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|The Lange Money Hour: Where Smart Money Talks
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- Guest Introduction: Lawrence Frolik, JD
- Who Should Seek Out A Specialist in Elder Law?
- The Real Role of an Elder Law Attorney
- Living Wills
- Marriage and Medical Liability
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Welcome to The Lange Money Hour: Where Smart Money Talks with expert advice from Jim Lange, Pittsburgh-based CPA, attorney, and retirement and estate planning expert. Jim is also the author of Retire Secure! Pay Taxes Later. To find out more about his book, his practice, Lange Financial Group, and how to secure Jim as a speaker for your next event, visit his website at paytaxeslater.com. Now get ready to talk smart money.
David Bear: Hello, and welcome to this edition of The Lange Money Hour, Where Smart Money Talks. I’m David Bear, here in the KQV studio with James Lange, CPA/Attorney, and author of three books, Retire Secure!, The Roth Revolution, and now, Retire Secure! For Same-Sex Couples. In many important ways, senior citizens are afforded special status under the law, with respect to their rights, responsibilities and benefits. These range from retirement strategies, housing options and long-term care to federal benefit programs such as Social Security, Medicare and Medicaid, and, ultimately, end-of-life decisions. For insights on elder law issues, we’re pleased to welcome Professor Lawrence Frolik of the University of Pittsburgh School of Law to this edition of The Lange Money Hour. A graduate of Harvard Law and a national expert on legal issues facing older Americans, Professor Frolik is a founder in the field of elder law. He’s author, co-author, or editor of over a dozen books on the subject, including the recently published Elder Law in a Nutshell, and his treatise advising the elderly or disabled client has been widely praised by the practicing bar. He’s been named to the council of advanced practitioners of the National Association of Elder Law Attorneys, and was a congressionally appointed delegate to the White House conference on aging. So, it’s sure to be an interesting and informative hour, and listeners, since today’s show is live, you can join the conversation with your questions and comments by calling the KQV studios at (412) 333-9385. And without further ado, I’ll say hello, Jim and welcome, Professor Frolik.
Jim Lange: Welcome, Larry.
Lawrence Frolik: Thank you, Jim. Good to be here.
Jim Lange: We are really lucky to have Larry. He, as David said, has a national reputation as an expert, and actually, a founder in elder law and disability law. And I really do want to get into the substance of elder law, but before we get into the substance, and I’m going to say that this is partly as much for me as our listeners, elder law is a growing specialty, and now you can even become certified in it and take special courses and get some special letters after your name or things like that. But one of the questions that I have for you, Larry, is who really needs to go to an elder law attorney? So, let’s say, for example, you’re 75 years old, and you want to get your wills updated, and you know of, or are referred to, a good estate attorney, but that estate attorney doesn’t hold themselves out as an elder law expert. Should you go to that attorney, or should you go to somebody who holds themselves out as an elder law expert? What is a consumer to do? And feel free to say different consumers could do different things.
Lawrence Frolik: Sure. I think that’s the answer. It really depends upon what kind of product (if I can use that term) that you’re hoping to acquire from the attorney. Now, if you’re, say, 75 and in pretty good health and life’s going on pretty well, but you never wrote a will or the last one you wrote was a long time ago, and you want to update that, you want to go to a good estate planner and sit down and look over what your possibilities are. The law changes now and then. There are tax implications. There are things that you could do which may or may not be best for you and your family. So, you want to make sure the estate planner helps you get your affairs in order, so that when you die, and unfortunately, you will, so when you die, your property will pass on in the way that’s most advantageous as you see it. That’s a very individualized decision, and a good estate planner will help you achieve the goals that you think are best for you.
Now, elder law attorneys are focused on a little different part of your life. The elder law attorney is focused on later life financial, legal and healthcare issues that affect older people. We would all like to have the life where you are healthy and carefree and out there in years, and maybe you’re on the golf course and that’s it! Life ends! And you’ve been in great health to that moment, and that’s maybe the “good” death. But the reality is many of us will have issues with our health and our finances and some other legal issues that can arise in later life. Now, should you go to see an elder law attorney just because that could happen? Probably not. There’s no need to go to an attorney just because something could happen. And most of your estate planners could help you do the rudimentary basic planning you need for later life, and by that, I mean any estate planner today will ask you to consider writing a living will, appointing a healthcare surrogate in case you lose mental capacity. That’s just sort of standard. Any estate planner today, I think, would say to you, “You should think about a durable power of attorney. So, in case you can’t take care of your affairs, maybe you’ve had an operation and you’re in the hospital, or maybe you’ve got Alzheimer’s or something, you want to have a power of attorney.” These are pretty standard documents, right, Jim?
Jim Lange: They certainly are to our office.
