder law attorney’s job is to get people on Medicaid, but what people do with Medicaid is their business, I was told. We just assume they know what to do.

I saw that few of my colleagues had the appetite to go beyond the law to address what I knew was tremendous human suffering among their clients and their family caregivers, suffering I had witnessed in my own family.

How Traditional Legal Planning Undermines Your Dream Retirement

Before I dive into what’s wrong with traditional estate planning, let’s look at what you get with a traditional estate plan. This is a complicated subject, so I will explain it briefly and in general terms.

A traditional estate plan consists of the following legal documents:

A Will. This document expresses your wishes as to how your property is to be distributed after your death. It also states who is to manage the property until its final distribution. If you die without a Will, there is no guarantee that your intended desires will be carried out. But if you die with a Will, chances are better that your wishes on how you want your assets distributed will be carried out, but there is no guarantee. And with a Will, there will be a Probate the estate will need to contend with if the assets exceed a minimum threshold. 

A Trust. Trusts, as Wills, set out how your assets will be distributed upon your passing. Many people use Trusts to avoid Probate—in fact, this is the biggest reason why people choose to work with a Living Trust. Trusts are also established to provide other forms of legal protection for the Trustor’s assets, to make sure those assets are distributed according to the wishes of the Trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes. But, in the end, a Trust and Will both achieve the same goal, that is, to establish how assets are to be distributed upon the death of the owner of the assets.

A Power of Attorney. This is a legal authorization for a designated person to make decisions about another person’s property, finances, or medical care. It allows the person you choose (the agent) to make decisions for you, or act on your behalf, if you are unable to make decisions yourself. But, a Power of Attorney is only valid while you are living – it has no validity once you die. 

A Living Will. This document, also known as an Advance Directive, states your preferences for artificial means of life support if you are no longer able to make decisions for yourself because of illness or incapacity.

A POLST. Similar to a Living Will, the POLST (Physician Orders for Life-Sustaining Treatment) form documents your desire for extraordinary medical measures as discussed between you and your medical provider. A POLST form dictates (by way of a doctor’s order) which types of care medical providers shall and shall not provide when responding to a patient’s call.

Handling of Remains. This document details how you want your remains to be handled (e.g. cremation, burial, or something else) after you pass away.

If your situation warrants, you may require additional documents such as a Community Property Agreement, a Prenuptial Agreement, or others.

All of these documents are important. Everyone planning for retirement needs them.

The problem arises when we compare the goals of traditional legal documents to the goals you will have if you want a successful retirement.

Generally speaking, legal documents in an estate plan accomplish three things:

  • Define who gets what when you die (Wills & Trusts)
  • Define how you want to die (Living Wills)
  • Define who will manage your affairs when you can’t manage them yourself before you die (Powers of Attorney)

I call it Die-Die-Die planning.

How does planning centered on your death help you during your life? If you don’t want to…

  • end up in a nursing home
  • become a burden on loved ones or have your kids become your unpaid caregivers, or
  • lose your assets to uncovered long-term care costs

…how will legal documents that define who gets what when you die, how you want to die, and who will manage your affairs before you die help you achieve these goals?

They won’t. These are two ships passing in the night.

Traditional legal documents do little, if anything, to help you achieve these goals.

Don’t get me wrong. I’m not minimizing the need for traditional planning. There’s a place for Die-Die-Die planning, but it’s not enough on its own.

There’s a deep disconnect between the goals of traditional legal planning and the goals you have for your life. This disconnect can turn your retirement into a disaster.

If you want to make sure this doesn’t happen to you, you need a better way to plan for retirement. The solution is to create a retirement plan that coordinates your plans for health , housing , financial , legal, and family  issues throughout your retirement years. I call this kind of retirement plan a LifePlan, and it gives you a way to live your best life until the end—without being forced into institutional care, going broke, or creating burdens for others.

Learn how to create your own LifePlan at AgingOptions .

From Your Retirement: Dream or Disaster? by Rajiv Nagaich, published by Hasmark Publishing. Copyright© by Rajiv Nagaich 2023.


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