Why Should I Plan?

By: Scott Waters, Waters, Tyler, Hofmann & Scott, LLC

Dear Southern Indiana Community,

I am honored to be the author of the inaugural edition of the new “Advisor Corner” of the Southern Indiana Estate Planning Council.  One goal of SIEPC, a group of local professionals practicing in estate planning, is to shed light on issues of interest to the public.  It is the hope of SIEPC members to better share their wealth of knowledge and experience in assisting clients in their estate and life planning needs.  With the assistance of the Community Foundation of Southern Indiana, SIEPC is launching this web-page to offer insight into the need for everyone to think more about estate planning.

It is with this question of “why plan?” that I want to start and that my fellow SIEPC members will explore in this Advisor Corner, to educate our community about the benefits for themselves and their families in conducting proper estate planning and the pitfalls of not doing so.

Scott Waters Waters
Waters, Tyler, Hofmann & Scott, LLC

Board Member of CFSI and Past President of SIEPC

So, why plan?

So, why plan? Ben Franklin wrote in 1789 that “in this world, nothing can be said to be certain, except death and taxes.” The human condition is faced with eventual death, and for many of us, taxation in some form will accompany it. If only it were that simple! “I am not old yet,” some say. But because death is a process (or an instantaneous event, such as an accident, heart attack, etc.), waiting until you are “old” to plan can make things very difficult.  If mental capacity is lost, you are incapable of any further planning.  So there is a need to act while you are mentally and physically able.  Without planning, your intentions for the distribution of your wealth to your children or grandchildren – or somewhere else entirely – may be left to chance and not happen the way you want.

One thing you can do to start your planning is to think about end-of-life care. One of the top fears I hear from many people is that they will outlive their money.  We all know, Medicare and Medicaid are by far the biggest payers of healthcare costs and nursing home care. Every citizen has the right to such care, but every citizen also bears some duty to pay their own way for care they can afford.  For example, a person who has used up their 100 days of care in a nursing home that is provided by basic Medicare would have to pay out of pocket the cost of the days over 100 that he or she stays. This cost is usually covered with their personal assets, or by long-term care insurance.  But when someone has used up all of their financial assets to pay for their care, they continue to get the care they need from the safety net of Medicaid.   Besides mothers, children and disabled, Medicaid can provide coverage for someone who has no money – not based on their status today, but for the last 5 years.  Medicaid uses a 5-year “look-back” period to determine your eligibility for nursing home payment.

Thankfully, the so called spousal impoverishment rule prevents a married couple from either having to divorce to preserve their assets on the spouse not needing nursing home care, or spending down all of their assets before Medicaid will begin coverage. Today, the spouse of a nursing home patient can retain approximately $126,420 and their home if it is worth less than $585,000 in equity. 

I recommend to my planning clients that they consider making monetary gifts to children and loved ones as their circumstances permit, and save their assets to the best of their ability to provide for their own care until they are no longer able. However, there are also multiple planning options for those who want to arrange their affairs so that the 5 year look back period can begin to run sooner rather than later. For those who can afford to do so, there are many long term care insurance options that may be of interest. These are topics for another day, but it’s important to know there are many things to consider as you begin the planning process.

So what is one to do when faced with an aging parent, spouse or family member?  There is no easy answer or solution.  But it is important to plan and know the big picture of what you are facing.  Seek advice and counsel from as many professionals and organizations as you can in dealing with in your loved one’s care.  Estate planning professionals, like the ones listed in the Southern Indiana Estate Planning Council, would be a good place to start to get insight into the advantages and pitfalls of the process of facing end-of-life issues.  SIEPC intends this Advisor Corner to be a place where practical and cogent insight can be gained as you face the daunting task of planning for the care of your loved ones.

This article was written in partnership with the Southern Indiana Estate Planning Council. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. The law sometimes changes. Documents persist on the internet indefinitely. Information may not constitute the most up-to-date legal or other information. The author does not undertake responsibility to update the information. Article written by:

Scott Waters

Waters, Tyler, Hofmann & Scott, LLC

(812) 949-1114


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