[Editor's Note: The following guest post was submitted by Margaret Curtis, MD, a pediatrician who writes about career and finance for women at ADoctorsWorth.com and frequents the WCI forum as “Crockett's River”. Dr. Curtis was the primary decision maker and financial manager for both of her aging parents for about six years total — four of those years she was caring for both at the same time! We have no financial relationship.]
I was the decision-maker for both my parents at the end of their lives. They had very different end-of-life trajectories: one was a best-case scenario, one a cautionary tale. I learned a great deal about navigating the tricky financial, legal and familial waters of caring for elderly relatives, and I hope my experiences might help some of you in your personal and professional lives. If nothing else, I hope reading this inspires you to sharpen up your own estate planning.
Cost of Caring for Aging Parents — Best Case Scenario
My mother retired in her sixties with a substantial nest egg, after a life of hard work and thrift. She was later diagnosed with Parkinson’s but lived independently for many years doing what she enjoyed most. When her symptoms started to interfere with her daily living, she moved into an assisted living. This brings me to the first lesson learned:
1) Put Care in Place Early
We all know patients who lived at home alone “as long as possible”, and it often doesn’t end well. There are real financial implications here too: friends of ours recently moved into a retirement community that includes independent living as well as skilled nursing and memory care. They moved while they still qualified for independent living (ie while they could both still pass a mini-mental status exam), so they locked in the lowest daily rate (adjusted for inflation) for the rest of their lives. No matter how much care they need, they will only pay the “independent living” rate. Given that memory care can be many multiples the price of assisted or independent living, this could mean the difference between outliving their money and leaving something for the grandkids. Not all senior care facilities offer this (incredible) deal, but moving when you are still independent gives you many more choices for location and price, because there are always more assisted living beds than skilled nursing facility (SNF) beds available (just ask any medicine intern who has tried to find a rehab bed for a patient on a Friday).
My mother’s living facility was affiliated with the hospital where my husband was an attending. Later, when we moved for my training, she moved with us. We were able to see her regularly and talk with her caregivers. My kids got to know her. This is lesson #2:
2) Keep Them Close
I often hear people say, “I won’t move close to the kids because I don’t want to be a burden.” Trust me, you will be more of a burden living across the country than across town. This is more practical than financial advice (unless you include the expenses of traveling to visit elderly parents, which becomes more frequent over time), but it will directly affect everyone's quality of life. You will also be able to draw on your professional community to help your parents if they live nearby. I don’t mean anything unethical, such as preferential treatment but just the fact that we were on a first-name basis with her PCP made us all feel better.
When my mother first moved into assisted living she transferred her assets into a local bank that has a “wealth management” division. Because her assets totaled over $1 million (seriously, hard work and thrift), she qualified for a private banker who cut checks for her expenses and monitored her asset allocation over time. That is lesson #3:
3) Get Professional Financial Help
Even if you are a die-hard financial DIYer, I strongly recommend getting at least some help with finances. First, because it frees you up to do other things, like be a doctor. Second, because it insulates you from what can be ugly wrangling over money. For example, we soon found out that a relative had regularly been asking my mother for money. Mom was never able to say no to this person, but Margie the Private Banker sure could. That conversation probably saved my mother more than she paid in fees for assets under management. If your parents’ assets don’t qualify for your own Margie, you might want use a CPA or lawyer for account management (below I discuss some other professional services that might be helpful). If you do all the accounting yourself you have to be meticulous in record-keeping to avoid even the appearance of impropriety.
Dr. Margaret Curtis, MD
With careful planning, my mother was able to live out her life in comfort, without worrying about her finances. We were able to enjoy her last years with a minimum of stress, for which I will always be grateful.
Cost of Caring for Elderly Parents — Cautionary Tale
Now, the Cautionary Tale. My father was diagnosed with Alzheimer’s in a scenario that will be familiar to EM docs: he walked into an ED of a major medical center and announced that he was there for his surgery. Needless to say, he wasn’t scheduled for surgery. He was admitted for evaluation and disposition. I heard about this a few days later when a hospital administrator called to say he couldn’t be discharged home. She told me that if I or my siblings couldn’t arrange suitable housing he would be reported to the state as an “elder at risk”. She couldn’t tell me anything about the results of his evaluation due to HIPPA regulations. Now, this is where our system defies common sense: I needed to take over his affairs and find housing for him and to do that I needed some kind of legal standing. To get legal standing, I needed documentation that he was no longer competent. To get documentation, I needed legal standing. After a few days of phone calls and 'round-the-mulberry bush conversations, a hospital social worker took pity on me and said, “This is ridiculous. I’m going to tell you that your father has dementia, probably Alzheimer’s.” I thanked him profusely, hung up the phone and called my lawyer to discuss options.
