Preserving Family Wealth – Financing Long Term care

Practical Tips For Preserving Family Wealth

There are two issues every family struggles with as their parents begin to age:  

1.  Where do you find the BEST care for mom and/or dad, and
2.  How do you pay for that care without spending everything they have?

The answer to both is planning.  Here are some general tips:       

Make use of the services of an Elder Law Planning Attorney.  Elder Law Attorneys generally specialize in assisting families to plan for long term care – by assessing needs and utilizing assets to maximize their benefit.  They also often plan for disabled children; develop complete Estate Plans; draft all Estate Planning Documents (Wills, Trust, Powers of Attorney and Health Care Advance Directive documents, as well as Administer Estates after a person passes.  Our office also reviews contracts for long term living as well as drafts contracts for Family provided personal care services.  Know how much money you actually have, and/or what you expect to need in retirement.   For instance, there are many retirement living options out there that cost quite a lot of money.  But there are also many nice ones that are moderately priced, and accessible to most middle class families.
Understand that Medicare is an ‘entitlement’ ( government health insurance that you have because you are old enough or disabled enough to receive it) – but it provides only limited payment for long term care services.
Long Term Care Insurance, if purchased when fairly healthy, is an excellent way to pay totally or to supplement payment for nursing home care.
Medical Assistance (Medicaid) assists elder and disabled persons  to pay for long term care when their assets are depleted.  There are state rules to qualify for this benefit.  Married elders especially need to anticipate long term care needs as far in advance as possible.  Doing so will prevent impoverishing one spouse due to the medical care needs of the other.     

Beginning when newly married, review your Will at least every five years.  Your life will change – your Will should keep up with those changes!

Know where your wealth is located and titled.  Be especially aware of “qualified” money (like IRA’s, KEOGHs, ROTH’s, 401k’s and 403b’s, etc) , as they require specific tax and estate planning.   

The recent (2017) Congressional changes to the tax code may be very important to seniors. For instance, the ‘medical deduction’ had been 10% of income for the last several years. For 2018 and 2019, this will be reduced to 7.5%, making it easier to qualify for this deduction, especially if spending down assets toward medical assistance eligibility. It is scheduled to revert again to 10% in 2020, unless Congress amends the tax code again.

Be aware of beneficiary designations and assets that can pass outside of probate.   If you have a disabled child, or minor children – you should consider the benefits of a stand-alone trust or trust that arises under your Will for their benefit.  

Consider Family Service Agreements.  This is becoming a more and more popular way to preserve family assets – the children provide care to the parent – in their homes, or in the home of the parent.  Modifications to the home make life easier for the aging parent to stay in the general community and avoid institutional care.  

Becoming more aware of the types of options available to you – for living arrangements and care arrangements as you age – will allow you to develop a plan that makes sense for your individual situation.