Smart Money Podcast: Retirement Planning Guide: Estate Planning, Social Security, Long-Term Care and Medicare Explained

Liz Weston, CFP®
Sean Pyles
By Sean Pyles and  Liz Weston, CFP® 
Edited by Kevin Berry

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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:

Learn how to plan for golden years with a deep dive into long-term care, Social Security, Medicare, and estate planning.

Long-Term Care Insurance: Kate Ashford, a certified senior advisor specializing in Medicare and retirement topics, discusses the intricacies of long-term care insurance, including exactly what Medicare covers in terms of long-term care costs. Kate also discusses alternative options to long-term care insurance such as hybrid policies that combine permanent life insurance with a long-term care rider.

Social Security: Liz Weston, a certified financial planner and senior writer on the core personal finance team, offers insights into the misconceptions and complexities surrounding Social Security. Liz discusses the benefits of delaying Social Security claims to maximize benefits, addresses the idea of Social Security going bankrupt, and explains the difference between the decision to stop working and the decision to apply for Social Security. Liz also breaks down what happens to Social Security benefits when one member of a married couple dies.

Medicare: Alex Rosenberg, a lead writer specializing in Medicare and information technology, provides a comprehensive understanding of Medicare, a federal health insurance program primarily for individuals aged 65 and over. Alex explains the different parts of Medicare, including Part A (hospital insurance), Part B (outpatient care), and Part D (prescription drugs), and their associated costs and coverage. Alex also discusses the pros and cons of the two ways of getting Medicare coverage and stresses the importance of knowing when to sign up, choosing the appropriate coverage, preparing for premiums, and planning for non-covered healthcare needs.

Estate Planning: Dalia Ramirez, a lead writer specializing in estate planning, explores the critical aspects of end-of-life planning and estate management. Dalia talks about the necessary tools for estate planning, such as wills, trusts, beneficiary designated accounts, and property deeds, and delves into the significance of healthcare and medical pre-planning, which includes power of attorney designation and living wills. Dalia also discusses the importance of having a plan in place for emergency scenarios and the roles you might serve for a loved one, such as being a power of attorney for medical decisions or a beneficiary of their property.

Q&A: The Nerds wrap up by explaining whether it’s possible to qualify for both Medicaid and Medicare, broad guidelines for coordinating the many responsibilities siblings may share when it comes to taking care of aging parents, and how often a will should be revisited after it’s created.

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Episode transcript

Sean Pyles: Hey listener, you want to hear about death and dying? No? Well, no one does, but it's part of life and there are a lot of important financial decisions that need to be made around these less than fun parts of our lives. At NerdWallet, we recently held a conversation all about estate planning, long-term care insurance, Social Security benefits and more. And we just couldn't keep it to ourselves. So, here is a lightly edited version of that talk.

Also, before we get into the episode, listener, I've got a favor to ask. We're putting together a special end-of-year episode, and I want to hear about the best thing that happened to you financially during 2023. Maybe you finally figured out how to stop impulse shopping or got a good high-yield savings account, or just learned a lot about personal finance by listening to Smart Money. Leave a voicemail or text me on the Nerd Hotline at (901)730-6373. That's 9-0-1-7-3-0 N-E-R-D. Or send a voice memo to [email protected]. All right, here's the episode.

Kate Ashford: Welcome everyone, to our Nerd Talk. Today we're going to teach you everything you ever wanted to know about helping your loved ones navigate the golden years. I'm Kate Ashford. I'm a Certified Senior Advisor, specializing in Medicare and retirement topics. I live in Pelham, New York, which is right outside of New York City. Also with me today is Liz Weston. She's a Certified Financial Planner and Senior Writer on the core personal finance team, as well as co-host of the Smart Money podcast. She lives in Los Angeles. You'll hear from Alex Rosenberg who's a lead writer, specializing in Medicare and information technology. He lives in Stoughton, Wisconsin. And you'll also hear from Dahlia Ramirez, a lead writer specializing in estate planning, who lives in Brooklyn, New York.