Cautionary Tale Lesson #1: You Will Need a Team
No amount of medical training will prepare you for wandering in this particular wilderness. I recommend your team includes:
1) A Professional Guardian
This may be the most valuable member of the team, and one I learned about late. The National Guardian Association describes the process by which individuals can act as fiduciary caretakers and overseers of both person and estate. The NGA also keeps a database of individuals and agencies who do this work. Although I acted as my father’s guardian, I believe hiring a professional who has both legal, financial and elder-care expertise would be invaluable. The best professional will have many services (including a CPA, attorney, and home health care expert) under one roof, or have close ties to these services.
2) A Lawyer
This lawyer doesn't need to specialize in elder or estate law but should be able to refer you to a specialist if need be. We used a lawyer who had helped us with a real estate closing. He guided me through the process of obtaining guardianship and later held the bond for my father (see below).
3) A CPA
Depending on how simple or complicated your parents' estate is, you may be able to manage tax issues yourself but for the sake of transparency and avoiding costly mistakes I recommend at least consulting a CPA at the outset.
4) Local Elder Care Agencies
These elder care agencies can vary from government agencies to local United Way offices. They generally don’t take an active role in managing an elder’s affairs but can offer help with finding resources. Just google “elder care in (location)”.
5) Do Not Expect Your Team to Include Family Members
I realize I’m straying away from financial advice again, but if you are going to get through this with family ties intact you need to have realistic expectations. Old family roles reassert themselves and conflicting interests make decision-making difficult. (A relative who lives in a different country once told me I should really be bringing my mother more fresh fruit. At the time I had a job, 3 kids under age 7 and 2 incapacitated parents. Do not be that relative.)
Legal Guardianship
Filing for Legal Guardianship
I filed for legal guardianship, which was fairly easy. My lawyer filed the paperwork (although you can also do it yourself with a google search), then my lawyer and I met a judge at the county courthouse to present supporting evidence. I submitted the results of his neuropsych evaluation and explained how I had gone to his home to move him and found a fridge full of rotten food, etc. I had to get a bond, which is essentially an insurance policy that would replace his assets in case I, as guardian, absconded with them. Because his assets only totaled about $200,000, the bond cost about $50, renewed annually.
Guardianship vs Power of Attorney
Guardianship gave me the capacity to make all legal, financial and medical decisions for my father. It is worth laying out the differences between guardian and power of attorney (POA): POA is designated by an individual to make legal and financial decisions for that individual, should she become incapacitated. POA does not automatically include health care decisions such as do not resuscitate (DNR) or do not intubate (DNI); for that, a durable power of attorney (DPOA) for healthcare (or healthcare proxy) needs to be designated. A guardian is appointed by the court to make all decision, including medical. An individual who has lost capacity can’t name a POA (which is why I applied for guardianship). Guardianship trumps POA. I encountered actual hospital social workers who did not understand this distinction.
Guardian Reimbursement
You are entitled to be reimbursed from your parents' funds for the time you spend on guardianship activities. I chose not to do this, because he had so little money left, but if you go this route you should absolutely have a CPA or professional determine the going rate for guardianship and cut the check. Again, avoid even the appearance of impropriety.
Banking
I established a bank account for the benefit of (FBO) my father, with myself as the sole check-writer. I kept the bulk of his money in a low-cost money market fund and periodically transferred cash into his checking account for his few expenses. His Social Security check was deposited directly into his account, and the bill from his memory care came out automatically.
Be Prepared to Straighten out Financial Messes
When I started going through his finances, I found my father owed several credit card companies and hadn’t filed tax returns in several years. I don’t mean he had no tax liability; I mean he hadn’t even filed. I figured the credit card companies would find me on their own, but I didn’t want to keep the IRS waiting so I contacted his local IRS office (easy to find online). The agents were very understanding and gave us enough time to get all the forms filed. I paid our CPA (from my father’s account) to recreate his returns as best we could using bank statements and social security records. Luckily he didn’t owe any back taxes so as soon as we filed his case was closed.
I met with a bankruptcy lawyer who offered a free initial consultation, to see if he should go into bankruptcy to protect his assets from creditors. She explained that he really didn’t have enough assets to protect at that point – he didn’t even own a car – and that filing would cost more than it was worth. She recommended I settle with the credit card companies to accept partial payment of his debts, which is what I did. Your situation may differ if your relative has substantial assets, and it may be worth consulting an attorney if a large debt is involved.