Lawrence Frolik: Yes, and I think to the vast majority of estate planners. Where elder law comes in is where people either are fearful or are already seeing on the horizon problems with mental capacity, long-term care, or increasingly also, elder law attorneys help families who have children who have special financial needs because of mental or physical disabilities. And so, you’re really concerned with how you’re getting older and you know you could have significant financial needs because of long-term care or health problems, but you really need to plan how you can conserve money for that child.
Jim Lange: All right. So, presumably, a well-trained and good ethical elder law attorney will have certain training and insights that a traditional estate planning attorney would not that would help them, let’s say, beyond a “standard” living will or power of attorney (and I do want to talk about that more), and they would also, perhaps, think out the finances and the potential problems more than, say, a traditional estate attorney.
Lawrence Frolik: Yes, I think that’s a good way to put it. The two types of lawyers overlap, and where they overlap is the basic wills and trusts. Most, but not all, elder law attorneys will write you a basic will and trust if you need one. But they do not hold themselves out for the most part as being as sophisticated as, say, you are about all the permeations of financial planning, particularly with IRAs and other modern instruments of wealth preservation. So, if you are just looking for kind of a basic will, “I’ll leave everything to my wife and to my children,” sure, an elder law attorney can do that. And a good elder law attorney would say, “You know, you need more than what I can give you in estate planning. Maybe you oughta go see Jim because your estate is a little more complex.” And just as a good estate planner can say, “I can give you a basic living will, but I think, given your situation, perhaps, we’d better refer you to someone who is going to help you with more complex issues.”
Jim Lange: And by the way, I have done that. I have one particular elder law attorney, who I think is very good and very ethical, and I refer her. And that’s a hint because I think there’s only one good one in the city! Her name’s Carol Sikov Gross, and she just does a great job with some of the issues that you had talked about.
Lawrence Frolik: Yes. The good lawyers in this field on both sides, estate planners and elder law lawyers, realize each has their field to plow, as it were. And although the fields overlap, there are moments when it’s time to pass the client on to someone else.
Jim Lange: Yeah. Let me tell you one of the potential objections that I have to some of the things that I hear in the field. I usually start with the assumption that my clients are the husband and wife who are sitting across the table from me. And sometimes, some of the strategies that I hear recommended are, in effect, a gifting strategy where you gift a significant portion of your estate to your kids, or you set up some type of trust that limits your access to your money, and the idea of that is in the event that you do need to go to a nursing home, that you will become a ward of the state and not have to pay for your own care. I’m a little bit more sympathetic if the idea is to preserve money for the surviving spouse. I’m a little bit less sympathetic to that plan if the idea is just to help with children who don’t particularly need its inheritance, because I always fear that if you become a ward of the state, that you’re not going to get the best care that you could otherwise, and I also think about well, what if you need to have, or you prefer (which, I think, most of us would) to have care in our own home, then we don’t want to deplete our assets. We want to preserve that. How would you answer that charge that sometimes that’s what “elder law attorneys do,” which is they have gifting plans and they have different trusts and annuity products that, essentially, make you eligible for care at the government’s cost, but you lose some control for the family.
Lawrence Frolik: Well, there are a lot of issues you raised there, and they’re all good issues and they’re good points to consider. Let’s roll this back a step, and what we’re talking about here, of course, is how do you pay for long-term care? And long-term care can come up because you have a physical ailment, but in today’s world, the biggest cause of long-term care is dementia. And that is typically Alzheimer’s dementia, which is a progressive, non-curable disease. And so, we have a lot of people out here who realize that there’s a chance they could have Alzheimer’s, and in fact, if you live past eighty, you have about a 50% chance of getting Alzheimer’s, and it is progressive so it can get pretty intense. Okay. Planning for that possibility can be done at two points in your life. The vast majority of people don’t plan for it. And therefore, they walk into an elder law attorney’s office when they’re thirty or forty days away from someone entering a nursing home, or they’re already in the nursing home, and they’re wondering, “What are we going to do now?” And there are things elder law attorneys can help them out (and we’ll probably get to those a little later), and at that point, there’s not much you can do about transferring away the money to your children or putting it in trust because you simply can’t do it. The government won’t let you. You can’t become eligible. Giving my money away today and becoming eligible tomorrow isn’t going to work. In fact, you have to wait five years after certain gifts until you’re eligible. Five years is a long time, obviously.
Then, there is a small number of people who, perhaps because they saw it in their parents or their siblings, older brothers and sisters, who say, “You know, I could come down with Alzheimer’s and that could decimate my estate. It could use up all the money we’ve saved, and we really want that money to go to the kids.” So, they walk into an elder law attorney’s office and say, “How can we preserve money today and become eligible five years from now?” Okay? Now, not too many people are willing to do that, but there are people willing to do that. The good elder law attorney would say to them, “Well, you realize you’re giving up money that one of you could use, or both of you could use, for your own care and comfort in favor of your children? You’re saying, ‘I prefer to put some or most of my money aside to insure it goes to my kids, and as a result, I won’t live quite as well.’” There are a surprising number of people who are willing to do that.
