The above title is an old saying however so true. Just the word, “home” has such a nice ring to it. Home: where you go after a long day at work… home: where you go to be with family… home: it offers you such a sense of warmth and security. Yet what happens when someone’s home is threatened because of having to potentially sell it to help pay for runaway costs of a spouse or other loved one needing to stay in a nursing facility. Elder Law Attorney and CPA Dennis Sullivan addresses this important concern with healthcare advocate Chip Bruce:
CB: Sadly in these times many people are very concerned about protecting their homes, spouse and life savings because of increasing nursing home costs, and having to potentially pay for such. I know that you’re very active in the region and community talking with folks about this issue. What are they telling you about this frightening situation?
DS: You’re absolutely right as you mentioned, especially over the past years with all the changes in health care reform and also Medicare changes affecting hospital charges. Many people are concerned about the increase in nursing home costs and the rise in health care costs. They are wondering if they will be covered. As a matter of fact, I’ve identified that health care reform was one of the top concerns among seniors. Number two right behind it was: what’s the best way to plan ahead for long-term care, and is it possible to get coverage for care at home, or assisted living, or a nursing home or avoid nursing homes altogether?
CB: Would you please discuss with our readers in greater detail about these concerns and if there are any answers out there to calm their worries?
DS: Much of the worry involves around planning for any future healthcare expenses and in particular paying for long-term care. Many people are concerned that their estate and asset protection plans are obsolete and others are concerned that they have no plans at all. The thinking here involves the following: is my estate plan out of date or simply doesn’t work in meeting my current goals and objectives. That’s a major concern of course. Then there are people who have no plan in place at all and they’ve come to realize this puts them in a very precarious position. The good news is there’s plenty of opportunity to review and update a plan, so if there is a disability or incapacity, they’re able to have a plan that’s going to meet their current goals and objectives. On the other hand, if people wait too long and something happens, be it disability or a spouse let’s say has passed away, of course by that time it’s too late to do something. What we have seen is a number of plans being out of date or just don’t work anymore because of a change in peoples’ life circumstances. These facts do and should have people concerned.
CB: Dennis, picking up on what you just said, I think we would all be shocked to read the facts however it’s important to discover them. So since you know this information very well, how many people out there really don’t have any kind of asset protection plan in place, or the plan they have maybe is as you were saying before outdated. Circumstances change so I would say it would probably be frightening to the average person to find out how many of their fellow citizens don’t really have any plan or again the plan just isn’t going to cut the mustard in this day and age.
DS: I’d say that of the people we speak with, about half of those people have no plan at all, and the other half may have a plan that was done years ago or even as recently as a couple of years ago. Research based on 2000 trust and estate plans found that the overwhelming majority of these plans were not meeting folks’ current goals and objectives. The figure was actually placed at a startling 86%. Again research showed that in 86 out of every 100 trust and estate plans they didn’t protect people like they need to. Yes this seems like a large percentage but when you think about the frequency of the law changes in the tax area and also in the retirement area, it not that all surprising that these plains fall short of the mark. Add to this the fact of health care reform and you have a very volatile situation that demands attention. Next you deal with the possibility where if somebody goes into a nursing home and people who thought there were in good shape to handle these costs now find out otherwise and their life savings must be spent on the nursing home costs. No one should be faced with this tragedy so that’s why I want this information available for people to read and understand why they must take action as soon as possible to make sure all loose ends are tied up.
CB: This is extremely important information. Is there anything else you’d like to add regarding this for the readers?
DS: It’s critical for people to understand that when you think about the changes in all those areas I just mentioned: in tax laws; and retirement along with healthcare reform plus peoples’ situations will change as well. Folks have to deal with adjustments in personal finances, and an individual’s or a family’s health care can also be affected, so with the combination of these areas, it makes sense the statistics reflect that 86 percent of the time trusts and estate plans were not meeting the individual or the couple’s current goals and objectives. We think an important set of questions for everybody is “if you could ensure your plan would work when you need it, would you want to make sure this occurs? Plus do you want to make sure the plan is current and up to date?” I believe everyone would answer yes to these questions without hesitating. Most often people want to act especially if it’s related to tax savings, or if they could be losing control of financial and health decisions, or if ever there is an accident or disability, or avoiding probate as well as some of the other topics we discussed at the beginning of our discussion. People want access to long-term care and protecting their life savings so these funds aren’t forced to be spent on paying for nursing home care.
More on this and other key subjects of interest in the important areas of estate planning and asset protection as they relate to paying for nursing home care, in a future article with Dennis Sullivan and Chip Bruce.