Here's a quick view of what we're going to be covering today. First, we're talking about why we're here in the form of the 30/60 talk. We're going to get into long-term care insurance, Social Security decisions, what you should know about Medicare, and some estate planning as well. We are calling this the 30/60 talk. I don't know how many people are familiar with this term, but in the older adult care community, there's a term called the 40/70 talk. This is the idea that when you're 40 and your parents are 70, there are some important topics you need to tackle. But by 70, your parents have already made a lot of big decisions and it's too late to make some others. So we're suggesting that when you are about 30 and your parents are about 60, you can start having these kinds of chats, and even guiding them in the event that they have questions.

This is a good low stakes time to talk about things like how your parents are thinking about retirement, where they hope to live. What they're thinking about, things like collecting Social Security and signing up for Medicare. Whether they've considered their long-term care needs, what you should know about their estate planning. At 30, you might be in a place where you're making some big life choices and it's a good jumping off point to ask your parents about theirs. This is also a good time to help your parents conceptualize what they hope will happen if they ever need help. Maybe they've never thought about it, maybe you've never thought about it. Maybe no one wants to think about it, but you don't want to be surprised when it turns out they think they're going to move in with you later. Or that they think you're going to provide all the in-home care they need when they can no longer do things themselves.

First, we're going to talk about long-term care insurance. Here are the facts. Someone having their 65th birthday today has about a seven in 10 chance of needing some long-term care. Those are good odds or bad odds, depending on how you look at it. Women need care longer than men, and about one in five people will need long-term care for more than five years. So this isn't a casual question, it's really an important thing to make sure your parents have thought about, particularly before they get too much older.

That's because long-term care costs money, of course, and a lot of people think Medicare pays for it, but they are wrong. Medicare will cover 100 days in a skilled nursing facility after a hospital stay, but after that, you're on your own. This is essentially a hundred percent out of pocket, which catches a lot of people off guard. About seven in 10 people have done little or no planning for this. Maybe that's because the numbers feel so crazy. Long-term care is expensive, whether you are in a nursing home or in your own home. But it can be planned for.

So, here we have long-term care insurance. This is insurance that covers the cost of care, if you're having trouble with at least one activity of daily living like cooking or taking a bath. This might be because you have a chronic condition like Alzheimer's or you have a disability. And policies come in all shapes and sizes. They usually cover care and a facility. They sometimes cover in-home care, but they don't always. Long-term care policies also don't cover all your long-term care costs. Usually, the policies pay for covered services up to a certain daily or monthly limit.

The thing about these policies is that kind of like term life insurance, if you never use this, you never get anything out of the policy. For some people that can feel a little discouraging. It's also a balancing act to purchase these policies. You'll want to be old enough that you won't be paying premiums for years and years, but young enough that you're still in pretty good health. Once you have a major health issue, you generally won't qualify.

The other thing is that long-term care insurance isn't the great product that it used to be. We're all living longer than we used to and using more long-term care than we used to. And for a lot of insurance companies, this stopped being a profitable enterprise. So fewer companies sell long-term care insurance now, and the policies aren't as great as they used to be. Your mom or dad probably can't buy the kind of policy that your grandparents could have purchased. And this kind of coverage costs more now that insurance companies have wised up, they probably have to pay out in some way.

There are alternatives to long-term care insurance. This is one of them, hybrid policies that combine permanent life insurance with a long-term care rider. You get coverage for life insurance, as long as you pay the premiums. If you die, your heirs will receive the death benefit. But if you need long-term care before you die, you can access the death benefit to pay for it. And the death benefit is reduced by that amount. Planners call this sort of thing a win-win since the money goes somewhere in the end.

But like all things, it's not all roses. Hybrid policies have pluses and minuses. You get rid of the use it or lose it aspect of long-term care insurance here, and there are easier medical underwriting requirements. So there may be a situation where you don't qualify for a long-term care policy, but you do qualify for a hybrid plan. But these plans also start out with a more expensive premium than long-term care policies usually. A common scenario is that these plans might require big upfront premiums for a period of about a decade, and not everyone can afford that. The long-term care rider amount also doesn't rise with inflation, so the amount you think seems great now might not seem great in 20 years. And last, while some part of long-term care insurance premiums may be tax-deductible, that's not the case for hybrid policies.

Long-term care insurance and hybrid insurance policies aren't the only options to pay for long-term care. Your parents can also explore things like reverse mortgages and government benefits to help pay for long-term care. And they might have savings or plan to have family assistance. The important thing is that they've given this some thought and that they have a plan.