Jim Lange: Do you think that they truly understand that they are “not just saving money from the medical facility,” but that they might be giving up the possibility of staying home for two more years? That’s one of the things that I question because I really believe I always try to represent the people in front of me and not their kids.
Lawrence Frolik: I think that’s absolutely right, and a good lawyer (and I’m sure this comes down to estate planning because there are people in estate planning who are tempted to give away money in order to avoid taxes, or whatever reason) always kind of pulls the client back to reality and says, “Hey, come on now! You know, it seems easy today, but what happens five years from now, seven years from now? What happens if X, Y and Z happens?” And that’s what lawyers are supposed to do for clients. They’re supposed to say, “Let’s consider the contingencies, and let’s plan for those contingencies.” Now, in the end, it’s the client’s decision.
Jim Lange: Umm-hmm.
Lawrence Frolik: So, for example, if a client comes in and says, “We’ve got a million dollars, and we don’t want to put it all in trust, but we’d like to make sure that half a million is available for our two kids. They’re okay, but we just think this is really important.” Okay, you know? Okay. There you have it. The lawyer has to say, “Well, we can put that half a million dollars into a trust irrevocably. You can never get it back.”
Jim Lange: That’s right. That is one of the important points about this.
Lawrence Frolik: Right, and at first, you want to make real sure they know what that means: You don’t get it back. And it’s not a game. It’s not like a little shuffle game where you kind of hide it today and get it tomorrow. It’s really gone! Now, that half a million, you could have the right to all the income from the half a million. Let’s say you put it into some bonds and stocks and whatever, some nice, what? Dimension funds? And let’s say you could get five percent, just as a number.
Jim Lange: And by the way, that’s high.
Lawrence Frolik: That is high.
Jim Lange: If you use the traditional accounting method, it’s probably closer to one or two percent in terms of interest or dividends.
Lawrence Frolik: Right.
Jim Lange: Are you talking about a total return trust?
Lawrence Frolik: Well, I’m talking really about a trust where you would invest it in order to maximize income without worrying about growth.
Jim Lange: All right.
Lawrence Frolik: In that case, you could put it in bonds.
Jim Lange: Out of curiosity, have you seen people use Wolf’s total return trust in that context?
Lawrence Frolik: Not personally. I believe in Wolf’s total return trust. I think it has a lot of good features, but I don’t know if it’s quite right. I think, with this trust, you don’t want to go that way because here, you want the opportunity to invest the assets, either to throw off a lot of income.
Jim Lange: Umm-hmm.
Lawrence Frolik: That’s when you’re not in the nursing home.
Jim Lange: Right.
Lawrence Frolik: But if you go into the nursing home, let’s assume a worst case scenario. A husband and wife, husband dies, wife continues to live on, money’s in the trust, in the fourth year of the trust, she goes into a nursing home. And at that point, you don’t want the trust to pay her much income because all the income has to be paid to the nursing home. So, at that point, you would take your money out of your high income-producing assets and you’d put it into a stock fund that paid very little income.
Jim Lange: Okay.
Lawrence Frolik: So, that’s why you want to keep the alternatives to move the money around.
Jim Lange: Good point, and the audience will have to excuse us, but you get two lawyers going and we just go back and forth! And by the way, you did notice that Larry started his answer with the classic lawyer, ‘It depends.’
Lawrence Frolik: I could’ve used ‘It’s on one hand or the other hand.’ That’s next!
David Bear: Do our listeners need to know what a Wolf trust is?
Jim Lange: Probably not. We have so many important concepts…
David Bear: Okay.
Jim Lange: …and that’s a little bit of a technical issue.
Lawrence Frolik: I’m sure Jim will talk about that in programs to come, or has in the past. It’s a very important issue, but, as you say, not exactly…
Jim Lange: We actually do use it in our practice.
Lawrence Frolik: Yeah, yeah. Well, getting back to my example. So, the husband and wife really want to give up $500,000, and they’re willing to do so. You just have to keep running them around the track, as it were, and say, “Look, do you really know then you’ll never get to that $500,000? And imagine that one of you does need long-term care, and you start out like most couples do, you provide it in the home.” And we’ll use the classic scenario: The husband starts failing and the wife takes care of him at home. Maybe the kids come and help out part-time. But eventually, it becomes too much. You have to start hiring some help. It starts out small, a couple days a week, maybe. But before you know it, you’re having someone in that house ten, twelve, fifteen hours a day, really, because the wife is also getting older. And in fact, caring for her husband is causing her health to decline. She’s not as strong as she might have been. Now, you got the question: Can you afford ten to fifteen hours a day care in the home, having given away half your money, and you’re only getting maybe $20,000-$25,000 from that, plus whatever you had left over. As you suggest, that might be not enough to pay for that in-home care. That’s a scenario you have to think about before you put the half a million dollars into that trust.