Running Out of Money for Care
My father’s finances put him in a difficult situation; he was too wealthy to qualify for Medicaid but would only be able to pay for private memory care for about 3.5 years. Fortunately for him, my mother had purchased Long-Term Care for him years ago and paid all the premiums. This covered about 30% of his expenses for 3 years, so gave him about another year of private pay memory care. (I would add “buy LTC insurance” as lesson #2, but that kind of affordable policy really isn’t available anymore. If you have it already, count yourself lucky and do not miss a payment). We would have to do the dreaded Medicaid spend-down; pay for his care out of pocket until he met Medicaid limits, then move him into a Medicaid or veteran’s memory care facility.
Now at this point you may be thinking, “Only one of my parents needs skilled nursing care! Why don’t they just get divorced (in name only), so we don’t have to spend down all their funds?” Nope. Judges see right through this kind of shenanigan. If a couple gets divorced, there is a waiting period before either can get state assistance.
I started looking for a Medicaid memory care facility almost as soon as my father was settled in his first, private-pay facility. I knew such facilities were in short supply. In fact, I couldn’t find even one that would take his name on a waiting list. I finally found a private, non-profit elder care services agency that was able to help. I found this agency online as I described above, and had I known about them I would have enlisted their help far earlier. I paid them an hourly rate to help with his case, and they were able to find a nearby veteran’s home that would put him on the list. When the home moved glacially slowly in processing his paperwork, the agency dogged them and even suggested I write to our state senator for help. (I did, and it worked).
You will notice that I paid for my father’s care largely out of his funds, and we did not offer (or even seriously consider), paying for his care out of our pockets when he ran out of money. The cost would have been literally half our take-home pay at that point. The decision of whether, and how much, to support your parents is entirely personal. Miss Bonnie MD does a nice summary of issues to consider here: https://missbonniemd.com/financially-ill-prepared-parents/ and there have been threads on this topic in the WCI forum. Again, a good CPA might be helpful in deciding how best to proceed if you want to help support dependent parents.
Conclusion: Save A LOT For Retirement!
My father lived comfortably and quite happily in his memory care unit until he died. He did not have to move, thankfully, and died with about 4 months living expenses left in his bank account. So this brings me to the final lesson, and I know I am preaching to the choir here, but:
Save for retirement. Save a lot. Old age is expensive, and dementia is even more so. You may be saving for a 40-foot cruiser (and for your sake, I hope you get it), but I am saving so my kids never have to put me in a public nursing home.
I hope this information is helpful, although I also hope none of you ever find yourselves dealing with a Cautionary Tale. If you do, or even if you have questions about what I have written, please feel free to contact me. If I don’t know the answer I may be able to point you to someone who does. If you never have direct care or oversight of elderly loved ones, remember to thank those who do. And I wish you and yours all the best.
Have you needed to care for aging parents? What advice can you add? Comment below and share your experience with others.
Thanks for sharing that story with us. Definitely a cautionary tale.
The one thing I have come across which I find infuriating is the concept of filial responsibility. I know it is incredibly rare to have been enforced in the past, but you never know how it can be applied in the future as I am sure everyone will always try to get as much money as they can.
For children to be held financial responsible for their parents care (the premise of filial law) is outrageous. If I had parents that wasted their money on stuff all their lives and then ran out of it while in a nursing home and Medicare doesn’t cover the balance, what legal right does that facility have coming after my assets if I chose to save my entire life? The law is antiquated and really should be off the books.
LTC insurance is a dicey proposition. The rates have been going through the roof as these companies realize how much money it is going to cost, plus you can be dutifully paying your premiums and find out that the insurance company went out of business and you are left holding the bag.
The best solution is what Jim has previously mentioned, and try to self insure by building up a sizeable nest egg.
Good points about having professionals assist in the Financials of your elders to avoid any look of impropriety. Most of us our DIYers and that might be a painful step to do but probably worth it just to avoid the legal issues if you handle everything and someone (relative, etc) thinks you put your own interest first.
I agree that the LTC insurance policies available now are generally not great. My mother worked for a large insurance company (John Hancock) and bought policies when they first came out . They were affordable and offered great payouts – which is why the insurance companies no longer offer them!
My state does not have filial responsibility laws, so those issues never came up, and I don’t know what the obligation would be if your parents live in a different state. Sounds like it could compound an already difficult situation. Have you heard of these being enforced?
There is a somewhat famous case I think happened in Pennsylvania that it was enforced and upheld by the judge that the son had to pay for debt accrued in nursing care facility (there were some other details that emerged that may make this not the best example (I think I heard that he may have helped mom leave country to avoid or something like that, details are foggy)
I’ve never heard of any law requiring one adult to pay for another’s adult expenses unless the former has previously agreed to cover costs.