The reason we bring this up is if your parents are about 60 and they haven't made this decision, it's important that they think about it while they're still in good health. It's definitely worth bringing up to see if they've considered it. And it's nice to know if they have it, because if you're in a position to care for them later, you may need to use it.

In the end, your parents may want to talk to a broker or financial planner about all their options to see what they qualify for, what they can afford, and to think about what's important to them. Is it crucial to them that the money goes to someone, no matter what? Do they want to leave something to their heirs? Or do they just want to make sure they're protected if they need help later in life?

One situation that a few planners have mentioned to me is that they sometimes see adult children who get together with their siblings to cover the cost of a long-term care insurance policy for their mom or dad. And when you think about it, this isn't crazy math. A lot of people end up helping their parents financially later in life. And the cost of long-term care can really blow up someone's finances.

Remember too, that this isn't an all or nothing game. If this is an idea that interests you, but the numbers seem too high, you can get a smaller policy. Financial planners will tell you something is better than nothing. Next up, you'll hear from Liz Weston on Social Security.

Liz Weston: Thank you, Kate. The most important thing to know about Social Security is that it is not a retirement account like a 401K. You're not putting in money to an account that's dedicated to you and then pulling it out later. Today's workers, you and I, are paying for today's retirees. This is a pay-as-you-go system. And what Social Security actually is, is insurance. It's right there in the official name, which is Old Age Survivors and Disability Insurance. What it does is it insures against longevity risk. And what that is is that financially speaking, the big risk isn't dying too early, it's living too long and running out of money. The longer you live, the more likely that is to happen that you run through your other savings, and depend more and more heavily on Social Security.

The good news is the bigger the Social Security check, the less you have to save. So figure each $100 that you get each month in Social Security represents $30,000 less that you have to save. That's based on an initial 4% withdrawal rate, which is considered sustainable for retirement savings. So, the average check right now means that people receiving that had to save half a million dollars less than they might have otherwise.

It gets even better. Unlike other retirement income, Social Security is guaranteed for life, it keeps up with inflation. And your checks do not depend on the whims of the investment markets, how good an investor you are or how good a saver you were back in your 20s and 30s. The earliest you can claim Social Security is age 62, but that means accepting a permanent 30% haircut. You'll get 100% of benefits, if you can wait until full retirement age, which is 67 for those born in 1960 and later. Each year between your full retirement age and age 70, you get an additional 8% guaranteed boost. Nowhere else in the world can you get an 8% guaranteed return, so this is pretty good money.

The advantages of delaying a Social Security are simply overwhelming. There's been a ton of research and it all comes down to waiting, if you possibly can. Researchers from the Federal Reserve found that virtually all American workers age 45 to 62 should wait beyond age 65 to collect. More than 90% should wait until age 70, only 10.2% appear to do so.

Now, your parents may not want to hear this because there's a lot of misinformation out there about Social Security. First of all, it is not going bankrupt. In the past, the excess taxes collected from that pay-as-you-go system, were invested in special treasury bonds. And that's what's known as the Social Security Trust Fund. That trust fund is scheduled to be depleted in about 10 years, but the system will still collect enough in taxes to pay 77% of promised benefits. And 77% is not the same as zero. And this assumes that Congress will do nothing to fix the system.

There was a crisis in the past, in the 80s, and Congress did step up and fixed the system so it could continue on. And there's going to be a lot of pressure on today's politicians to make sure that their grandparents' checks are not cut. So, I'm pretty confident that because this is the most popular federal program ever, because so many people get benefits for it, and because it represents a huge portion of our retirement income, politicians are going to have to do something to fix it. But even if nothing happens and the trust fund gets depleted, there's still enough taxes to pay 77% of the benefits.

Also, another common misconception is people think that they have to apply for Social Security as soon as they stop working. These are actually two separate decisions. You can wait. And financial planners tell you to tap other retirement accounts, if it allows you to delay. So, your parents may have it in mind that they have to put off tapping their 401K or their IRA as long as possible, not necessarily. If it keeps them from having to apply for Social Security for a few years, that's typically a very good trade-off.