Jim Lange: Right. So, in effect, by having put away that money for your children, you have reduced your options in order to stay home, and you have to use that money. In effect, that money is no longer available to you, and now you don’t have the housing choice that you want, and you might have to go to a facility when you might have been more comfortable at home.
Lawrence Frolik: Right, and even if you can’t stay at home, you may have preferred to go to an assisted living facility, which costs about half as much as a nursing home. But, again, you’re not going to get Medicaid, medical assistance, on assisted living, for the most part. Almost never. So, yes, I think it would be unusual for most couples to think at the end of the day to want to hide their money in a trust merely to pass it on to the kids. I think that would be a small group of people. Now, who actually uses trusts more commonly is they put the house in a trust and don’t put any money in the trust.
Jim Lange: Yeah, and by the way, I’ll tell the listeners that I am actually relieved because, you know, Larry’s this national expert on elder law, and a lot of people think of elder law as attorneys who do set up these trusts, and I was going to think, “Well, gee, what am I going to do when Larry comes and tells us the audience how wonderful they are and I’m not thinking that way?” And I’m actually very pleased that we could do this. And by the way, I will also mention, for people who want more information, and probably about the best source, certainly from the person who has the highest and best credentials anywhere, the book Elder Law in a Nutshell by Larry Frolik and Richard Kaplan, and you can reach that at Amazon.com.David Bear: Amazon, right.
Jim Lange: All right. So, that’s, let’s say, one very important issue, but, you know, obviously, elder law attorneys do a lot more than that. One of the things that you had mentioned was living wills. And living wills are something that I believe that everybody…I actually believe everybody should have. I know there’re some differences. And what our firm does, and we do it routinely, and if somebody says, “Oh, I already have a living will. Can I get a reduction because I have that, or because I have an old one?,” what I would tell them is it basically takes very little time on our part. In fact, the time to discuss it is much more important or a much higher use of time than the actual drafting of the document, which is pretty standard. And we just do them routinely. So, if I’ve done, I think, about 1,860 wills, I’ve probably done 1,859 living wills, or healthcare directives, because one person just insisted not. Could you tell us a little bit about the importance of a living will? And I know that you are outspoken in some of your opinions on living wills, and I think our listeners would like to know those.
Lawrence Frolik: Yes, and I’m glad to hear that all but one of your clients, you weren’t able to convince them! And there’s always that outlier, sure. And a living will is a very simple concept. Who’s going to make your healthcare decisions if you can’t make them because your mental state won’t allow you to? Imagine you’re on prescription drugs, a lot of them, and you’re under a lot of pain, and you’re delirious and going in and out of consciousness, and the doctor has to make the decision about whether we do procedure X or procedure Y. You’re not going to be there to make that decision. You just won’t be capable. You’re too involved with the disease. You’re drugged up, literally, and you can’t make that decision. So, someone’s going to make it for you. Under the law in America, the doctor cannot make that decision for you. That’s not true across the world, but it’s true in our country. If you can’t make the decision, you have the right to designate someone else to make the decision for you, or you have the right to make the decision in what’s called a living will that tells the doctor how you want to be cared for in case you can’t at the moment the decision has to be made make the decision.
So, there’re two avenues here: One, you can make a prior decision, do X, or you can say, “If it’s going to be X or Y, ask my daughter Jill and she’ll make the decision for me.” So, that’s what these documents are about. They are preserving your right to decide your healthcare and to designate what the healthcare should be or to who will make those decisions for you. And you can combine the two. You can have a document that says, “If I get seriously ill and I’m really demented, really have serious Alzheimer’s, I’m in that late stages where I don’t know anyone around me, I don’t know where I am, I’m not even eating anymore, and I get pneumonia, do I want to be treated for that pneumonia?,” which might extend your life a few weeks. But you don’t even know you’re alive, literally. Some people, not all, some would say, “Don’t treat the pneumonia. In that case, if I die, that’s the way it is. I accept that.” Others would say otherwise.
Jim Lange: You brought up…all right. It sounds like we have to do a break.
David Bear: Well, let’s do our break now. So, this is an interesting conversation, but we do need to pay the bills here, so…
David Bear: And welcome back to The Lange Money Hour with Jim Lange and Larry Frolik, Pitt professor and author of Elder Law in a Nutshell.
Jim Lange: Which, by the way, I would think is…I can’t think of a better resource for people looking for information. In the elder law field, Larry is probably, if not the top expert in the country, certainly one of. Larry, when we were talking before, you mentioned food and hydration as being one of the, let’s say, more sensitive points when people are using a healthcare directive or a healthcare power of attorney. Can you tell us a little bit about what some of the options are and what you might be telling a client if you were in that role, or what might be in your book talking about the food and hydration issue (which is one of the options that you check when you do do these powers of attorney)?