“Agreed” would include marriage for those states that bundle marriage debts together and co-signing on a loan.
Under what circumstances does “filial law” apply?
Most people haven’t heard of filial laws, that’s where a lot of the opposition to them comes from.
https://graphics8.nytimes.com/packages/pdf/health/NOA/30states.pdf
In answer to your question, it varies by state.
Wow, that’s a fascinating bit. Hopefully, it’s unknown because it’s rarely applied. 30 states including CA and NJ is a good chunk of people with aging parents to not know about it otherwise. Honestly, I actually like the underlying premise of caring for your elders after reading it.
In an ideal world, everyone would have a will, financial POA and a healthcare POA put into place when they were younger and in sound mind, which they would update over time as their wishes changed.
Having these documents in place will make it much easier for your loved ones to care for you in the event you become incapacitated and they need to administer your financial affairs.
Unfortunately, many people have none of these things which it makes it much more difficult on the onset to deal with a parent in this situation.
My Mom is 89 and although she’s still mostly doing ok this post is very helpful. I’ve been preparing in various ways but still have lots to do.
I’m happy to answer any questions you might have! I also recommend getting in touch with one of the agencies I mentioned above that can help with the big picture: financial and legal planning, finding resources, even running interference with other relatives.
My friend Tori LLoyd, JD, runs an agency called Athena Advocacy. She is based in Vermont but could refer you to someone local to you. I have no financial relationship with her, but I know her to be a person of integrity.
This is a great lesson to be learned. Two in fact.
Thanks for sharing, Margaret. This probably couldn’t be talked about enough. Unfortunately, we have little control over our parents finances and will inherit some of these problems most likely.
Thanks for putting yourself out there and telling an important story that shows both sides of the potential problem.
TPP
Thank you TPP 🙂
Thanks for the advice. I was helping my parents deal with my grandmothers as they progressed through the end of their life. It is a tough job. Privacy laws, like HIPPA, make it harder. Just trying to cancil their cell phone contract was a nightmare. I have a great respect for those who have been through this.
Dr. Cory S. Fawcett
Prescription for Financial Success
Amazing how laws that are meant to protect people can be such a hindrance to actually getting them care. Everyone I encountered along the way was well-intentioned, but limited in what they could do. I was lucky I could speak the language.
My recently widowed MIL is almost as rich as we are; after years of lamenting that her husband might use up all their money on a nice nursing home leaving her only enough for a bad one he died without ever entering one. She has put her son on one bank account and lets me track most of the others online. Making slow progress to move to our town, a decision we are not even certain she will follow through on (and many reasons not to, it would mostly benefit OUR peace of mind).
We are distressed at little things we have no control over, since she is legally of sound mind, like: ‘our’ trusted bank (cough cough UScaagh) convincing her to leave the proceeds of a life insurance policy in an account with them while she decides (they were unable to talk her into an annuity right off). Realtor can’t look inside until she cleans the house (with her disabilities). Her decision to leave everything else in a .05% account while she figures things out (we know no stocks for her, but no new CDs?!?!?). Her concern that she can’t afford the nice place in our town where she could last financially until, ?, 95 yo, and hoping to rent one where it’ll keep her in money until she’s 140. She did grow up hungry in post WW2 Germany so she might be wiser than we are, and certainly has her reasons.
We were really saddened and awakened when we kidded (semi seriously) with her that perhaps she should loan our kid money to buy a house, something that 20something is asking us to do about now. MIL told my son “Next time I really want you to tell me before you take my money to do something like that!” He sadly told her “I would not do anything without getting your PERMISSION, Mom, so I’ll never be telling you anything about your money after I do it, or not telling you about it.” Here we are worrying about someone financially abusing her when the usual culprits in such a case are relatives.
There is a really frustrating gray area when an older person really can’t manage all their own affairs (especially if they include big-ticket items like a house) but aren’t legally incapacitated. Hence my father’s long decline.
The relative who was taking money from my mother was able to fly under everyone’s radar for years. S/he probably would have said it was totally fair and justified. This is where professional, unbiased help is a Godsend.
The gradual descending aging process is a huge hindrance. The Medicaid rules are complicated for financial assets allowed for staying in a house, but require signing a lien for recovery upon death. If moving to a facility, that creates assets over the limits that need to be spent down. A five year lookback window complicates it more.
The local caseworker simply gathers information and fills out the forms. Then you get accepted or rejected.
The aging parent most likely wants to stay home and take care of business, until it’s too late. Little things like how bank accounts and houses are titled and a will make huge differences.
