Elder Law Basics: Protecting Your Parents’ Rights and Finances

As parents age, planning for their financial security and health care needs becomes essential. Elder law is a specialized area of legal practice designed to protect older adults’ rights and autonomy.

As part of a team that includes a financial advisor and tax professional, an elder law attorney can help ensure that your parents’ wishes are honored and that they have the resources and protections they need for a safe, dignified retirement.

WHAT IS ELDER LAW?

Elder law is a branch of law focused on the unique needs of seniors. It covers legal issues related to aging, such as health care decisions, long-term care planning and benefits qualifications.

THE PURPOSE OF ELDER LAW

Older adults have special circumstances that require specialized planning. For example:

• Seniors can be specifically targeted and especially vulnerable to fraud and financial exploitation
• Aging adults face greater likelihood of becoming physically or mentally incapacitated, eroding their autonomy, leaving them unable to make decisions about their own money and health and making them more susceptible to abuse or neglect
• Older Americans may qualify for public benefits and may need advice on optimizing them
• Seniors face an increasingly urgent need to make plans for how their assets and property will be addressed after they’re gone

KEY ISSUES ELDER LAW ADDRESSES

According to the National Elder Law Foundation, which works with the American Bar Association to set standards and certify elder law attorneys, there are 12 primary areas of practice in the elder law specialty:

• Health and personal care planning
• Pre-mortem legal planning
• Fiduciary representation
• Legal capacity counseling and representation
• Public benefits
• Special needs
• Insurance issues
• Resident rights advocacy
• Housing issues
• Employment and retirement advice
• Litigation and administrative agency advocacy
• Senior counseling

In a nutshell, elder law attorneys apply legal guidance and processes to protect seniors and fight for their rights and best interests in everything from health care and estate planning to public benefits and senior housing.

ELDER LAW ATTORNEY VS. ESTATE PLANNING ATTORNEY

There can be quite a bit of overlap between estate planning and the work of elder law attorneys. Most elder law attorneys are also estate planning attorneys, but few estate planning attorneys have the special focus of elder law.

WHY ELDER LAW MATTERS FOR AGING PARENTS

Americans are living longer than previous generations, spending more of their lives as seniors. And the chance of developing a long-term chronic disease of aging, like dementia or kidney disease, increases with age. Without proper planning, aging parents can face:

• Financial exploitation: Seniors tend to have more assets to lose and increased susceptibility to scams.
• Loss of autonomy: As aging progresses, parents may eventually no longer be able to make decisions for themselves. Without prior authorizations and legal structures in place, family members may struggle to get the access needed to care for parents and to understand and fulfill their wishes.
• Spiraling costs: Nursing home care can exceed $100,000 per year, and seniors may not understand what benefits could be available to help and how to access them.

PREVENTING FINANCIAL EXPLOITATION OR ABUSE

Sadly, older Americans are often targets of scammers or even family members or caregivers looking to cash in on their lifetime of hard work and saving. But there are a few ways you can help.

• Make sure your parents know the hallmarks of a scam and stay up to date on the latest scams and technology. If a situation seems urgent, they should pause and consider calling you or another trusted individual before reacting.
• Additionally, make sure they follow best practices for securing and monitoring their accounts, credit, property and private information. If they’re open to it, you can offer to help with monitoring.
• Encourage your parents to name you or another person as a “trusted contact” at their financial providers, which allows the provider to reach out if they can’t get in contact with your parent or if they’re concerned that your parent may be experiencing diminished capacity or potential fraud.

A financial advisor can be the first person to spot potential issues, because they’re often intimately familiar with a client’s family situation, can see financial inflows and outflows as they happen, and can pick up on changes in mental state or capacity over time.

PROTECTING AGING PARENTS’ LEGAL RIGHTS

These are a few of the things your parents may want to discuss with an elder law attorney or estate planning attorney.

DURABLE POWER OF ATTORNEY

A power of attorney is a legal document that gives someone authority to act on another person’s behalf. For example, if your parent should become incapacitated, a POA could ensure their bills get paid, their investments continue to be properly managed and their property is protected. In the absence of a durable power of attorney, no one (including spouses and adult children) has the authority to make non-healthcare decisions on behalf of an adult.