Another common misconception is that it doesn't matter that when you take benefits, that if you start earlier and accept the smaller checks that that's the same as starting later and accepting the bigger checks. Here's the reality. The system as a whole is supposed to be agnostic about when people start taking checks. But the system is actually a little bit out of whack, which is why all this research is showing that people are better off waiting. It hasn't really caught up with our longer life expectancies.

Now, even if the system were agnostic, that doesn't mean the decision for the individual is agnostic. And just think about it. If you start too early and your checks are too small and you run out of money, that's the decision that you have to live with for the rest of your life, or your parents do, if that's the choice that they make. So the consequences of this decision for any individual can be huge.

A lot of people talk about breakeven points, which is the age at which that larger check outweighs the smaller checks that you pass up in the meantime. We have a calculator on the site that can help you determine that. The breakeven point is typically somewhere in your late 70s. But I constantly hear, "Okay, well the average life expectancy is 76 or something, so I'm not going to live long enough to make the breakeven. I'm going to take it early." That number that you hear about life expectancy, if it's in the 70s, that's our life expectancy from birth. That includes all the infant mortality, all the accidents and illnesses that happen to people that cause them to die prematurely. Once you reach age 65, the chances are very good that you're going to live at least another 20 years. The more income you have and the more education you have, the more likely you are to live beyond the average life expectancy. Most people are going to hit that breakeven age and go beyond.

So you want to take that breakeven thing with a grain of salt. And it's especially important to ignore it if you are married because then one partner's decision can have serious consequences for the other. Once the first spouse dies, the survivor gets the larger of the couple's two checks and the other check simply goes away. And that can lead to a sharp drop in income, which is one of the reasons why so many women experience poverty in old age. Typically, the male in the heterosexual couple was the higher earner. He dies earlier, their income plunges, and she has to get by on what's left.

The best protection is to maximize the higher earner's check, and that means delaying as possible to age 70, if it can be managed at all. Because again, it's the higher earner's check that determines the survivor benefit. And now, Alex will tell you what you need to know about another hugely important decision, which is how to deal with Medicare.

Alex Rosenberg: Thanks, Liz. And speaking of hugely popular federal programs, Medicare is another one of those that's just below Social Security, but it's a good one.

So I want to talk about a view that I used to have and I think one that is fairly common and it's that, boy, the U.S. health insurance system is a mess and it's really complicated and it's really expensive, until you make it to 65 and then you get Medicare. And just like showing up in the good place, everything is fine. You're just taken care of. Right? Yeah, not so much. It's a little more complicated than that. And there are some things that you want to be aware of and have a plan for, before you or your folks get close to Medicare age, which is generally 65.

So first of those is that Medicare is not free. There's one piece of it that's free, that's Part A, but then the rest of it is not. And the rest of it covers really important stuff, so you'll want to have a plan to pay for premiums and co-insurance and deductibles and all that stuff.

Second, there are a bunch of different parts. Like I said, Part A, the hospital part is free for most people, if you have a sufficient work history. But there's also Part B and Part C and Part D. There's a lot of different ways you can choose to get your Medicare coverage. And you'll want to have a plan for how those are all going to fit together to give you the benefits that you are looking for.

Third, even with all those parts, depending on how you've pieced them all together, it still doesn't cover everything that you're likely to need as a beneficiary. So, you've already heard about long-term care. Medicare does not cover it. But there's also other important stuff that, as a Medicare age person, you are likely to need some care for, like dental and hearing and vision. Those are also not covered or minimally covered by Medicare. So, you'll want to have a plan there as well.

And if this wasn't all complicated enough, if you take too long to sign up or if you change your mind in certain ways later on, you can be hit with these sizable permanent penalties to your premiums that some of them in fact, last the whole rest of your life while you're on Medicare. So, it's important to get it right the first time. And sort of like Social Security, when you see Medicare in the news often it's kind of scary looking bad news. Often, it is about Medicare Advantage, which we'll talk about more in a moment. But you might see some scary stuff about Medicare going broke or fraud, waste and abuse and denials by AI. It can be intimidating, so you'll want to have some context for all that stuff too.