Lawrence Frolik: Exactly. It comes up…perhaps the listeners, for those who may not have experienced this in a family situation, unfortunately, the late stages of dementia, people forget how to eat and they won’t eat. You can try to hand feed them for a while, but even that eventually becomes difficult. And now, you have someone who’s not eating. They may still take water, but they’re not eating. Of course, if you don’t eat, eventually you’ll pass away. And the question becomes: Should you try to feed them artificially? And that is done through a feeding tube, and it’s inserted through the wall of the stomach. You can’t get enough IV tubes through an artery. You have to go directly into the stomach. And this is…I won’t say it’s routine, but it’s not an uncommon procedure in nursing homes and hospitals, and with a feeding tube, the person can get adequate nutrition, all right? So, the question arises: Would you want that done to you if you were severely demented and not going to get better? Now, of course, if you had hope of recovering, you’d certainly want it done. But we’re talking about someone who’s on a one way trip unfortunately into even more severe dementia.
David Bear: And you’re just prolonging their life, basically.
Lawrence Frolik: And you’re prolonging their life. Now, whether you believe in artificial nutrition or not is a very, very personal decision. There is no right answer. Some people are very, very firm. They would not want it. Other people are just as firm that they believe that they would want it, sometimes for religious reasons. They believe their faith dictates it. Other times, it’s their secular beliefs. There’s no right answer. But the question is: Do you want it? And you should have an answer to that. And as Jim points out, almost every living will form that any lawyer will produce, or any group has produced, will have that question on it: Do you want artificial nutrition and hydration? And so, you’ll be asked that. I would say nine out of ten people will say, “No. I do not want it.” So, they’ll check ‘no.’
Jim Lange: That’s basically been my experience, also.
Lawrence Frolik: Right.
Jim Lange: And again, we’ve done around 1,800 wills.
Lawrence Frolik: Yeah, so you have a great sample there and it confirms what I only know through academic…
Jim Lange: Maybe even more than nine out of ten.
Lawrence Frolik: Yeah, it’s 90-95%. Now, having checked the box, does that solve the problem? Not quite, because the reality is you want more than a living will. You must name a surrogate healthcare decision maker. I mean that in the sense you’re well advised to do so!
Jim Lange: Yes.
Lawrence Frolik: No law says you have to do that. Because if you are incapacitated and getting medical care, your physician wants someone to discuss your medical care with. The last thing a physician wants to do is be given a form that you signed five years ago, checked a couple of boxes, and to say, “Well, that’s his instructions!” No, that’s not how medicine works. Medicine has finely calibrated decisions, and each decision leads to yet another decision, and the doctor really wants to sit down with someone, ideally someone you’ve appointed as your surrogate, and say, “This is Larry’s condition. These are our options. These are the results, the consequences of doing X, Y or Z. How should we proceed?” So, if you’ve named a surrogate, typically, it would be your spouse. If not your spouse, or if he or she is no longer available, perhaps a child or even a grandchild, in some cases. The physician will sit down and make these decisions.
Now, the decision may come up about artificial nutrition and hydration. If you have checked the box or instructed the surrogate and say, essentially, “I don’t want nutrition and hydration,” you can do that in one of two ways. You can say, “This is a binding instruction. You must follow me.” Okay? That’s one way. It’s probably not a good idea because you don’t know all the circumstances that could arise. It may be, in some circumstance, if we could wake you up, “Larry, wake up just for a second, and these are the conditions,” I would say, “Whoa! Under these conditions, I’d like artificial nutrition.” Well, that may not happen. So, it’s better to say, “I prefer not to have artificial nutrition, but I’d have to leave that decision up to my surrogate, who will make the decision in light of all the circumstances.” Now, she will know that your preference is not to have it and she probably will follow that. But should circumstances dictate otherwise, she’ll make that decision.
