The Most Important Thing You Can Do For Your Aging Parents
How to Ensure Your Parents Don’t Lose Their Home, Bank Accounts, & Assets To Long Term Care Costs
A friend relayed a story that is one I hear all too often when it comes to caring for aging parents.
Her friend, I’ll call him Bob to protect his identity, has an aging father who is still living at home. Bob’s father has some dementia and some other ailments. He sometimes forgets to take his medicine and often forgets to feed himself. On good days Bob’s father is mostly okay by himself at night after he goes to bed, but he’s getting to where he really needs round-the-clock care.
Bob has three siblings and for the past three years, they have been rotating taking care of their dad. Bob has shifted after work twice a week and during the day on Saturday. He also rotates some additional shifts. All the siblings have pitched in to pay for upkeep on the house and added things to make the house safer for their dad.
This is hard on Bob as he also has two small children and a wife at home. In fact, all of the siblings are growing wary and Bob’s father’s health is declining. Bob and his siblings know it’s past time to sell his father’s house and move him to a facility, but they aren’t sure how their dad will take it or which facility is right and they worry about whether or not their dad’s money will last.
Bob admits that they should have talked to his dad long ago about long-term care, but they just never found the right time. Now, because his father’s health is in such bad decline, Bob and his siblings have to make many hard decisions on their dad’s behalf without knowing what their father really wants.
It’s one of the toughest situations children face when caring for their aging parents—what to do about long–term care and how to pay for it.
Let’s face it. No one wants their financial assets such as their home, bank accounts, or other possessions lost or depleted due to health care costs or long-term care costs. (Long-term care costs could be home care, assisted living care, or nursing home costs.) These costs can be substantial and can deplete a family’s savings very quickly. The key to avoiding this is to have a plan.
The Question Isn’t If You Need To Make Plans But When Should You Make Plans
According to the Genworth Cost of Care Survey, the most comprehensive survey of its kind conducted by CareScout®, “at least 70% of people over the age of 65 will require some form of long term care services and support during their lives.”
That means there is a better chance than not that at some point your parents may need to pay for long-term care. You may even need to make a decision for your aging parents when living at home with assistance is no longer an option and more care is needed. Part of what makes this so difficult is that it often is not figured out ahead of time before crisis mode hits.
Like Bob, too often the conversation between children and parents never happens. Children don’t know what their parents’ wishes are, what their parents can afford, or how long their money will last. Even before the critical stage, care can have a major impact.
Small and large expenses crop up from running errands and paying for groceries to needing to make home modifications such as installing handles or ramps in your aging parent’s home. In fact, almost half of caregivers report they spend over $5000 a year in caregiving costs.
It can also have a negative impact on your job. 60% of caregivers say caregiving has a negative impact on their job with 66% experiencing care-related distractions such as phone calls or emails. Today the average cost for a private room in a long-term care facility ranges from $60,225 per year all the way up to $281,415 per year. While you may think these costs are reason enough as to why people lose their homes, bank accounts, and assets, you might be shocked to learn that it’s not the most common reason.
The Two Most Common Reasons Why People Lose Homes & Assets to Long-Term Care
1) They thought they had it covered because they had a plan in place.
Over and over, people are devastated upon learning that the “fool-proof” plan they had in place for care is no longer valid because of changing federal laws or their personal situation.
For example, we all know about the recent changes in our states and national healthcare laws. The Affordable Care Act (commonly called “Obamacare”) has changed the way, people, across the country view, and in many cases pay, for healthcare. It’s also brought into the spotlight the role of nursing home and assisted living care, and the continued skyrocketing costs for those who live in our country.
Plus many people are shocked to learn that Medicare and/or Medicaid will NOT cover all or most of these long-term care expenses.
And that’s for the people who put a plan in place! That does not account for the large population of aging adults who have not put anything in place.
2) They never took the proper steps to protect themselves.
It’s not uncommon to find otherwise rational people that never get around to putting a plan in place because they still think of themselves as alert and vital and don’t see themselves as needing that care.
Until…you guessed it, they find themselves needing care.
The good news is that this doesn’t have to happen to you or your parents.
