Long-Term Care

Protect A Life of Saving from Long Term Care Costs

Every month, Lawrence Cappiello writes a check to a nursing home for $12,000 to pay for his wife’s nursing home and long term care costs. Two years ago, his net worth was $500,000. In less than two years, the Cappiello’s savings will be gone. This unsettling story is explained in the article “How to Keep LTC Costs From Devouring Your Client’s Life Savings” from Insurance News Net. He is suffering from nursing home sticker shock and says he should have known better.

With proper planning, long term care costs won’t take your life’s savings

Cappiello was a professor at the University of Buffalo for 25 years. During that time, he taught an introductory course on health care and human services that touched on the costs to consumers. He said it was clear even then, that the cost of long term care was going to escalate out of control.

To qualify for Medicaid payments of nursing home care in New York State, residents are permitted to own no more than $15,450 in nonexempt assets. However, elder law attorneys, whose practices focus on these exact issues, say that the way to protect the family’s assets, is to take steps years before nursing home or long term care is needed. Some general recommendations:

  • Signing over the deed of the home to children or any others who would otherwise inherit it from you in a will. The transaction would need to stipulate that you have life use of the home.
  • Establishing an irrevocable trust, that upon death, transfers the house to the beneficiaries. There must be language that ensures that you have life use of the house.
  • Giving away savings and other financial assets.

Transfers of any assets must take place more than five years before applying for Medicaid nursing home and long term care coverage. If they have been given away or transferred within the five year “look-back” period, then there is a chance that they may still qualify, or they may have to wait five years.

That is why planning with an experienced estate planning attorney is so critical for families, especially when one of the spouses is facing a known illness that will get worse with time. There are steps that can be taken, but they must be done in a timely manner.

Many older people are not exactly jumping with joy at the idea of handing over their assets, even when relationships with adult children are good. The idea of giving up assets and the family home is a marker of the passage of time and the inevitability of one’s own passing. These are not things that we enjoy considering. However, taking steps in advance, can make a huge difference in the quality of the well spouse’s life.

It should be noted that a sick spouse can move assets to a healthy spouse, to make the sick spouse lawfully poor and eligible for Medicaid. There is no look back period or penalty relating to long term care for interspousal transfers. This may sound like a very simple solution. However, these are complex matters that need the help of an experienced attorney. If it were so easy, countless spouses would not be facing their own impoverishment because of an ill spouse’s long term care needs.

Reference: Insurance News Net (Feb. 4, 2019) “How to Keep LTC Costs From Devouring Your Client’s Life Savings”

Common Estate Planning Mistakes That You Can Avoid

The number one estate planning mistake is failing to have or to update an estate plan, says the Times Herald in the article “Top six estate planning mistakes.” Therefore, start by working with an estate planning attorney to create an estate plan, and you’ll be way ahead of most Americans. Why does this matter?

An estate plan allows you to stay in control of your assets while you are alive, provide for your loved ones and for yourself in the event you become mentally or physically incapacitated, and when you die, give what you have worked to achieve to those you wish. It costs far less to take care of all of this while you are alive. It’s a gift to those you love, who are spared a lot of stress and costs if it must be figured out after you have passed.

Once you have a plan in place, you have to keep it updated. An estate plan is like a car: it needs gas, oil changes, and regular maintenance. If your family experiences significant changes, then your estate plan needs to be reviewed. If you change jobs, have a change in your financial status, or if you receive an inheritance, it’s time for a review. When there are changes to the law, regarding taxes or non-tax matters, you’ll want to make sure your plan still works.

The second biggest mistake we make is failing to plan for retirement. If you start thinking about retirement when it is five or 10 years away, you’re probably going to be working for a long time. When you are in your twenties, it is the ideal time to start saving for retirement. Most people don’t start thinking about retirement until their thirties, and many don’t plan at all.

There are many different “rules” for how to save for retirement and how to calculate how much income you’ll need to live during retirement. However, not all of them work for every situation. Advisors are now telling Americans they need to plan for living until and past their ninetieth birthday. That means you could be living in retirement for four decades.

Mistake number three—failing to fund trusts. Trust funding is completely and correctly aligning your assets with your trust. If you don’t fund the trust, which means putting assets into the trust by retitling assets that include bank accounts, investment accounts, real estate, insurance policies and other assets, adding the trust as an additional insured to home and auto insurance policies and have every change verified, you have an incomplete estate plan. Your heirs will have to clean up the mess left behind.

Fourth, failing to communicate your estate plan to your executor, beneficiaries and heirs is a common and easily avoidable mistake. Talk with everyone who is a part of your estate plan and explain what their roles are. Speak with the person you have named as Power of Attorney and Healthcare Proxy on a regular basis. Make sure they continue to be willing and able to perform the tasks you need them to do on your behalf. Make sure they know where your documents are.

Fifth, don’t neglect to make arrangements for bills to be paid and financial matters to be handled, when you are not able to do so. There are many studies which show that after age 60, our financial abilities decrease about 1% per year. Expect to need help at some point during your later years and put a plan in place to protect yourself and your spouse. If you are the main bill-payer, make sure your spouse can take care of everything as well as you, before any emergency strikes.

