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Where Estate Planning Meets Long-Term Care

Christine Benz

Christine Benz: Hi, I'm Christine Benz. I'm here at the Investment News Retirement Income Summit, and we're hearing today a lot about long-term care. And I'm happy to say I'm joined here today with Ben Neiburger. Ben is the principal at Neiburger Law, and he focuses a lot on estate planning matters at his firm. Ben, thanks for joining us.

Ben Neiburger: Well thanks for having me.

Benz: So, one topic that came up today was the interaction of estate planning and long-term care. So a question for you, Ben, is for someone who has an estate plan in place, and is also considering long-term care, how do they adjust the estate planning documents to reflect the existence of a long-term care policy?

Neiburger: Well with the long-term care policy, you understand that it pays out a stream of income for care, whether the care is at a nursing home, or an assisted-living facility, or at home. So they have to arrange the estate plan to control the payments that come out of the long-term care insurance, so that they can get those payments to go to the right places, so they can either stay at home in the community, or in the assisted-living facility with all of their friends, and those type of things. One of the best things to have is called powers of attorney.

Benz: A financial and health-care power of attorney for most people.

Neiburger: Exactly. So you're going to have one that's going to help people implement health decisions for you. And remember, these only come into effect when you're no longer able to make the decisions for yourself.

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Benz: And that's in a doctor's judgment, usually?

Neiburger: It depends on a lot of different things. But generally, you'll know when somebody can't make their own decisions, or their decisions are very, very poor, usually after dementia has set in for a while. But they need to have the health-care power of attorney so that they can tell the doctors what to do, and the health professionals what to do.

And whoever is the person's agent under the power of attorney, that is, the person who's doing things, can also have access to the health information, because then they can direct the long-term care funds towards the correct amount of health care.

In addition, the long-term care comes and it goes into their checking account. You need to have a power of attorney for finance, also called a power of attorney for property, to be able to dip into the checking account, to write checks to pay for those bills. And having the correct person acting under the powers of attorney is important to make sure that your money is safe.

And I also would not have the kids just as joint tenants on the accounts, because sometimes the balance in those accounts could be subject to the children's creditors. If there's a joint tenancy that means you're both on the account. There are other ways to deal with the account to avoid probate, but that's another discussion.

Benz: Right. So you want one person, typically, to be the agent for the financial power of attorney, and you want that person to be a financially-sound, decision-maker themselves.

Neiburger: What you'd like generally is the same person as the agent under the health care power of attorney and the financial power of attorney to avoid fighting.

Benz: But they can be different.

Neiburger: They absolutely can be different. And if you have a family that gets along under stress, it's fine. But you have to make sure either that the person is financially-savvy, or they know to hire somebody, to bring somebody in to help them be savvy. Not somebody who, just willy-nilly, throws money around, or spends it on anything, or doesn't make wise decisions, but somebody who can either educate, or hire the people to help them make the right decision.

Benz: So one last question. Should geography play a role in selecting these agents? So with the health care, for example, would it help to have someone who's near?

Neiburger: Sometimes. A lot of things can be done by telephone. Of course, it is hard to manage things, especially health care from far away. It's very difficult, but you can get people on the ground to help you do that.

Now if you have two children who you trust equally, one's in town, one's not, of course, you're going to pick the one who's in town. If the one that's closest is not responsible or is squeamish about medical decisions, you want to use the far one. It's key to have the right person do the job. It's helpful if they're close, but it's not necessary--e-mail, fax, and phone work just fine.

Benz: Well thanks, Ben, for some helpful guidance on some tough issues. We appreciate you being here.

Neiburger: Thank you for having me.

Benz: Thanks for watching. I'm Christine Benz.