Conversations That Make A Difference
It can be uncomfortable talking to your parents about their future, however, it will help you to protect their assets and carry out their wishes, not to mention it will make for a lot less stress in an already stressful situation.
Plus with the reality of rising nursing home costs, questions about whether or not state and federal governments will financially be able to fund nursing home care, and tax changes, it is more important than ever to have this conversation—sooner rather than later.
Remember, even if your parents put a plan in place, it may have become obsolete.
By having this conversation NOW you can ensure that healthcare costs are paid for without the expense of losing a home and/or seeing other financial assets such as bank accounts drained.
Four Key Things To Cover In Your Conversation:
1) Find out what your parents want.
Should you wind up with the legal power and responsibility to make decisions for them, make sure you find out in advance what your parent(s) want. This conversation may be uncomfortable for both of you, but it is essential. If you don’t know the ins and outs of a power of attorney, a living will, or a healthcare proxy find an eldercare expert or attorney to help.
2) Find out if there are long-term care and asset protection plan in place.
If there is no estate planning or asset protection plan in place, there are likely some tough choices to be made. However, the fact that you are reading this means there is still hope—you’re under the gun so to speak, but there are options. You still have time to help your parents put a financial plan in place for long-term care.
If there is an estate plan or asset protection plan in place, ask when it was last reviewed by a lawyer who specializes in estate planning and asset protection.
3) Get advice from a qualified professional about the correct path to take…TODAY
Every day you put off getting advice is a day lost that could be critical to your parent’s financial future (and in some cases your financial future as too often the children are left to pick up the financial burden because no plan or an obsolete plan is in place.)
When getting advice about the correct path to take, be careful where you get advice from. While well-meaning, companies selling asset protection products such as insurance may not have the full picture or be the best solution for your parent’s situation.
You also need to watch out for financial scams. Financial abuse of the elderly has, sadly, become a growth industry during the nation’s tough economic times.
This correct path is not done by guesswork or by not being 100% sure of the financial direction to take. Quite frankly these decisions shouldn’t be recommended or implemented unless the person providing you this guidance has the specialized knowledge it takes, based on years of experience helping individuals wade through any number of situations and challenges. I have seen in recent times where these bad choices have taken many good people. The result: peace-of-mind is shattered, and worries plus angst is the norm because what was perceived to be a sound financial/asset protection plan wound up sorely lacking after it was discovered too late that caregiving expenses were expected to be taken care of were not.
4) Learn about your parents’ Medicare and Medicaid coverage.
As I said earlier, many people are surprised to find out that Medicare does not cover nursing-home stays or other long-term care costs. Medicaid does, but only people who have exhausted most of their assets qualify for Medicaid-paid nursing home benefits. There are other things that can affect this coverage too, so it’s important to learn what’s covered, what’s not, and how your parents’ finances and situation affect that coverage. You’ll also want to find out what kind of Medicare coverage your parents have if they have a Medigap or Medicare Advantage policy and a drug plan. Learn what the co-pays and out-of-pocket limits are, and other financial aspects of their insurance.
My goal with this article was not to scare you. In fact, it was to arm you with some facts and motivate you to have that all-important conversation with your parents sooner rather than putting it off any longer. Because while long-term care costs can be substantial and can deplete a family’s savings in a very short period of time, there are solutions that will help you avoid this from happening…if you act now.
Don’t end up like Bob. There are ways to shelter assets so that the assets do not have to be spent on care. Depending on, among other factors, your parents’ assets, family, the state your parents live in, and the illness they are battling, assets can be protected from the cost of care.
Remember, the only time you come out on the short end is if you fail to prepare!
For more information on having “the conversation”, steps to take to protect your parent's assets from the cost of care, and what should be considered, download your free report, “An Easy-To-Understand Lawyer’s Guide On How To Protect Your Parents From Losing Their Home, Bank Account, and Other Assets From Long-Term Care Costs”
The estate lawyers of Krause Donovan Estate Law Partners, LLC practice law in the areas of Probate, Wills, Estate Planning, and Trusts. We assist clients in and around Madison, Wisconsin with all matters related to estate planning, trusts, and probate matters. Our dedicated attorneys will even make house calls if you are unable to come to our office.