We moved one in early. No house now!
Once , can you help me write the check for the phone bill came up, time to setup joint accounts with right of survivorship. Trust is established, can you call the bank and pay my supplemental insurance. Shortly, mail comes in and you are paying the bills.
Once she needs assistance, parttime help. We never got to the nursing home.
Another wants to stay in the house. Filed a transfer on death deed to avoid probate.
How do you sell the house and be destitute at the same time? Haven’t got that figured out and the “cognitive skills “ aren’t there.
“I want to stay here”. The funds for home assistance will run out. Any ideas?
Really outstanding blog post with lots of useful information. Both of our mothers are declining pretty steadily and extremely uncooperative and unreceptive to moving into an appropriate facility. Both think that the answer to their problems is unrestricted money from their children. Both are emotionally distant to their children.
My wife’s mother is local and essentially broke. My mother is 1200 miles away from any family or support but has a decent nest egg, like Margaret’s mother, but from divorce, not from being especially frugal. It’s going to be interesting to see how it all plays out.
Play it like a 5 card draw poker hand. Discard the 3 you don’t want. Now you’re set. The trick is house rules. My kids reserved the right to draw 3 more cards. Over and over.
Stack the deck. If you keep 4 aces, they can’t get a royal flush, no matter how many times they draw.
My point is, financially you need to stack the deck. Building the case in advance to force them at some point to play fair or quit. Otherwise, more chips and more cards.
By the way, you got dealt a terrible hand. Consider folding. Good luck. I admire your attitude.
Truly an excellent post. My parents are both healthy but will be retiring soon. This post really helped see how much homework I have to do.
Thanks
Dr. Curtis
Phenomenal article. I have forwarded to multiple people so far. Recently my 93-year old Aunt passed away and encountered similar issues-fortunately not the cautionary ones. She too purchased an LTC policy after her husband had Alzheimer’s. Her policy lasted 6 years before she went on Medicaid. I do retirement planning and have found the biggest risk that people have is their LTC planning. (As a money manager for 30 years I never thought I would gravitate to think that LTC insurance would be an area I would care about). I urge you to look at One America’s Assetcare policies-hybrids-they are designed for those with assets that want guarantees and most importantly don’t want to just “save a pile of money” in case. It is only part of my business-(I have only written a policy for myself and my former boss). My inside secret is that those of us who know the product want it for ourselves. (It is unlike policies that can raise rates willy-nilly-to me that is not good enough). I urge you to take a look as thy have been around 25+ years.
James McGlynn CFA, RICP®
p.s.
I am a very cynical/jaded person but I couldn’t find how they can “screw” me on this!
I am floored by your article, the extremes of your experiences with both aging parents, and the generosity and grace with which you wrote it. (About the only thing that did not come as a shock was your experience with HIPPA obstructionism.)
We lost my father-in-law this past January, and are watching my mother-in-law go through mourning and life adjustments while trying to keep an eye toward when she will need to move closer to either of her adult children.
It’s a delicate balance – how to encourage her independence and social connections (in a town out of state, with no family nearby) for as long as possible while not receiving the call you did when your father’s incapacity declared itself.
Thank you again for sharing your wisdom and advice – I’ll be sharing this article with siblings, my wife and brother-in-law.
Fondly,
CD
Most people loved the article. I got a single email “not a very good article” but it was outnumbered 10:1.
I shared the article with my sister, as well.
Whoever considered this “not a very good article” is too immature to understand what is coming for him or her down the road.
Thank you for your kind words.
It is a delicate balance, indeed.
My father was declining in function in his early 70’s. I diagnosed him with Parkinson’s. It progressed rapidly.
I had a crash course in credit card debt (his that I didn’t know about), selling out of state property, POA, durable healthcare POA, living wills, Medicaid applications, nursing home options, then ultimately funerals, burials, death certificates, etc. It was all pretty miserable but I was glad to have the connections, knowledge, time, and financial resources to make his final years as comfortable as possible.
This story really helps those of us who still have living parents to plan ahead. Part of what makes WCI great are honest stories like this one. Thank you very much for taking time to write this.
This was a great article, and I really appreciate the honesty of what you wrote.
My concern – and I’m sure it’s like this for many of our peers, is my parents dont have much for retirement (maybe 200-300k), and are fully dependent on me at this point for their general lifestyle (they’re in their 60’s, dad retired, mom working).
It would be nice for us to have a general idea on how much to save for long term care – or ideally, any review comparisons of different types of LTC insurance would be spectacular.
If I can put aside x-dollars a month now, for them 20/years from now that’d be great.