Jim Lange: Well, by the way, this is a very personal issue with me because two years ago, my 95-year old mother suffered a stroke. She lost her ability to speak, to move, to walk, to basically do anything, and there she was in the hospital bed, and she was alive, not able to comprehend, to at least the best of our knowledge, what was going on, and the issue was: Should they insert a feeding tube? And her physician, Andrea Fox, was against it, but she obviously, as Larry said, it’s not her decision. It was up to the surrogate who my mother appointed, who, interestingly enough, was not me, and I had a disagreement with my brother and we fought it out and eventually, I won and they decided not to do a feeding tube, and she died peacefully eight days later in a hospice. So, this hits home, and I think had we inserted a feeding tube, there’s a very good possibility that she might’ve been in a comatose state, maybe achieving a tiny bit of consciousness over the next month, three months, or even just prolonging it significantly. So, I actually, in retrospect, feel good about that decision, but it is an important one. And by the way, I’m going to throw in two little plugs for two organizations that have not been mentioned. One of the things…and this is not a legal plug. This is just a promotional plug. A lot of times, people in the end stages of life, or even just in their eighties and beyond, and they’re trying to help with things like having somebody come to the house or having somebody put appropriate rails on their apartment or the safety bathroom features, or having meals delivered to the home, like Meals On Wheels, and there’re a bunch of non-profit organizations that serve these needs, and in a rare moment of unity, a bunch of these organizations got together and they created an organization called AgeWell. And AgeWell really is one woman and a desk. Now, she would object to that. She would say that there are several. But she’s fantastically competent. Her name is Maxine Horn. She happens to be a cousin of mine, so I have full disclosure. On the other hand, she’s just one of these fantastically competent women working for a non-profit organization doing a great job. And I thought I would just mention that. And I don’t have their contact information, but it’s certainly on the internet. If you just type in ‘AgeWell Pittsburgh,’ that would be a potential resource for people that I thought that I would just mention because it seems to be also an issue.
David Bear: My question is: What happens in the absence of these directives? What procedure goes on then?
Lawrence Frolik: If you do not create a surrogate decision maker or have a living will, the state of Pennsylvania has one for you. It’s called a statutory surrogate. It’s a model law that’s been adopted by most of the states now, which says…a typical, I guess, scenario runs something like this: If your physician declared you to be incapacitated and unable to participate in your healthcare decisions, then the physician can turn to the designated surrogate as defined in the state statute. And that person then becomes fully capable of making life and death decisions for you. And the statute varies little from state to state, and Jim probably knows Pennsylvania’s better than I do, but it starts out with your spouse, and if there is no spouse, or the spouse doesn’t feel comfortable in that role, and sometimes emotions are so high that they don’t, it moves then to your adult children collectively, not any one, and it moves out from there down to grandchildren and off to the side to your siblings. So, there is somebody. And it works well in the sense it provides a decision maker.
Jim Lange: It sounds like intestate law.
Lawrence Frolik: It is very much like intestate law, like you have a will written for you, you have a surrogate named for you. The two problems, I think, with it: One, once you get past the spouse, you move to the children, and it’s all the children. And you can have disagreements, as Jim pointed out. Now, fortunately, I’m sure he and his brother, although you may have had an initial disagreement, like in many families, a little time passes and you can come together. That doesn’t always happen. Sometimes, there’s a recalcitrant child who really refuses to go along with what would seem to be the sensible decision.
The other issue there is you haven’t left instructions for that surrogate. And one of the best things you can do as you get older is to talk to your children and your spouse about how you want to be treated under certain conditions. Frankly, these discussions often arise when people are watching television, because they’ll see something on television and they’ll turn to the other party and say, “Don’t let them do that to me!” Well, say a little more than that. Try to make them understand what you want in general terms. You don’t know the specific procedure issue, but you can let them know what your views are. And the reason for that is two-fold: One, there’s a much better chance they’ll do what you want, and that’s comfort. But there’s really another reason that’s even more important: You want that surrogate to be able to say, “I’m making a hard choice here,” like Jim had to make, and in a minute, I’ll tell you about a hard choice I had to make for my mother. But you want that person to be able to say, “That’s what mom or dad wanted. I am doing the right thing. It’s difficult. It’s hard. It’s emotionally hard on me, but I can at least take comfort, even though I’ve had to terminate life care for my parent, that I did what my parent wanted,” and that’s the discussion you need to have with your children.
Jim Lange: And also, I want to throw in one other thing, and this is going to sound like a plug, like I’m plugging both AgeWell, but there’s another, let’s say, set of organizations that I’m also going to say that I had a wonderful experience with, if you can call dying a wonderful experience. Both my dad and my mom were treated in hospice care, and there was a huge difference in the treatment because they are no longer worried about having you get addicted to some of the painkillers. And in both my dad’s and my mother’s case, they both ended up dying in a hospice facility much more comfortable than we could have kept them either at home or at a traditional hospital. And in my dad’s case, they were enormously helpful, let’s say, in the last couple months of his life. So, the one that we happened to choose was Forbes hospice, but, from what I can tell, there’s other very fine hospices, and I’ll just say that we had a very good experience. And there is no place that I see in a living will for that, but I think that that could also be talked about, that you might prefer to have hospice care as opposed to traditional medical care.
Lawrence Frolik: Absolutely. A hospice is really one of the good things that have come into American medicine in the last twenty-five years, and Medicare pays for hospice care.