Finally, talk with your successors about what you would like to happen if and when you become mentally unable to make good decisions, including caregiving options. As we age, the likelihood of needing to be in a nursing home or other care facility increases. You can’t necessarily rely on your spouse living long enough to take care of you. Make sure that your financial power of attorney contains the appropriate gifting language, your assets are titled properly, and your successor financial agents know about the plan you have created. If you don’t have a long-term care policy now, try to buy one. They are less expensive than having to pay for care.

Protect yourself, your family and your loved ones by addressing these steps. You’ll be giving yourself, your spouse and your loved ones peace of mind.

Reference: Times Herald (Dec. 14, 2018) “Top six estate planning mistakes”

Awareness and Communication Can Help Head Off Elder Abuse

It’s great that overall our life expectancies have increased, but with longer lives, comes a greater risk of bad choices and financial elder abuse. There are steps you can take to protect those you love.

As we age, so does our brain. Even high functioning retirees, who have no outward signs of dementia, find it more challenging to distinguish between safe and risky investments, according to recent studies. The numbers say it all: only 7% of seniors over 60 have dementia, but nearly a third of those who are 85 years old or older have dementia.

MP900407501If you’re a senior or you have one in your life, it’s critical to know how to prevent abuse. The Kansas City Star provides some helpful ways to prevent abuse in its recent article, “Five ways to avoid elder financial abuse.”

Communication. Speak with your elderly loved ones on a regular basis to check in on their health and their activities. Remind them to maintain safe practices, like shredding receipts and account statements. You should also remind them to be cautious about opening unknown emails and that they should never give out their Social Security number or banking information online or on the phone. Keep open communication, so you can see if they’re showing any signs of confusion or mental decline.

Stay attentive. Know how your loved ones are spending time and their money. If they hire outside help, try to be involved in the hiring process and try to know their health care aides. In addition, take a look at their monthly or quarterly statements to identify any unusual, frequent, or large payments. If your loved one is showing signs of decline, ask if you can pay bills for them, so you’ll know what’s going on.

Create a system of checks and balances. Make sure that your senior has the proper estate planning documents in place that will let trusted family members help them as needed. If you have siblings or other family members, divide responsibilities and then swap responsibilities every few months.

Build professional relationships. Ask your senior to let you come to meetings with them, when visiting advisers, like their estate planning attorney.

Streamline accounts. Conduct an inventory of their financial documents. This includes their life insurance and long-term care policies, bank accounts and investment accounts. Try to make your loved one’s finances more manageable and consolidate their accounts where possible, which will make it easier to spot any unusual withdrawals or transactions.

If, despite all of your efforts, financial fraud or elder abuse takes place in your family, reach out to law enforcement in your area and talk with an elder law attorney. You can protect your loved one (or yourself) after the fact.

Reference:The Kansas City Star (September 8, 2018) “Five ways to avoid elder financial abuse”

Will Your Adult Children Be Impacted by Your Retirement?

An important discussion between parents and children is how you want to live.

If your children depend on you financially or they’ve come to count on you as a regular babysitter, you’ll all need to address what comes after you retire.

25543329453_9991c191f2_oSeniors who have been looking forward to moving to a less expensive area, living in an RV as long as their health permits or downsizing in every possible way, may need to consider others in their lives who will be affected by these changes.

US News & World Report’s recent article, “The Talk to Have With Your Kids Before You Retire,”acknowledges that this can be uncomfortable for some parents.  However, parents need to prepare adult children for their impending retirement. It’s crucial to begin financial discussions early in retirement. That makes it easier in later years, when cognitive decline can affect decision-making. Talk with your children about these things regarding your retirement:

Notice. Your retirement may affect your children, especially if you plan to move or are assisting them financially. Let them know of your retirement plan five years prior to leaving the workforce, and remind them about it every now and then.

Financial info.Some parents don’t want their kids to know the details of their finances, while others share information and even involve them in the process. If you’re more open and honest with your kids about your financial information, they’ll feel secure that their parents are OK. If you are struggling, you should also let them know that.

Financial support. You may need to stop supporting your kids so that you can retire. If you have a kid living with you in the house and you’re helping to pay their bills, start working on a strategy to get them off your payroll and out of the house.

Estate plan.Talking to your children about your estate planning to avoid confusion and sibling rivalry during a very stressful time. Talk about which child will be executor, so there are no surprises.

New lifestyle.An important discussion between parents and children is how you want to live. This includes location, which might change with the seasons, deciding if you want to live close to children and grandchildren, or prefer a spot with opportunities to enjoy retirement. You should also let your kids know your preferences for an assisted living facility or a nursing home, and discuss paying for long-term care.

Share important contact information.Give your children a list of your legal and financial team members: estate planning attorney, CPA, financial advisor, banker and any other professional who they would need to be in touch with, if something happened to you. If someone other than your children is your executor or successor trustee, that person should have the same information.

Reference: US News & World Report (June 8, 2018) “The Talk to Have With Your Kids Before You Retire”

Scroll to Top