I agree. A comparison of different policies by LTC experts would be excellent. I find it hard to believe that the only solution is to “save a bunch of money just in case”. Surely there are a few doctors that have a policy they like.
Great. I’ll put it on the list of requested guest posts.
Satisfied customers of long term care policies are really difficult to locate. Of course, dissatisfied customers are usually in no condition to communicate. Because of the changes in the contracts, the circumstances of the insured, and LT care facility itself, it will be difficult for meaningful physician input.
The analysis of broker and legal views of current products would be valuable.
This was a wonderful post. Thank you for sharing. I am bookmarking this for future use, as I’m pretty sure these decisions and duties will fall to me once my parents reach a certain age.
Great article! My parents are both 87 years old and living on their own. I know tough times are just around the corner. The experiences you had and the advice you provided is very much appreciated!
Wonderful post, certainly an issue that isn’t discussed enough. While my parents are in their early 60’s and healthy, I know that won’t last forever.
We were able to convince my mom to allow a bookkeeper to review the checks and books monthly. She could not see so was willing to agree though she protested the amount of money it cost (it was trivial) She would not pay for a wealth manager, a banker or a CPA or any other financial help. My brother in law was an accountant. He walked all the family through a similar process to that described above. This allowed all the siblings to be very transparent with mom and with one another about what was happening with all the checks and deposits and to allow each (and especially mom) to know that no one was asking for or allowing checks to be cut for their or their children’s benefit. We were incredibly cooperative with each other but as mom aged she became more suspicious. Siblings in other cities or states can help manage things online such as finances, coordinating insurance payments and bills ,which takes a big burden off of the in-town child.
Unrelated comment. There are some good blogs about retirement and long term care. There are very limited amounts of money including in stocks and bonds that can be kept for the second spouse who enters a nursing home. My recollection is something trivial like $100,000 – 200,000 total. All other savings are spent on the first spouse until they spend down to medicaid levels. This leaves the second spouse (statistically the wife who likely will live up to 8 years longer ) in dire straits. These limits were established in the days of pensions and have not been changed.
The levels vary by state. In Utah they’re closer to $2K than $200K.
Thank you so much for sharing your cautionary tales and the lessons you learned the hard way.
My family went through the same process when we were relocating my grandmother to an assisted living facility near us. The legal and financial processes were challenging but necessary to guarantee her a quality of life in her golden years. We met many obstacles along the way but were mostly able to navigate them.
My mother received durable power of attorney at the consent of my grandmother and this helped tremendously. Without this designation, we wouldn’t have been able to help with many problems that arose along the way.
You’re detailed experience is a great guide for helping anyone who may be preparing for this outcome or even currently going through it. I plan to work with my mother to document any advice she’d like to share and may put out a similar piece to this. Very helpful and thanks so much for sharing!
In past year, 2 dramatic changes; Both of my parents live in FL have been diagnosed with dementia; 92 year old Mom has Alz and now is living in an assisted living/memory care facility and 96 year old Dad still living at home with 24/7 home aides. All POA documents were in place but all assets are low basis stocks and so i have to sell stock on regular basis and incur cap gain taxes to meet unreal expenses. No LTC policy except for capped home aide only coverage that only makes small dent. There’s a blessing to live a long life but almost every day there has been an issue to deal with. Most people simply won’t have saved enough money for this, my parents vitals are both good. Alz/ dementia is just a crusher
I’m sorry to hear about your parents.
One option you may have, assuming you’re the heir of these low basis stocks, is to use YOUR money to pay their expenses and take advantage of the step up in basis at death.
Since the “vitals” are good on both, the LT care costs can end up exceeding the value of the gross estate. Then you get into the Medicaid asset qualifying can of worms.
The end of life time frame is sooo variable.
Using your own after tax to avoid capital gains for the stepped up basis could be a losing proposition as well. For me personally, I would not want my financial plan favoring my parents earlier demise. For those reasons, I wouldn’t suggest finessing the taxes in this situation. Play the hand you were dealt.
Excellent argument. Of course, this is what they saved their money for and they’re probably in a relatively low capital gains bracket, no?
Can they deduct their SNF costs as medical expenses? Great way to reduce taxes if so…
Hearing about the costs involved for nursing homes makes me wonder what the other 99% of the US population does for their parents. It’s not a new problem and few people can afford the type of care outlined in the original post and many of the comments. Both of my parents died while I was a teenager and I’ve never really given much attention to the subject. It’s only coming to mind nowadays with my wife’s parents hitting their mid-70’s (one can afford everything, the other can’t afford anything).
What do post-retirement years look like for the typical retiree with medical problems or dementia?