Jim Lange: Yeah, that’s kind of another interesting little side benefit, so you don’t rack up a $500,000 medical bill by…well, I’d better watch myself, but by getting not as appropriate treatment…
Lawrence Frolik: Well, getting aggressive treatment when, perhaps, that is not really the point at this point. Maybe for you, aggressive treatment, we’ve passed that point. I’ll give you an example: My own mother, who was 97, had some level of dementia, certainly not good memory, and she had a heart condition. But it turned out, the heart condition was under control, but her kidneys were failing. And they came to us. My sister had the surrogate healthcare decision maker because she lived close to my mother, and they said, “Do you want to put your mother on dialysis?” Well, my mother was 97, going three days a week for cleansing her blood did not seem like the right thing to do. And so, we suggested that would not be appropriate, and they said, well, at that point, she needed hospice care. And she went into a hospice. She didn’t live long, but she lived well the last few days. And I agree with you, and that’s another discussion you want, and you really want your family to understand that you believe that the relief of pain and your comfort is of higher value than trying to stretch out a few more weeks in this world.
Jim Lange: Yeah, and I’ll just say my own experience, when I was at the hospice, my mom was in obvious discomfort. You could just see. She couldn’t say anything, and I was like, “Give her more pain pills! Give her more pain medicine!” And the nurse, not a physician, the nurse said, “No, that isn’t pain. It’s anxiety.” And they gave her something for anxiety and she was instantly relieved, and I don’t know if they would have seen that in a hospital, because these women…and I actually think they’re saints on earth, some of the volunteers and the people who work there, and the physicians and nurses, etc. They just have experience with this type of situation, and I think can make better decisions and have a patient be more comfortable.
David Bear: Well, let’s take that one final break at this point.
BREAK TWODavid Bear: And welcome back to The Lange Money Hour with Lawrence Frolik, Pitt law professor, and Jim Lange.
Jim Lange: And Larry is the author of many books, but the most recent, and best, of them regarding elder law is Elder Law in a Nutshell, by Lawrence Frolik and Richard Kaplan, and that can be found at Amazon.com. Again, the book is called Elder Law in a Nutshell. Well, speaking of books, I also just wrote a book called Retire Secure! For Same-Sex Couples, and obviously, I wanted to promote that, and most of the factors in the book apply to unmarried couples also. But I was a big advocate basically of getting married because it was significantly better for estate tax purposes, for IRAs and Social Security, and it made a huge financial difference. And actually, I was lucky enough that Jonathan Clements of the Wall Street Journal and I met for two-and-a-half hours in New York City. We talked about these issues. He wrote a column on it and he was nice enough to quote me. And I was talking with him afterwards, and he said one of the comments that he got was that…even though I have it in my book, but he didn’t put it in his column because he was obviously space constrained, is aren’t I taking on a legal liability by getting married and potentially taking on the liability, specifically, the medical liability, of my spouse? Now, I would argue that the benefits, in terms of Social Security, and the benefits in terms of IRAs and inheritance and everything else overshadows that, but just like a physician says, “First, do no harm,” are we hurting ourselves by getting married?
Lawrence Frolik: Well, I’m glad it’s not Valentine’s Day. Well, first of all, Jim, congratulations on your new book. I’m looking forward to reading it, and I’m sure it’s going to find a wide audience. It’s a terribly important topic, same-sex marriage, and, of course, it’s now legal in Pennsylvania. To get to your point about marriage, and this applies to all couples, same-sex, different sex, it makes no difference. Having been married for over forty years myself, I guess I think it’s a good idea. But it may not fit all circumstances.
Jim Lange: Yeah, I think you said you had twenty-five years of good marriage, right?
Lawrence Frolik: At least! On and off, yes! For older couples, it’s often second marriages, or even third, that is, you know, one spouse predeceases the other, of course, and romance comes at any age. And we have a lot of older couples who are looking for a second romance and find it. And the question is: Should they marry? Well, there are some issues as you said. The biggest one, though, that probably isn’t thought of by everyone, is this problem of paying for your spouse’s long-term care or other health needs. Because when you marry someone, you take on the legal obligation essentially to pay for that care. Now, if you have a lot of money or the care doesn’t cost too much, you’re happy to do it. But realistically, if you don’t have a lot of money, that may be a burden you should think twice about taking on.
David Bear: Well, I see we have a call here. Let’s talk to Ron from Pittsburgh.
Jim Lange: Okay Ron, you’re on the air.
Ron: Hi. I was wondering if there was ever a point in time in an individual’s life where it would be too late for them to contact an elder law attorney.
Lawrence Frolik: As long as there’s life, there’s hope. Essentially, no. I don’t mean to be fearless about this. The vast majority of elder law planning takes place for people who are either in a nursing home or about to enter one, or their spouse is about to enter one. That’s a good time, if you haven’t called one before, it’s a good time to talk to them about how you can save as many assets as possible and get qualified for state assistance. There are things you can do, they’re absolutely legal, they’re perfectly sensible, which can allow you and your family to preserve more money and nevertheless get state assistance. Now, it may be you have too much money and that doesn’t make sense. But for most people, there are simple tactics that you can do that an elder law attorney can help you with.
