Aging In Place: Estate Planning To Keep You In Your Home


I was on the phone with my 92-year-old grandmother a couple months ago. “Well, the doctor says I am beginning to show signs of macular degeneration.” My first thought was, at 92 years old, something had to start degenerating! My otherwise very healthy, capable grandmother was suddenly being faced with age-related macular degeneration, a quickly advancing disease that can cause the loss of vision. With the diagnosis came a slew of “side effects”: a steady stream of eye exams, some unsteadiness on her feet, and perhaps most jarring for my grandmother, surrendering her driving privileges.

The loss of autonomy amongst the elderly, some much younger than my grandmother, undoubtedly leaves families with tough decisions. Can mom really take care of herself? Is it time to move her to a nursing home? Can I afford full-time care? As of late, there seems to be a shift in who is making these decisions. The aging population is beginning to think ahead to their future well-being so that their children and grandchildren don’t have to. The overwhelmingly popular goal for this type of planning? To stay at home as long as possible. While the end-goal of growing old at home is not new or hard to understand, self-planning for this goal is on the rise. We see this manifest itself in some clients’ estate planning concerns, and we implement different mechanisms to address this concern depending on a client’s particular needs.

The biggest worry we see amongst elderly clients is that of outliving their money. Making the ideal of “staying at home” a reality is unique to the elder seeking it and can take many different shapes. For some, home transformations – constructing a ramp where stairs used to be, widening doorframes to accommodate walkers, adding rails along walkways – are sufficient. For others, full-time, in-home care is required. Either way, the ideal can at first seem costly. When compared to some of the other options available, aging in place may not only make more sense for emotional stability but may also make more fiscal sense.

As an estate planner, it is vital to meet with a client’s other advisors in order to realistically assess and advise a strategy. We routinely meet with investment managers, financial advisors, and CPAs to gain a clear and accurate picture of a client’s financial wealth and stability. The range of strategies and solutions are as different as the clients. However, no matter the situation, involving the people most familiar with your financial situation in your estate planning efforts will facilitate proper planning into the future.

A very basic tool that every estate planner uses is the living will. This document allows you to specify decisions relating to your healthcare in advance, in case you are incapacitated and no longer able to make decisions. Though it may seem redundant, it is important to note that during incapacity, a trustor will no longer be able to modify the trust document. Some clients, knowing that they would prefer to stay at home at all costs, choose to include provisions to that effect in their living wills.

As client objectives shift from maximizing inheritance and avoiding taxes to preserving the autonomy that comes with staying at home, quality-of-life provisions in revocable living trusts are becoming more and more important. In addition to all its probate-avoidance language and legalese, a well-drafted living trust will include a clause or paragraph that protects the trustor’s health care wishes. The language will include instruction to the trustee as to how and when money shall be spent, and can be as specific as the client wishes. An example of some generic language is as follows: “it is my intent that I shall remain in my primary residence as long as it is medically reasonable…” Trustors sometimes have language of their own that they like to add, and for the most part, that is perfectly acceptable under the law.

The Special Needs Trust or Supplemental Income Trust (SNTs) can also be utilized to effectuate a client’s aging concerns. This type of trust enables a person with a disability to continue to receive governmental benefits, like Supplemental Security Income or Medicaid, without affecting eligibility for those programs. The purpose is to enhance the quality of life for the disabled person by stretching assets farther and continuing to receive the maximum amount of aid possible. Generally, SNTs are funded for a third party (a disabled family member, for example), but the law now allows a beneficiary to fund his or her own SNT without having those funds counted as personal assets ( 42 U.S.C. §1396p(d)(4)). This is an exception to the general rule of settling a SNT, and therefore should be considered only after talking to a tax law professional.

My grandmother has steadfastly documented her “quality of life” expectations in her estate plan. For her, continuing to live at home will only require physical adjustments (and hiring her grandchildren as chauffeurs). We are living longer than ever, and the focus of estate planning is changing. The change is not exclusive of the traditional planning goals of probate avoidance, business succession planning, and minimizing tax consequences. Rather, it represents an expansion in the knowledge an estate planner must have. It has always been our job as attorneys to promote our clients’ objectives. Identifying and implementing sound legal devices and drafting options to address the concept of aging in place will thus become more and more a part of our job description.

This article was originally published in the Fall, 2015 issue of the Stifel Wealth Management Quarterly newsletter. The Etchebehere Law Group is not affiliated with Stifel.


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