Spend down to Medicaid levels and go on Medicaid nursing home care. Or a family member cares for them. If you look at my four grandparents, you see this:
MGM: Keeled over suddenly from MI in 50s
MGF: Cared for by son/DIL into 80s
PGM: Dementia, spent down to Medicaid and in a memory care unit
PGF: Died of severe aortic stenosis/complications, had been living with/cared for by daughter/SIL.
That’s a pretty good representation of what happens to people.
Very sad to read the long term care stories-something modern Americans are unprepared to deal with. My parents passed away in a hospital (never good) and alone at home (probably a candidate for LTC if we had it). I have been doing retirement planning for 3 years after many years as a mutual fund manager. It is very clear that solving the LTC insurance problem is a major concern-even for affluent doctors. I urge you to look at the hybrid LTC policies-that are essentially a self-funding option that offer lifetime coverage. (I bought one for myself first.) As the population ags and has no LTC coverage you CAN opt for an unfunded Medicaid safety-net (after you have spent your wealth), but that seems silly. Hopefully WCI will analyze these products in-depth.
Haven’t looked at them in depth in a few years, but wasn’t impressed with what I saw a few years ago. Still not ready for prime time as near as I can tell. Glad I’m able to self-insure that particular risk because I find insuring against it to be not a great option.
Did you look at OneAmerica’s Assetcare? Wade Pfau and Michael Finke did an in-depth study of their product. To me it is self-insuring (high-deductible) with a lifetime rider. To me it was convincing as their premiums do Not rise.
I guess the question is whether OneAmerica is going to be in business in 15 years. Were they in business 15 years ago?
Excellent question. That is MY biggest question as well. I have their actuary’s presentation titled “Standing the Test of Time”-explaining why their policies were/are solid versus the stand-alone policis. They have been writing these policies 25 years and the losses as are they expected. They have a Comdex rating of 95 out of 100. I get it-the guarantees are only as good as their finances. There is a full refund of the lump sum if you change your mind. i.e. they look shaky.
“I have their actuary’s presentation” is fairly questionable. Use independent and verifiable data would be much preferred. As you know, statistics and probablities depend on the assumptions. Without the knowledge of actuarial calculations, of course the actuary would use the most favorable. Full refund sounds too good to be true.
“As expected”? Was that the original expectation or the new one?
Hopefully you get the idea. Everything comes up roses until the freeze kills the garden.
I would think an actuary’s public presentation trumps any other information I could get my hands on.
Where are you going to get “independent” data from an outside source? Please tell me? The Comdex rating is the most objective I have.
I have the 24 pages of the presentation-do you have anything specific? Their detailed presentation was satisfactory enough for me as a CFA-I usually have to rely on more conjecture than that.
“Full refund sounds too good to be true”. I agree but if you think about it when you buy LTC insurance it is doubtful that you will change your mind as you get older and really ask for a refund.
(I know the LTC did a number on everyone and there is extreme skepticism but the hybrid product was designed differently. I learned that obtaining my RICP®)
You are more than welcome to deny that there is a solution but as someone who has researched the heck out of the product I believe my roses will survive the winter and I know if you don’t plant roses nothing will grow.
Please stop selling your product here. A good salesman persistently answers every objection. The answer is NO. End of story.
Considering this is the product you are selling on your website as part of your financial planning business, would you mind disclosing the commission structure?
Please explain if EZ Underwriting Guidelines have changed in 25 years.
https://ltcsolutions.net/one-america-assetcare-uw.pdf
Lincoln Money Guard, Genworth TLC, StateLife
*Unlike MoneyGuard and TLC, Asset-Care separates the policy cost into two components – a premium and a continuation of benefits rider. For illustration purposes, we have combined these components, but the premium refund guarantee does not apply to the cost of the benefits rider. In these illustrations, the cost of the benefits rider was 7-12% of the total, so in practical terms only 88-93% of the policy is truly refundable.
Oh Nellie.
I guess I’m no longer impressed with your opinion of this product knowing that you sell it.
Looks like it’s an annuity with a LTC rider. Thanks but no thanks. Not interested in whole life insurance with LTC riders either.
If LTC makes sense, it can stand on its own.
Show me an LTC that makes sense that stands on its own besides this? So if someone knows a product you don’t want information? Should I avoid Doctors who have medical training because they get compensated? I am an independent planner who has found a product that works for LTC. Should I have no training-would that be better?
I haven’t seen one. I thought you had found one, but instead you found one that requires the purchase of an unneeded annuity. Insurance isn’t complicated. You take a big group of people, figure out what the risk is actuarially, then charge a premium that allows the company to make a profit (unless mutual) and cover the risk. There should be no need to buy an annuity or a life insurance policy or whatever. That just introduces more moving parts and makes it harder for the consumer to figure out how he’s being fleeced.