So we've established that it's a complicated bummer in some ways, but backing up a smidge, what actually is Medicare? How does this work? So at its core, Medicare is the federal health insurance program primarily for people age 65 and over, but not completely just for those folks. There are also millions of Medicare beneficiaries below age 65 that qualify through the Social Security disability system, which is fairly strict. Or if they have certain long-term chronic, sometimes fatal, conditions, things like ALS, Lou Gehrig's disease, or end stage renal disease, permanent kidney failure are also ways to qualify for Medicare.

Medicare, as I said, has several parts. Part A is hospital insurance. It covers you when you are in hospital inpatient. So often if you're checked in, you're admitted, you're staying the night. That part is free for most people, if you have a sufficient work history. Part B is the counterpart to Part A. It covers all the outside the hospital stuff, or most of it at least. Your outpatient care, your doctor's visits, your tests, your labs, your screenings, vaccines, things like that. Part B is not free. It has monthly premiums of about $165 a month. And both part A and part B have some significant copays, co-insurance, deductibles, etc. Parts A and B are provided by the federal government. Part D, which covers prescription drugs, which are not generally covered by A and B, is different in that it's sold by private insurance companies. So there are lots of different ways those plans can look, and you'll need to shop for one that fits your budget and your coverage needs.

So, that's one way that Medicare can all fit together to provide your coverage. That way is often referred to as just Medicare or Original Medicare. And it's got some major advantages to using this sort of original version of the system. One of those is flexibility. You can see any provider who accepts Medicare, and 90 something percent of them throughout the country do. And you can do that just about anywhere in the country. So you can move around, you can travel, and you can still keep your same plan and your same level of flexibility.

On the downside, I mentioned that there are these out-of-pocket costs like copays, co-insurance, deductibles. And there's no limit on those, either annually or lifetime. So those can get pretty expensive, especially if you spend some time in the hospital. And there's no cap. You can buy a separate plan called a Medigap plan or Medicare supplement insurance that will cover some or all of those costs. But then that is yet another thing that you have to buy, and it has its own premiums, so it's a consideration. And then as we said, there's little to no coverage for dental, hearing, and vision care.

The other option on the right side here is called Medicare Advantage, and it is a sort of bundled alternative. It's sold by private insurance companies like Humana and Cigna and UnitedHealthcare. And one of the big selling points is it's not as complicated. It doesn't have all these parts. You just buy one thing from one company and you pay one bill. And it covers all the same benefits as Parts A and B, and usually D. So, that is a big simplicity advantage there.

On the downside, there are provider networks and hospital networks, so you might not be fully covered or covered at all if you don't go to the right healthcare providers. These are often, it's called $0 premium plan, so there's no additional premium to take the Medicare Advantage route. They're not completely free. You are still responsible for that Medicare Part B premium of the 165-ish dollars per month. But there are a lot of $0 premium extra options there.

These plans do typically have maximum out-of-pocket limits, so you do hit a cap on the copays, co-insurance, deductibles that you pay. Those can vary quite a bit between plans, but it is something to keep an eye on. And these plans do also often offer some extra benefits, some coverage for dental, vision and hearing. The quality of those benefits can vary. So if you're looking at those as a factor for your shopping, you'll want to read pretty carefully to make sure that the benefits are actually going to be useful to you.

So summing up, I think there are roughly four major decisions that you'll want to be ready for, as you or your folks are getting up close to Medicare age. First, you'll want to know when to sign up. That's generally as you're approaching age 65, though if you are still working and you have qualifying coverage through an employer, you might want to keep that and sign up later. In any case, you'll want to be ready when the time comes and know what the rules are and how those apply.

Second, you'll want to choose how you get your coverage, if you want original Medicare or Medicare Advantage and all the various permutations and options within each of those two versions. Third, you want to be ready to pay for the various premiums, copays, co-insurance, deductibles. Those are very much a thing, they can be pretty expensive, and you want to be ready for them in whatever form that takes. And then last, you’ll want to have a plan for the things that Medicare might not cover. So things like your long-term care, your dental care, your vision, your hearing. That could look like saving some extra money. That could look like finding another standalone insurance plan that will cover those. But in any case, you want to have a plan for those eventualities as well.

