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Seniors are living longer and longer these days. Their baby boomer children also will be living much longer. Discussing long-term care may be embarrassing, but it is a reality that must be dealt with. Please don't wait until you are incapacitated to make your long-term care wishes known. It is your responsibility to speak with your adult children. Let them know exactly what your wishes are should you become unable to function. Do you have a recent legal will for the state in which you now reside? If you die without a will ,and have a substantial estate, it will be costly to untangle. The probate process can be very lengthy in some states. Take the time now to arrange your legal affairs while you are still healthy.Reading: Long Term Care, Insurance, Protecting Elders & Gift Ideas
It would also be wise to have a Living Will which stipulates your exact wishes for medical care. The document is in writing and should be notarized. Many banks offer Notary Public services for free these days. A Living Will directs caregivers not undertake any expensive and extensive procedures to prolong your life. It is a touchy subject that you need to tackle your adult children.
Today, even a basic no-frills burial package is around $6,000. Do you have a life insurance policy? Perhaps you also have a policy that pays for your final expenses. Do your children know about these policies and where they are kept? Due to the high cost of funerals today more and more seniors are choosing to be cremated. Cremation services can be had ranging from $800 and into the thousands. Prices are not going down for these services. You can buy a pre-need cremation package and lock-in a fixed price.
Medical costs keep rising. Do you have medical insurance that provides for long-term care? If not, the burden of caring for you will fall on your family. Your assets will quickly be eaten up if you need care outside of the home. There are horror stories all over the country about people that go into state run nursing homes. It isn't pleasant for many. Discuss with your children what you want done. Your children will be using their assets when yours are gone. Is that what you want? Your adult children may not be aware of what it costs for long-term care. You may have to enlighten them.
It's a shame that many seniors have no assets and have to depend on the generosity of their children for their care. To be fair to them, you need to broach the subject and tell them what you wish for them to do regarding your long term care. Talking about the birds and the bees is much simpler than talking about hospitals and nursing homes and funerals. If your adult children live out of state it can be a huge problem to coordinate your care.
Discussing long-term care with your adult children is never going to be a pleasant subject. Unfortunately, it has to be dealt with. At a minimum, make sure that you have a legal will. Also, make sure you have a living will, in writing, that makes your final wishes clear to all. Discuss your burial arrangements with your children. Let your children know if you have any insurance policies, and where they are kept. As unpleasant as the topic may be, it needs to be discussed while you are physically able. Make your long-term care plans now.
Long term care is defined as needing the assistance of another person in performing two of the six functions of daily living. When this assistance is needed, there are three options for funding this type of care.
Self-funding means you have the money to simply pay for all your care needs.
The second method of funding is having a Long Term Care policy with an insurance company, which will have a pool of dollars to use to pay for your care.
The third way is to deplete your assets to the point of being eligible for Medicaid coverage.
The first option is self explanatory. Your personal assets and funds will be used to pay for your long term care stay. If at some point you run out of assets, you would be eligible for Medicaid coverage. Your care would continue, but there would be no assets to pass on to heirs. In an effort to encourage people to take responsibility for their care, many states are adopting what is called the Partnership Program.
This allows individuals to purchase a long term care insurance policy from a private insurance company, transferring the risk of care to the company. The rules of the Partnership Program would be that however many dollars are in your pool of benefits, you can exclude that dollar amount of your assets from the medicaid spenddown rules. For example, if a client has assets of $500,000, then purchases a long term care policy that has a benefit pool of $300,000, only $200,000 of their assets would be at risk for long term care cost. The balance of the $300,000 would be eligible to pass on to the heirs of there choice.
This is done in order to insure that people have assets to pass on to their spouse, children and grandchildren, and also to give some relief to the Medicaid system, which is struggling to cover all the costs of people currently utilizing the Medicaid system. Another example of planning with the Partnership Program, if a client has total assets of $200,000, then design a long term care insurance policy that covers the $200,000 knowing you have preserved your assets from spenddown.
There would not be a need of having assets of $200,000, and then buying a long term care pool of money that is much higher. If the client is opposed to using the Medicaid system, then they may want to buy a larger plan. If they use the Medicaid system in their planning, they can simply cover their existing assets. The third option is often related to the first. Whether you have a large amount of assets, or a small amount, they will be spent down until you are eligible to use the Medicaid system.
If your state currently has the Partnership Program in place, consult with a professional to see how it would fit into your retirement planning. If your state does not currently offer the plan, contact your local representatives and encourage them to try and get the Partnership Program placed in your state. It is opening a new world of retirement planning and estate preservation for the many people who have had to deal with long term care cost.