Important Elder Law Distinctions

1. A Will vs Living Will. Your Will passes your property to your heirs at your death. A Living Will is a document that sets forth your wishes for medical treatment when you are terminally ill. A Will names an Executor at your death and a Living Will a surrogate or agent while you are alive.

2. Agent vs Executor. Your Agent (named in your Power of Attorney) can act on your behalf to manage your assets during your lifetime. An Executor (named in your Will) or Administrator (if you do not have a Will) takes over for you after your death. You may appoint an Agent yourself in a Power of Attorney. An Executor is named in your Will but is appointed and sworn-in by the Register of Wills. This is known as probate. The Register of Wills issues letters which are evidenced on what are known as short certificates.

3. Medicare vs Medical Assistance. Medicare is health insurance for individuals over 65 years of age. There is no asset requirement for this program. Medical Assistance (“MA”) is a federal program that pays for long term non-medical care, usually in a nursing home. This program is available for individuals who have spent their assets down to a certain amount. MA is an entitlement (if you qualify you get it) and is needs based — meaning it is based on your assets and income.

4. Revocable vs Irrevocable Trust. A revocable trust is a trust that you can terminate and get your money back. An irrevocable trust is permanent and cannot be terminated without the approval of a Court or all of the interested parties. A revocable trust does not change the nature of the assets. They are still yours. Irrevocable trusts are completed gifts for the most part and although you may retain some rights, you cannot get the assets back. Therefore, irrevocable trusts are subject to the five-year lookback for MA, which could affect your qualification. Call us to learn more about trusts and the five-year lookback.

5. Qualified vs Non-Qualified. A qualified asset is a retirement account of some type and money taken out is generally taxed. A non-qualified asset is not a retirement account and you can freely withdraw funds that may or may not have tax consequences. Qualified assets, since they cannot be accessed without paying taxes, are generally thought of as non-liquid. Non-qualified assets are more available and therefore more liquid.

6. Nursing homes vs Assisted Living Facilities. For elder law purposes, a Nursing Home is a facility that may accept MA. Theoretically, there is a higher level of care provided at a nursing home than in an assisted living facility. Assisted living facilities do not accept MA and, therefore, are always private pay in Pennsylvania. The distinction between nursing homes and assisted living facilities have been blurring recently with assisted living facilities taking on more dementia patients.

7. Probate vs Non-probate assets. Probate assets are those assets that require an Executor to move to heirs or beneficiaries at the time of someone’s death. These are usually assets in a decedent’s (the person who died) name alone. Non-probate assets are those assets that can move without the need of Court authority – like life insurance, annuities and joint accounts.

8. Special Needs Trust vs Supplemental Needs Trust. A Special Needs Trust is a trust a disabled person funds with his own money, often termed a “first party payback” trust. Upon the death of the disabled person, the funds remaining in the trust are required to go back to the government. A Supplemental Needs Trust is set up by a third party, such as a parent for a child, and funds left at the death of the child can go to other beneficiaries.

9. Advance Directives vs Powers of Attorney for Assets. An Advance Directive for Health Care is a document that appoints someone to act on your behalf for medical decisions when you are unable to make them yourself. An Advance Directive may include a Living Will (see No.1 above) for end-of-life decisions as well. A Power of Attorney for Assets appoints someone to manage your assets if you cannot do so yourself. Both documents are used during your lifetime.

10. Testamentary vs Intestacy. A testamentary estate is one that is being directed by your Last Will and Testament. An intestate estate is being directed by state law that identifies the hierarchy of your heirs. Even though intestate estates may not always reflect the decedent’s wishes, only about 40% of people die with valid Wills. So, if you would like your wishes met at the time of your death, contact us to talk about preparing your Will, or updating a Will you may already have.

11. SSI vs SSDI – SSI (Supplemental Security Income) is a federal program for aged, blind and disabled individuals. It is funded by the US Government and not Social Security Taxes. It is “needs based” meaning you must qualify both medically and financially. SSDI is Social Security Disability Insurance that permits a disabled individual to receive monthly benefits from the insured’s Social Security. This is an important distinction to understand when you do your Will and leave money to a disabled family member. You must know what benefit they are receiving. An inheritance could interfere with their benefits. So, if you have someone in your family on SSI, call us to find out more about Supplemental Needs Trusts.

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