The number one question I hear in my elder law practice is: how do I help my parents protect their assets from nursing home costs? Often, the question is coming at a very late stage in the game – usually after the parent is already in the nursing home or assisted living facility. At this point, it gets a little more complex for a lawyer to help protect the parents’ assets.
Lawyers are a lot like emergency managers – we are usually brought in to a crisis situation with limited tools and resources available and attempt to help guide the best possible outcome under the circumstances. Emergency managers know that the best way to increase the odds in your favor is to start planning for a crisis before it occurs. Emergency managers along the Gulf Coast know that a hurricane is coming, just not when. They make all of the necessary arrangements to resolve 90% of the problems that are easily anticipatable before the crisis occurs and then devote their resources during an event to resolving the unanticipated. Note that good planning reduces the degree to which an event actually becomes a crisis – it’s only a crisis if you have a number of options and limited resources to deal with consequences.
If you have aging parents, or if you are getting to the time when you are thinking not just about retirement but about what happens when you are less able to care for yourself, it’s a good idea to treat the future as an anticipatable crisis and begin planning for it as early as reasonably possible. So, because many of us worry (and as a lawyer, I get paid to worry on your behalf) about health care eventualities (note: like the Gulf Coast emergency managers with hurricanes, we know that our parents – and ourselves – will eventually need long term healthcare, just not when), good planning is the key to reducing the degree of crisis we face when it is time for long-term healthcare.
We can learn several keys to protecting the assets you have worked so hard to create from emergency managers.
1) Emergency Managers assemble their teams. Work with a lawyer and financial planner as a team to develop avenues to protect and grow your assets with trust vehicles.
2) Emergency Managers form compacts and agreements before an event. They work with other counties and states to provide resources while they have them in order to build relationships of trust and confidence for the future. There is a an understanding that “paying it forward” not only helps build trusting relationships. Give strategically and early – you can’t take your assets with you but you of course worry about being asset-less as you get older. Still, it makes more sense to gift assets to your children who will care for you as you age than to use those assets to pay for your nursing home care later. Giving early is key because Medicare/Medicaid will “look back” 60 months from the date you apply for coverage to see if you gifted any money. If you have, you can be penalized on receiving coverage for a period of time depending on the size of the gift.
3) Emergency Managers take stock of their resources before an event. Emergency managers always take stock of what is available to them, what might be available to them and what probably is not available to them. This helps them plan for contingencies. Know your assets. Take stock of what you have liquid (cash, investments) and the values of assets you currently own (cars, homes, businesses, etc.). Some assets are not included in the Medicare calculation while others will make it difficult to receive coverage. Know your income streams and tax liabilities. In retirement, income can be from pensions, social security, Veterans Administration benefits, dividends, and loan repayment. Calculate all of this to make sure you know what is going to be coming in.
4) Emergency Managers use expertise to solve complex problems. When faced with a complex or novel problem, emergency managers look to experts in a particular field to help them solve them. Work with an attorney who is experienced in the area of Medicare, to figure out what your liabilities will be and what the law is regarding qualification for Medicare and any other state or Federal benefits to which you might be entitled. See some of my other blog posts regarding social security and VA benefits. Working with an attorney with expertise in the field will help you ensure that you are capturing each and every dollar to which you are entitled.
5) Emergency Managers use their experience to guide their decision-making. As a side note: attorneys require upfront costs, money you may prefer, in a perfect world, not to spend. But attorneys worth their salt will save you tens of thousands of dollars above and beyond what they charge you to put things in working order. Knowing that your assets are protected and that you won’t be burdening your children (or bearing the cost of care for your parents) gives many people restful nights of sleep. The importance of sleep cannot be overstated – better sleep means you will live healthier and longer.
6) Emergency Managers do not panic. If you are coming around to planning for long-term care a little late in the game, all is not lost, but it is very important that you do not simply take “self-help” actions like making large gifts, transferring titles, and the like. As the event comes closer and closer and a crisis looms large, experienced emergency managers do not panic, they take stock of resources and options, they talk to experts, they gather their team and they proceed based on the best information and options available to them.
Thinking and planning strategically is the absolute key to reducing the amount a future event turns into a crisis. When you know an event is coming, it makes sense to plan for it now to reduce the cost of the event later. Most of us prefer to delay costs to a future date in hopes of avoiding the inevitable. This is the greatest cost strategy in terms of both assets/resources and your own stress. It creates a future scenario when there are limited resources, numerous options and limited time to act. Good emergency managers know that they can operate in sub-optimal conditions, but they would always prefer to increase their odds by anticipating and resolving threats before they become problems.