Fortunately, for all of that preparation, there is a lot of help out there. NerdWallet has a whole lot of Medicare content from the intro level to the very nitty-gritty. And there are some great third party resources as well. is surprisingly usable for a government website, and has some really good shopping and plan comparison tools. And there are also these state programs that will provide free confidential Medicare counseling that can really get into the specifics with individual people. And next up is Dalia.

Dalia Ramirez: All right. Thanks, Alex. So, I'm here to talk to you about estate planning today. And unlike Social Security and Medicare, this is not a government sponsored program. 67% of Americans have no estate plan at all. That means no healthcare directives, no will or trust or any other tools. And also surprisingly, the cost and difficulty is not the main barrier to entry. It's that people simply reportedly have not gotten around to it yet. And like the other tools we've talked about today, this is one of those things that is better to talk about with a loved one sooner rather than later. Because it can really help protect you and your stuff in case of death or incapacity.

Estate planning is pretty complex, there's a lot of tools here, but that's the umbrella term for what it's really for. It's for you and your stuff and your loved ones to make sure everything transfers as smoothly as possible. And there can be some tax benefits.

So these are the core estate planning tools to look out for, when we're talking about the financial topics. First, wills, which is the main way to make sure that everything you own goes to who you want it to go to when you die. Otherwise, courts in your state will get to decide, which people usually don't want. And the probate process without a will can be really expensive and time-consuming for your loved ones when they need to be in a grieving process instead of a complicated financial or legal process.

Next, a tool to consider is trust, which are a little bit more expensive than wills and a little bit more complicated to set up, but can be really helpful and worth it in terms of giving you control over your assets. They also might come with some tax perks like bypassing inheritance or estate taxes, depending on the type of trust. And there are a lot of different options, but the main one to think about is a living trust that can protect your assets in case you're incapacitated due to illness or injury or just during old age.

Next thing to talk to a loved one about is beneficiary designated accounts. Now for life insurance or retirement accounts, you'll often be required to name a beneficiary. But it's helpful to consider adding beneficiaries to investing accounts, other bank accounts, and to name a backup if possible in case the primary beneficiary can't receive assets. And it's also helpful to check to make sure that the beneficiaries designated in your accounts align with the people who are set to inherit things in your will, because an account can override the beneficiaries that you put in a will. So let's say you have an ex-spouse still on a life insurance account, they'll inherit your assets, even if you don't list them in your will. Well, the beneficiary will get the life insurance asset, not everything else.

And then lastly, property deeds. Liz actually has a great article about this, about not gifting a house to your adult children. And that's true. This can come with some significant tax consequences, depending on your state and the value of the property and the way that you transfer it. So if you are planning to inherit property from a loved one, look into something like a transfer on death deed or titling the property into a living trust. And we have some resources about that on NerdWallet.

The next really important cluster for estate planning tools are in terms of healthcare and medical pre-planning. These tools can give you and your loved ones a lot of peace of mind and control in terms of comfort and care in final moments, in end of life, or in a terminal illness or injury scenario. So first is a power of attorney designation, and this gives someone, maybe you, the power to make medical decisions in proxy for a loved one, if they're incapacitated. If they're going under surgery, this allows you to communicate with their medical professionals to make those decisions for them. And the goal is to make decisions that they would make and for you to help honor their preferences when they can't speak for themselves.

A document that pairs really well with a power of attorney that I would recommend doing as well, is a living will. Which you can work with a loved one to document their preferences for life prolonging treatments, CPR, intubation, a feeding tube. And a power of attorney or healthcare proxy can use a living will to refer to to help healthcare professionals understand what a loved one's preferences are for these terminal or emergency scenarios.

And speaking of emergency scenarios, there's something called a MOLST or POLST form. These are usually state specific, they're going to be bright pink or purple. These are kept on a fridge and they help emergency professionals honor your preferences for something like CPR or intubation in an emergency scenario. They're common for loved ones with high risk terminal illnesses or anyone living in an assisted care facility. And again, most of these forms are free and pretty simple to fill out. You can find them and download them specific to your state. And they are so worth it for protecting a loved one in case of emergency, and better to have in place sooner rather than later.