The lump sum IS refundable but the rider which makes it lifetime is the equivalent of a short term policy. If you can find a policy that has a better guarantee I would love it too.
What do you mean hybrid? What’s it a hybrid with? Whole life insurance?
Lump sum? You pay the premiums all at once?
Assetcare is a hybrid that is usually a second-to-die whole-life insurance policy. The policy is usually for a couple that combines the benefit. The premium can be a lump sum, annual pay, 10 pay. It can even be paid for from an IRA-an annuity within the IRA-same same but different. I did the lump sum and pay annually so that the benefits are lifetime. If benefits are not used up to the death benefits can be received by beneficiaries.
You forgot to mention “fully refundable “, didn’t really mean “fully “. Buried in the fine print.
Compare the Lincoln and Genworth LT care features please.
You neglected to address the commission structure , the $250k limit AND the FACT the your “questions “ were merely designed to generate commissions from the link to your website. You are deceptive in asking advice where you simply want to sell to anyone you can. “Too good to be true”, amazing it really was.
Responding to ad hominems and snarky comments isn’t the best way to analyze this product. I just hope folks inquire into LTC -on their own. I had hoped there would be objective analysis here but alas everyone thinks everyone else is here to rip them off. Ask the CFP’s which product they recommend. Night.
Still didn’t disclose your financial interest, not once.
Where is the commission sheet? “How do you make your money?” is not snarky. “Full refund” that isn’t full? It may be too good to be true. Was the actuary SOA or CSA and what field was the certification?
Neither the actuary nor an agent serve the buyer. It isn’t snarky to investigate the ethics of a vendor as well. Post the financial rating for OneAmerica! It doesn’t exist.
StateLife is the Insurance company. Now I need to review the contract and the ownership structures to see if MY new policy can be cut loose. Due diligence isn’t snarky.
NEVER buy a “beater car” from a used car dealer you SUSPECT of selling wrecked cars with the odometers turned back UNDISCLOSED. Find another dealer. I wouldn’t use his body shop either. I just don’t want to end up getting ripped. It may be legal, ethics count.
Always another way to sell whole life isn’t there? I think I’ve got this one (“Buy it for the LTC riders!”) lined up for my next edition of the Myths of Whole Life Insurance series.
Good luck to you sirs!
The commission is up to 8% for the Assetcare. Not sure if there is a non-profit avenue to go to-if Vanguard sells it they will have the same commission structure.
The ratings are listed at 95/100 on Comdex. Comdex combines all the ratings agencies: Moody’s, Fitch’s, Standard and Poors and A.M. Best.
The comment that LTC should stand on its own-how has that worked so far?
The pension protection act of 2006 introduced these products. I hope none of us ever needs LTC but if you want a solution I will wager your CFP recommends Assetcare.
I think my website only linked to an ebook-not sure where you found the LTC sale link-there isn’t one.
I have searched for experts to refute these policies: Glenn Daily for example.
Sorry folks got burned on Whole Life policies before.
Looking forward to the mythbusting on Assetcare from industry experts.
So Tim do you sell LTC or have you researched it?
I still think the better solution for LTC needs for most who read this site is still to acquire enough assets to be able to self-insure this risk.
This is a positively brilliant article. I’d only add that it’s unfortunate – in good measure because Google works as it does – that its HUGE applicability to boomer couples and singles isn’t immediately obvious. (“We” number 71 million as I write, and it’s safe to assume that – human nature being what it is – no more than a few percent have come within miles of following Dr. Curtis’ excellent advice!)
Yes, a spouse faces several different concerns, but the similarities in the 2 situations – I submit – MORE THAN OUTWEIGH those differences. You would think, by the way, in this era where “niche businesses” [often valued at $X BILLION] have arisen all over the place – with “finance” accounting for quite a few – that a “disruptor” company would have come along to make easier what Dr. Curtis recommends. That is, the economies of scale – candidly, lawyers with their billing rate or banks with “private wealth” Depts having a lot going against them ARE NOT the best way to implement the sensible approach Dr. Curtis counsels.
We need a MASS-oriented (not *just* some very capable lawyers who MIGHT serve 200 individuals/families) approach, and it would be far better if it were cross-disciplinary – attorney & CPA under the same umbrella, for openers.
But for any boomer (or boomer’s kid) who’s lucky enough to read this article, if/when they fail to follow the excellent advice offered, they’ll have only themselves to blame for the (frequently) ensuing “trainwreck.”