Living with Serious Illness

Estate planning

Preparing a will
     A will is a legal document that describes how you want your money and belongings to be distributed. If you do not have a will, the State of Oregon has already written one for you. Because the state will follow its own rules, this means your money and belongings may not go to the specific people you want them to go to. A will is also important because it allows you to appoint an individual who will manage the distribution of your estate. In addition, you may designate a guardian for any children you have under the age of 18, and a custodian to manage any assets you have left to these minors.
     When you die, with or without a will, your estate will go through a process called "probate." Probate takes time and costs money. For this reason, many people choose to create a revocable living trust instead of a will; however, this generally involves attorney fees. Some family situations can benefit from probate since it is a court-supervised process designed to carry out your wishes. For small estates, the probate process is extremely easy and inexpensive. (Return to list)

Revocable living trusts
     Making a revocable living trust is one method that can help plan for a financial future, and save on probate cost and time. You fund your trust by transferring your assets into the name of the trust. You are normally the trustee until you die or become incapacitated. Upon your death, your designated successor trustee has the authority to administer the trust, pay the bills and distribute the remaining trust estate to your beneficiaries without having to go through probate. Although there are many resources available on the Internet to help someone make a revocable living trust, setting it up correctly is important so it is advised that you seek legal advice. (Return to list)

Durable power of attorney
     A durable power of attorney is when you appoint another person to handle your financial affairs in the event that you cannot. "Durable" simply means the power of attorney remains effective if you become incapacitated. In Oregon, a power of attorney is always durable unless the document says it is not. There used to be a document called a "medical power of attorney." This is different from a power of attorney and is now called an Advanced Health Care Directive, or Advance Directive for short. An Advance Directive is similar to a durable power of attorney except it allows you to appoint someone to make medical or healthcare decisions for you if you become incapacitated. To be fully covered in the event you become incapacitated, you should have someone legally designated to handle your financial affairs (Power of Attorney) and someone appointed to make your health care decisions (Advance Directive). (Return to list)

Guardianship/Conservatorship
     If you do not have a durable power of attorney or an Advance Directive and you become incapacitated, your family may have to go to court to appoint a guardian and/or a conservator. A guardian is a person who is appointed to make personal decisions for you, such as where you live, what care you will receive, etc. A conservator is a person who is appointed to manage your money and your property. They are usually the same person, but not always. It is helpful to avoid the need for these by having a power of attorney and an Advance Directive. Having a guardian and conservator appointed for you is expensive and you may lose your independence. (Return to list)

Preserving your assets: Medicaid regulations
     There are times when considering Medicaid is an important option, both for single persons and for married couples. To determine if an applicant is eligible for Medicaid, the applicant's income and resources will be evaluated. There is an income limit that is adjusted annually. The applicant's gross income is included, not net income after expenses. Resources are divided into countable (bank accounts, stocks, property, etc.) or exempt (house, car, belongings, etc.). Countable assets are not allowed to exceed $2000. Medicaid law allows the applicant's spouse to keep a portion of the countable assets per a Medicaid formula. All or a portion of the Medicaid recipient's monthly income may also be diverted to the stay-at-home spouse so that the spouse has sufficient monthly income to provide for his or her support. Exempt assets are retained by the spouse upon the applicant's death and no repayment of the Medicaid dollars spent is recovered until the estate of the surviving spouse is liquidated.
     If an applicant has resources greater than the allowable, they can "spend down" the resources by paying off debt, making house or car repairs, purchasing a newer car or more expensive home, etc. The resources can also be converted to income to increase the stay-at-home spouse's resource allocation. Although not a common or popular technique, a court-ordered legal division of assets in a divorce or legal separation may protect the stay-at-home spouse's resources from a spend down requirement and/or estate recovery claim. (Return to list)