So, a great question to consult is to lawyer or not to lawyer. Now, an estate planning attorney can make a big difference, if you have a complicated estate or a complex family situation. Let's say your loved one owns a business and you might be inheriting that, or there are lots of stepchildren, stepparents. An estate attorney can be essential in those cases. And it can also be really helpful if you and a loved one just don't know that much about estate planning, or have a state that has its own inheritance taxes, it can be really helpful to hire an estate attorney. But it can be out of budget for some people. Estate attorneys can cost thousands for a flat rate estate planning package or hundreds hourly. So, it really depends on your own needs.

If you are not planning to use a lawyer, you can do it yourself with a free online template. You can download a lot of these forms for your state. It's harder to do for something like a trust, but for a lot of the healthcare forms and even a simple will, you can absolutely do it for free and yourself. But just double check to make sure that you are getting these documents witnessed or notarized, if that's required in your state. And we also have resources that tell you what the state requirements are for you.

And then a good middle ground in terms of support and cost is online estate planning software. And this can be a good middle ground, affordable option that can walk you through a custom will or even a trust in your state. And will packages often come with the healthcare directives as well, and can cost several hundred, closer to $600 to $800 for a trust package. But for a basic will and some advanced directives, it'll just cost a couple hundred, which can be a lot more affordable than an estate attorney.

And then lastly, I just wanted to walk through some roles that you might serve for a loved one. Because it can be a little intimidating to be walking through estate planning with a loved one. And it might feel like you have a lot of responsibility on your shoulders. But some of these roles are not as complex as they sound, and some of them you may not have to serve. You can hire a professional to do it for you.

So first is power of attorney. I said earlier from medical decisions, you can also be a loved one's power of attorney for their finances, which just means that you make the decisions that they would make. And you can discuss in advance what they want to happen with their taxes, their medical decisions, if they're incapacitated.

Next, you might be the executor of a loved one's will, which means that you're responsible for navigating the probate process and making sure that assets are distributed in the way that they've listed in their will. And that might also mean that you pay out the taxes from the deceased estate. There are professional executors, so you don't have to do this. You can pay someone to do this. And they get paid also out of the deceased estate, which means that you don't directly have to pay for it. And that might be worth it for you, if you don't want to be financially responsible while you're in a grieving process, let's say.

And then you could also be a beneficiary of property, of accounts. In some states you'll pay inheritance taxes if you're a beneficiary of certain property, but not all states have inheritance taxes. And actually, this federal estate tax limit is pretty high. The minimum is... it's around $13 million, so if your loved one's estate is below that, tax avoidance is not one of your main goals for estate planning. I would say the healthcare stuff is a lot more important. Depends on where you live, depends on your relationship to the benefactor, but just keep in mind that there could be some responsibility, some forms to sign, if you're a beneficiary.

And then lastly, you could be the trustee of a loved one's trust, which means that you're managing the assets on behalf of the grantor. This works, I would say similarly to a financial power of attorney, but it's more of a technicality with a living trust. Technically the grantor still owns the assets, but you are the manager of the assets. So I'd say for estate planning, a top priority is healthcare directives, and then just making sure that things are listed clearly in a will. Asset appraisals can really help with seeing what you have and what it's worth. But overall it's important... it's better to have something than nothing. So, don't get intimidated by complex tools. Having a basic will goes a really long way. And we can go to questions, I believe.

Kate Ashford: Thank you, Dalia. All right. This question is, "Is it possible to qualify for both Medicaid and Medicare? I have a relative who is of Medicare age, but I think she's using Medicaid. I wasn't sure if she should be getting both or which one takes priority."

Alex Rosenberg: Yes, it absolutely is possible to qualify for both. And there are millions of people who do. There are even some special Medicare, Medicaid combined plans in certain states that are designed to coordinate how those work together better. But even if you just have the vanilla versions of each, they're designed to complement one another in certain ways.

If you have both, Medicare generally pays for stuff first, and then Medicaid comes in and takes care of the stuff that Medicare might not have covered, if it's a covered Medicaid benefit. That coordination can get a little bit complicated, as you might imagine. But yeah, it is fully possible to have both and worth pursuing both, if you qualify for both of them. Because they cover different stuff and can kind of fill gaps in one another.