HEALTH CARE POWER OF ATTORNEY AND ADVANCE DIRECTIVES

A health care POA (sometimes called a healthcare proxy) can allow your parents to name someone to make medical decisions if they can’t. And they can document their wishes for life-sustaining care through an advance directive (also known as a living will).

Additionally, HIPAA releases give chosen family members access to medical records and information. Without them, even spouses can be denied access.

LAST WILL AND TESTAMENT

A last will and testament is the document that names an executor to settle the estate and creates a wealth transfer plan for your parents' assets.

REVOCABLE LIVING TRUSTS

A revocable trust is a companion to a last will and testament and could let your parents transfer assets into a trust they control during life. If they should become incapacitated, the successor trustee can take over trust administration. At death, assets in the trust also avoid probate.

BENEFICIARY DESIGNATIONS AND ACCOUNT TITLING

Accounts like IRAs and life insurance pass directly to named beneficiaries, and assets that have specific kinds of titles (like joint titles) will also be distributed according to law.

Beneficiary designations and asset titles should be coordinated with other methods of estate distribution, like wills and trusts.

GUARDIANSHIP AND CONSERVATORSHIP

Ideally, your parents will have a durable power of attorney before incapacity ever becomes an issue. But if that’s not the case and you’re seeing clear signs of mental decline, it may be necessary to file a petition with the local probate court to have a fiduciary appointed for your parent. An elder law attorney can help you understand this process.

ELDER LAW AND LONG-TERM CARE PLANNING

AVOIDING COSTLY LONG-TERM CARE SURPRISES

If your parents need it, the cost of long-term care can quickly start to drain their retirement savings. Early planning can help them estimate expenses for nursing homes, assisted living or home care.

Financial advisors can model these costs and develop a funding plan, and an elder law attorney can determine what benefits might be available to help pay for it and review legal contracts if your parents are considering moving to a continuing care retirement community.

UNDERSTANDING MEDICARE VS. MEDICAID IN ELDER LAW

For seniors, Medicare can cover hospital stays and short-term rehab, but not long-term care. Medicaid, which is a needs-based federal insurance program for low-income Americans, can pay for long-term care, but only for those seniors with little income and little assets.

An elder law attorney can help your parents understand whether they might qualify for Medicaid and can also help with the preparation of the Medicaid application.

LONG-TERM CARE INSURANCE AND ELDER LAW INTERSECTIONS

If your parents have one, a long-term care insurance policy can help cover care costs. If a claim dispute arises with the insurance company, an elder law attorney can potentially step in on your parents’ behalf.

PLANNING FOR NURSING HOME AND ASSISTED LIVING COSTS

Retirement community contracts can be complex, and there are specific federal and state laws that protect residents of long-term care facilities. Elder law attorneys can help by:

• Reviewing contracts before they’re signed to ensure your parents have a clear understanding of their potential expenses, rights and responsibilities
• Stepping in if there are cost disputes
• Advocating for your parents if their rights are being violated

FAMILY CAREGIVERS

An increasingly popular option is to age at home and pay a family member for necessary caregiving. In those cases, it's important to have a Family Caregiver Agreement that spells out the terms of the arrangement. An elder law attorney can help you understand how it works and draft the agreement.

WHEN TO WORK WITH AN ELDER LAW ATTORNEY AND FINANCIAL ADVISOR

SIGNS YOUR PARENTS NEED ELDER LAW SUPPORT

Ideally, an elder law attorney can provide guidance well before specific legal issues crop up. There are also some scenarios that make legal guidance or action more urgent. They can include declines in overall health or cognitive challenges, or a dispute with an insurer, benefits agency or retirement home.

HOW FINANCIAL ADVISORS AND ELDER LAW ATTORNEYS WORK TOGETHER

There are many areas of overlap when it comes to things elder law attorneys and financial advisors can help with. They’ll look at them through different lenses, but the coordination of viewpoints and strategies can make for a stronger and more comprehensive plan.

For example, both financial advisors and elder law attorneys can assist with:

• Plans for the disposition of assets after death
• Funding strategies for long-term care
• Incapacity planning

For more complex issues, it’s best to tap into the focused expertise of an elder law attorney, who can coordinate with a financial advisor to align with your overall financial planning.

And remember, both elder law attorneys and many financial advisors serve as fiduciaries, which means they must act in their clients’ best interests at all times. By planning early, you can help protect your parents’ rights, preserve their legacy and ensure they receive the care they deserve.