Elder Law is an area of the legal profession that focuses on the issues that confront a specific age segment of the population. Clients are typically in the seventy and older category and have not only adult children but adult grand-children as well.

Due to their sheer numbers, the US demographic known as the “Baby Boomers”, throughout their existence have always had a big impact on business, politics, and popular culture. This impact will extend to the makeup of the US population also. Presently there are just under 50 million people living in the United States age 65 or over. In just the next 15 years that number is expected to experience a 40% increase to over 70 million by the year 2030. Kentucky is expected to experience an even greater increase by percentage during that time period as its 65 and over population is projected to expand from 675,000 to just under 1 million. Just as business, medicine, and government has adapted to address the needs of this group over the past 50 years the legal field has as well.

Historically, legal practitioners in the Trusts and Estates field primarily addressed the needs of the senior population with a focus on estate tax avoidance upon the death of the individual. However, with the threshold now at a record high of $5.45 million dollars for individuals before any estate tax is due this is not a concern of the overwhelming majority of people over the age of 65. What is of concern is the high cost of long term care in a skilled nursing facility and the devastating effect it will have on any wealth they have worked to accumulate and wish to pass along as a legacy to their family or friends.

Additionally, as people age many experience diminishing physical and mental abilities and need to rely on trusted family members for assistance with banking, taxes, transportation, healthcare, and dealing with governmental agencies with regard to their benefits. Among the many issues they address, Kentucky elder law practitioners work with seniors and their family members to provide planning for asset preservation, applications for Medicaid, benefits from the VA, and in drafting necessary legal documents, such as Wills, Trusts, Advanced Health Care Directives, and Powers of Attorney, that are focused on the needs of seniors to assist with maintaining dignity, quality of life, and independence as much as possible given the circumstances.

Depending how expertly it is drafted it can be a very versatile document that may preclude the need for a guardianship or conservatorship down the road. Codified in Kentucky under KRS Chapter 457, the recently adopted Kentucky Uniform Power of Attorney Statute, it allows the “principal” to designate an “agent” referred to as “attorney-in-fact” who is authorized to act on their behalf. It allow the agent to handle financial and/or legal matters on behalf of the principal or conduct other transactions that are specifically delegated to the agent. It can be of a limited or general nature for a specific or variety of purposes and can be durable or springing based on certain contingencies.

Governed by Chapter 387 of the Kentucky Revised Statutes guardianship is defined as a legal relationship between an adult and a person determined by a court proceeding to be legally disabled. The guardian is then appointed by the court to oversee both the personal and financial affairs of the disabled individual or “ward”. A guardian is held to account for their actions to the Court on a regular basis as a fiduciary for the ward and is held to a high standard in serving in such a capacity. Similar to a full guardianship a conservator is a guardian for the ward on as to handling of their financial affairs only. They also function in a fiduciary capacity and must account to the court on a regular basis for the decisions they have made concerning the ward’s finances.

Often times Kentucky elder law practitioners are engaged by family members when a loved one has lost sufficient capacity physically, mentally, or both and assist the family in obtaining either a guardianship or conservatorship. Although at times necessary, this is an extreme measure and should only be done as a last resort when no other alternatives exist to help the family member in need.

Also known as a “Supplemental Needs Trusts”, they are utilized to acquire or maintain eligibility for government benefits that are “means-tested” such as SSI and Medicaid. These types of trusts can be either designated as “first party” or “third party” and the choice of which depends largely on the circumstances of the disabled individual.

First party special needs trusts are divided into two types. “Self-settled”, meaning the assets placed in the trust are assets which belong to the special needs beneficiary and are made possible and governed by the provisions contained in 42 USC 1396p(d)(4)(A). The second types is a “pooled trust” governed under the provisions of 42 USC 1396p(d)(4)(C). These are generally utilized when the assets of the special needs beneficiary are insufficient to justify the expense of a corporate trustee and a suitable individual trustee cannot be found. Third party special needs trusts are funded with the assets of a “third party” such as a parent or grandparent, hence the name. They are generally very flexible and can be either inter vivos or testamentary and revocable or irrevocable.

Regardless of the type utilized the key to these is the discretionary authority of the trustee. Great care must be used in the preparation and drafting of these documents and should only be done by an experienced and licensed elder law attorney. Drafting errors can be fatal and result in a denial or loss in continuation of government benefits for the special needs beneficiary.

In a general or a basic sense it is estate planning for people who would not be included in the much heralded “1%” of Americans based on assets. With the threshold for the federal estate tax now at $5.45 million for a single individual and nearly $11 million for a married couple that affects only that top 1%, the biggest concern for most seniors when it comes to estate planning is the loss of one’s hard earned accumulation of wealth to the nursing home. While the reality is not quite as literal as that, the cost of long term care if need is the largest obstacle to leaving behind any sort of legacy to surviving spouse, other family members, friends, or charity.

Categorized by most Kentucky elder law practitioners as either “pre-crisis” or “crisis” planning it is a combination of moving, arranging, and shifting of “resources” into the best possible scenario so that an individual can be approved for Medicaid rather than deplete their own resources through private payment directly to the nursing home.

Pre-Crisis planning although most preferable because a much greater result can be achieved, is unfortunately only done in about 10% of all Medicaid situations. Pre-Crisis is preferable based mostly on the sixty (60) month look back period for asset transfers considered under federal and Kentucky law. Operating in advance on a nursing home admission allows the Kentucky elder law practitioner the most flexibility to work within the laws and regulations to preserve the greatest amount of wealth.

Crisis planning, or done after a nursing home admission, is the scenario performed most often, and although it provides a lesser degree of flexibility due to the time constraints, if done correctly, can still result in significant assets being preserved for a “community spouse” and/or future generations.