Kate Ashford: Okay. Let's say you have siblings. Are there any broad guidelines you'd give to coordinating the many responsibilities that go with aiding aging parents? Like sibling one does mostly medical stuff, sibling two does mostly financial stuff, etc., or everyone becomes a bit familiar with everything. Something else... I mean, people might have different answers on this. I think this is really going to be... it's going to be family specific. It probably is useful if everyone's a little familiar with everything because there will be times when one sibling gets busy and can't manage the thing they've been managing and someone else has to jump in. It's probably equally useful if one person is sort of the point person on all their medical stuff and one's point person on all of their benefits and housing, financial, paying bills. So I think it's kind of a little column A and a little column B. Does anyone else have anything to add to that?

Dalia Ramirez: I have two notes on this. One is that in many states, you are not allowed to have co-healthcare proxies or co-power of attorney. Somebody needs to be the decision maker. So you can have everybody in the conversation, but it makes it a lot more complicated if you need sign-offs from more than one person in either a legal, financial, or medical scenario. So, it's important to name one person per category.

And also, I've talked to some estate planning attorneys that say that often, parents will compensate a child who does the majority of their long-term care. Or the child who was making healthcare decisions for them in their final years with a certain part of their estate. Maybe that's the child who inherits the house because they've been living with them and taking care of them. Now, again, that's family specific, but that can be a factor to take into account. It's important to discuss with siblings and parents, because often, long-term care professionals get paid for their work. So if you are the main caretaker for a parent, there maybe is some compensation necessary there.

Liz Weston: Having been through this with four parents now, my parents and my husband's parents, it's really important for the person with the medical power of attorney to be as close as possible. Because sometimes these decisions have to be made quickly, they have to get to the hospital. It's not always possible that way. And also something else to keep in mind is that personally, I want a fricking honey badger as my power of attorney. Because they're going to have to push against a medical system that's determined to keep us alive at any cost. And they need to go in there and make sure that your wishes or your parents' wishes are being honored. So, that's something to keep in mind.

Some families are very traditionalist and it's like the oldest son gets all the responsibility. A lot of families have different strengths and weaknesses. A kid that's farther away can handle the financial stuff while somebody who's closer deals with all the health stuff. I would just add though that a lot of times, the closest child winds up with a lion's share of responsibility. So it's important to keep an eye on each other and make sure that the person who's doing more gets help, gets respite, gets some money if possible. Or just make sure that they are protected because it can be a total burnout of a job. And good luck. It's a blessing to have siblings, but it's also a challenge sometimes to coordinate and deal with each other. So, good luck with it.

Kate Ashford: Liz, there's a question here that I think is up your alley. If the lower earning spouse will reach Social Security age first, should they still wait until 70 if possible, to start taking benefits? For example, if half of the higher earning spouse's full benefit will be more than the lower earning spouses entire full benefit.

Liz Weston: The important thing in this scenario is that to get spousal benefits, the other spouse has to apply first. So in the traditional man making more, woman earning less, the man has to apply for benefits before the wife or spouse can get a spousal benefit. So, that's going to factor in all this. It's less important for the lower earning spouse to wait as long as possible. And there's lots of other factors that can come into play here. If somebody's getting a pension from a job that didn't pay into Social Security, that can affect what they get, or if there's a minor child involved, that can affect all these things.

There's two paid sites, the Social Security Solutions, and Maximize My Social Security, they're only like $30, $40, something like that. But that can help you sort through some of those options.

Kate Ashford: And then I think we're at time, but let's see if you can squeeze in this answer to Julie's question. Dalia, how often should a will be revisited after it's created? For example, if I make a will at 36, should I plan to review it every five to 10 years to make sure it still matches my wishes?

Dalia Ramirez: Yes, I would say 10 years is a good metric, but a better metric is life events, marriage, divorce, having a kid, starting a business, gaining or losing a large asset, buying a house, gaining a new heir like a grandchild. So, I say events-based more than time-based, but 10 years is useful.

Kate Ashford: All right. I think that's it for questions, and I think we're at time. So thank you, everybody.

Sean Pyles: And that's all we have for this episode. If you have a money question of your own, turn to the Nerds and call or text us your question at (901)730-6373. That's (901)730-NERD. You can also email us at [email protected]. Visit for more info on this episode. And remember to follow, rate, and review us wherever you're getting this podcast.

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