In my last article, I briefly touched on the financial and emotional impacts when a family member requires long-term care. The best way to defuse the long-term care time bomb and ensure mom and dad continue to live independent is to have a plan.
However, for this article, we’re going to assume mom and dad do not have a plan. They have no long-term care insurance. They are both in their mid-80s. Mom has dementia and dad was her primary caregiver. Dad has just fallen and broken his hip and now they both require care. What do we do?
The siblings meet to discuss how they can help their parents. Most of them feel a little lost as to where to look for help. Like most seniors, mom and dad want to stay home. Mom and dad have saved more than $250,000, but the siblings soon realize that a few years in assisted living or a nursing home would spend down these dollars pretty quickly. So, they decide that the family will provide the care.
Initially everyone has good intentions, but in reality, providing care will fall primarily on the siblings who live closest to mom and dad. In this case, it’s a daughter and she is also raising a grandchild. It won’t take very long before she starts to feel overwhelmed. In many cases, the emotional and physical strain of trying to work and be the primary caregiver for a family member can cause a person to be depressed and physically sick.
So, what should they do?
Step 1: Get the power of attorney straight. Mom has dementia and dad is in the hospital. The first thing that the siblings need to do is to ensure one of the siblings have power of attorney authority for both the finances and medical care for their parents. This assumes dad cannot perform this role, at least for the time being. There is a lot of information that can be added here so I will just say, visit your attorney regarding this matter.
Step 2: Consider additional resources. As I stated earlier, the siblings will feel overwhelmed and not be sure where to turn. In November of last year I wrote an article about programs available to seniors. For brevity sake, I won’t go into all the details again. The siblings should contact the Kansas Aging and Disability Resource Center (ADRC). Their website is at www.ksadrc.org and their toll-free number is 855-200-2372. They are a centralized resource center which provides information and referral services for older adults and persons with disabilities. A local resource is the Leavenworth Council on Aging. This is a county agency that provides services to any person age 60 or older. For a full listing of their services go to www.leavenworthcounty.org/home.asp.
Step 3: Develop a plan of care. Once the family determines what resources are available to help, they can finish their plan of care. Let’s assume that the siblings come up with a plan where they all take on a share of mom and dad’s care. Let’s also assume that to the maximum extant possible, they include input from mom and dad. They know they are all going to need a break every now and again so they plan on bringing in additional care givers to provide respite or relief for the primary care givers. They can hire an individual or they can hire an agency. An agency has some advantages. They should be licensed with bonded care givers, which means they are insured. They should also have more than one care giver oriented to the case so they can respond on short notice with more than one care giver available to staff the case. Most importantly, the agency should have done a detailed background check and drug screening. You can’t be too careful these days regarding who is coming into your home. Once the contract is signed, the agency can be your on-call back up. This is especially important should either mom or dad take a turn for the worse and need more care than the family can provide on short notice. The agency should be flexible enough to provide care that ranges from 24 hours, seven days a week to just a couple of hours every other week or so.
Step 4: Have a financial plan. Assuming dad is no longer fully capable of handling the details of family finances; a trustworthy sibling or power of attorney must assist in developing a plan. This plan should include a budget that projects an orderly spend down of assets. Once all of mom and dad’s assets are spent; then the plan might assume a transition to Medicaid. In addition to savings and investments, an asset often overlooked is the equity in the home. If mom and dad have a home that is paid for or nearly paid for, they can access that equity to help pay for their care. A reverse mortgage or home equity line of credit are two tools that they can use. I wrote an article about reverse mortgages in March. If the family does not use the equity in the home and applies for Medicaid when they qualify; the state may put a lien on the home anyway. The state would recoup some of the money it spends on mom and dad when the second spouse passes away and the home is sold. See my article on the Kansas Partnership Program from February 2013.
In our next article, we will touch on a few points to consider when doing long-term care planning as part of your financial and estate plan.
Larry Martin is an investment advisor representative offering advisory services through Mader & Shannon Wealth Management, Inc., in Kansas City, Mo. Previous articles are posted on my web page, http://theretirementexperts.us/. He can be reached at firstname.lastname@example.org or (913) 651-4321.