Jim Lange: And I’m going to distinguish between two modes of planning (and I sometimes run into this in my own practice, not necessarily with regard to elder law issues): One is what I’ll call ‘cleanup mode.’ Cleanup mode is after there has been a lack of optimal planning, and you’re in this situation, and what do you do now? And yes, I would agree with Larry, even if you’re in cleanup mode, you still sometimes are much better off seeing an attorney than not doing it. But ideally, and maybe, Larry, you can comment on this, both for elder law issues and other issues, you want to be in what I would call ‘planning mode,’ which is not when you have to make a desperate decision, Hail Mary at the end, but that you can actually plan for your future and your money. And that would be my preference, and whether it’s appropriate to see an elder law attorney or not, it would be better, if it was appropriate, to do it early, and that would be my inclination.
Lawrence Frolik: Absolutely. It’s always better to be prepared rather than trying to pick up the pieces after the fact. One example, for example, is a durable power of attorney. We all think they’re a great idea, but you have to have mental capacity to sign one, and all attorneys will tell you, they’ve had clients come in and say, “You know, we thought about having dad sign a power of attorney, but we just didn’t get around to it, and now he’s incapacitated. What can we do?” You may find yourself having to go to court to get a guardianship. That’s expensive.
Jim Lange: And that’s a nightmare. By the way, when I said that we did living wills or healthcare directives for virtually everybody out of the 1,800-plus, we also do powers of attorney routinely. So, the only discussion is which type and which variation and who, not whether you’re going to have one or not.
Lawrence Frolik: Right. It’s a ‘don’t leave home without it’ type of document.
Jim Lange: Yeah. So, getting back to the marriage and aging, how big a factor is that, and would you distinguish between people who have, say, $500,000 or less, and maybe people that have $2 million or more? In other words, if somebody has $500,000 and they’re taking on this potential liability, maybe it will be a big issue for either them or their children. Maybe if somebody has $2 million, then the cost of that care might not be as relevant, or is that not the right way to look at it?
Lawrence Frolik: No, that’s a good way. But another way, perhaps even better, is to think about the two parties that you’re interested in here. One is the spouse. That is, if I’m marrying Judy and I have to pay for Judy’s care, as you suggest, it may mean there’s less money for me to live on, much less pay for my own care. And so I may not want to take on that responsibility of taking care of Judy because it might essentially bankrupt me, or impoverish me. But there’s another issue even for that $2 million estate, which is the children, and people, as you know, when you write estate plans for second marriages, people are very protective of the children from the first marriage. And you want to make sure that you’re not entering a situation where you would deplete your estate for the kids because you had to pay for your second spouse. And there are ways to deal with that. Various insurance products will help you assure that there’ll be money, even if you have to pay a lot of money for your second spouse’s care near the end.
David Bear: Well, I think we’re getting close to the end of the show, speaking of ends, and I wanted to just say thanks to Professor Larry Frolik, author of Elder Law in a Nutshell, and I also wanted to thank Dan Weinberg, our in-studio producer, and Lange Financial Group program coordinator, Amanda Cassady-Schweinsberg. As always, you can hear an encore broadcast of this show at 9:05 this Sunday morning, here on KQV, and you can access the audio archive of past programs, including written transcripts, on the Lange Financial Group website, www.paytaxeslater.com. Click on ‘Radio.’ While there, check out the series of short videos from Jim’s interview with John Bogle, founder of the Vanguard Group. You can also call the Lange offices directly at (412) 521-2732. Finally, mark your calendar for Wednesday, June 18th at 7:05 pm and the next new edition of The Lange Money Hour, when Jim will welcome back P.J. DiNuzzo.
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James Lange, CPA
Jim is a nationally-recognized tax, retirement and estate planning CPA with a thriving registered investment advisory practice in Pittsburgh, Pennsylvania. He is the President and Founder of The Roth IRA Institute™ and the bestselling author of Retire Secure! Pay Taxes Later (first and second editions) and The Roth Revolution: Pay Taxes Once and Never Again. He offers well-researched, time-tested recommendations focusing on the unique needs of individuals with appreciable assets in their IRAs and 401(k) plans. His plans include tax-savvy advice, and intricate beneficiary designations for IRAs and other retirement plans. Jim's advice and recommendations have received national attention from syndicated columnist Jane Bryant Quinn, his recommendations frequently appear in The Wall Street Journal, and his articles have been published in Financial Planning, Kiplinger's Retirement Reports and The Tax Adviser (AICPA). Both of Jim’s books have been acclaimed by over 60 industry experts including Charles Schwab, Roger Ibbotson, Natalie Choate, Ed Slott, and Bob Keebler.
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