I just ate a cheeseburger.

At this point in the year, many of us are abandoning our New Year’s resolutions, but there’s still hope…

by Chris Flynn, Attorney

Well, we’re a few months into 2016, which means we’re also past the point where many people have abandoned their New Year’s resolutions. (I’ve started eating cheeseburgers again despite the 15 or 25 pounds I’d planned to lose this year.)

Estate Plan Organization

A common resolution in the beginning of the year is to “get organized.” I have file cabinets at home that I’ve been mindlessly throwing documents into for years. I keep meaning to clean them out. I know they hold important papers, but can’t imagine trying to actually locate any one of them. With no immediate need to know where specific paperwork is, it’s always easy to put it off for another day instead of taking a couple hours to make sure the big things are in place.

And sadly, if I never do take care of those file cabinets? My family will be left to dig through the piles of junk I’ve gathered over the years trying to figure out what’s important and what’s been left for them.

Would it help your children to know where stuff it? To easily know what bank accounts, investment accounts and insurance policies you own? To get things handled quickly and privately and as automatically as possible when you die?

We can help with this! In just a few meetings, you can know what you have, where your accounts are, where your assets are going when you die, and have it all in one place so that you or your loved ones can access it whenever it’s neededBig Red Binder web version

When you set up a trust with Edwards Group LLC, you’ll leave with The Red Binder. In it, we’ll have all the documents needed to ensure easy administration of your accounts and assets during your disability or after your death.

The Red Binder

Some of the contents of The Red Binder include:

• A Trust, stating what happens with all of your assets upon your disability or death.

• A Will, ensuring that any “straggling” assets get handled in accordance with your trust.

• Powers of Attorney, ensuring that the right people (of your choosing) have the ability to help you when you need it.

• End-of-life and burial wishes, so your family knows what you want and can avoid disputing it later.

• A summary of your plan and a summary of your assets.

In our office, Senior Asset Coordinator Laura Peffley (pictured above with clients), is constantly helping clients get their assets consolidated into one trust. If you simply have an account statement or can print one, she can usually work with that. If you can’t find a deed to your house, she can help you track it down. And ultimately, we can map out a plan together to ensure all of your assets go where you want, when you want.

Procrastination is the Enemy of Estate Plans

Even if you’ve already abandoned some of your resolutions at this point in the year, we can still help you tackle this one today. Procrastination is the single greatest threat to an effective estate plan. Don’t put it off any longer. Planning protects those things most important to you, and we make it easy to take the first step with the following options:

  1. Attend one of our free workshops. We have two regular workshops, one of which is an introduction to estate planning. It’s a great, no-pressure way to get started. And you’ll receive $200 off your Initial Meeting fee just for attending.
  2. Give us a call at 217-726-9200. Tarina, our Client Coordinator, loves helping people and answering their questions. In fact, she was a client before she ever started working at Edwards Group, so she has a unique perspective that many find helpful.
  3. Schedule an Initial Meeting. If you know you’re ready to get started and want to stop putting it off any longer, just give us a call to schedule a 45-minute meeting where an attorney will review your concerns and goals. The attorney will also help you understand the unique risks that your family faces. By the end of the meeting, you should understand your planning options, what they will cost and if Edwards Group is the right firm for you. Clients find this meeting to be very valuable in helping them understand their options.

Get back on board with getting organized by calling us at 217-726-9200 to RSVP for a workshop, ask questions or schedule an Initial Meeting.

myths about retirement

Contributing to an IRA After Retirement

One of our clients had a question a while back: Can a retired person keep contributing to an IRA? Take a moment and learn about the logistics of contributing to an IRA after retirement.

Can a retired person keep contributing to an IRA?

There are many types of Individual Retirement Accounts (IRAs), but they all exist to help you save for retirement. Once you’ve reached retirement though, can you keep contributing to your IRA?

Yes and no. If you are earning a salary based on work you are doing, then you can contribute to an IRA account. This is because you generated earned income. Earned income includes wages earned by working for yourself or wages earned by working for someone else. The IRS describes earned income as earnings from self-employment, wages, salaries, tips, union strike benefits, and long-term disability benefits that are received prior to retirement. The amount of earned income you create affects the maximum amount you can contribute to your IRA account. You cannot contribute more than your earned income if your earned income is less than your maximum contribution. The maximum you can contribute is $5,500 if you are under 50 and $6,500 if you are over 50.

Not everyone works for themselves or others to generate income. You may generate unearned income through interest, dividends, investment income, pensions, and social security. Unearned income may not contribute to an IRA account. While you may financially depend on unearned income, you cannot contribute to an IRA in a year when you have only that type of income.

There are exceptions to these rules. If you are married, you can take advantage of a Spousal IRA. This IRA account aims to help save for retirement by allowing a working spouse to contribute to a nonworking spouse’s IRA account. As long as the working spouse has a high enough earned income, he or she can contribute equal maximums into both IRA accounts.

All in all, working for wages allows you to generate earned income and contribute to an IRA account. If your income comes from alternative sources other than work, it generally cannot be used to contribute to an IRA account.

Read more about IRAs using these links:

6 IRA Planning Tips

7 IRA Planning Traps to Consider

Other IRA articles here…

lottery ticket

How NOT Winning the Lottery Makes Your Life Easier

Big changes in your life may require updates in your estate plan. What kind of big changes? And what should you do about it?

by Attorney Chris Flynn

I didn’t win the Powerball, either…

And that’s okay. Can you imagine how much life changes after something like that? The good news is, since I didn’t win the largest jackpot in US history, the things I’m doing now, and the planning I’ve done for later, don’t have to change at all. I’ve worked with several clients recently though, who have gone through big changes in their life, some of whom have received an inheritance (typically less than the recent $1.5 billion jackpot), bought a new house, had a loved one get married, or become disabled.

Any of these types of changes in your life could mean that you need to update your estate plan.

We frequently help clients update their plan after big life changes. By updating your plan periodically, you ensure that:

• any new money or wealth will go where it needs to go instead of being eaten up by things like nursing home costs or taxes.

• any planning you did based on your prior home is also done for your new (or second) home.

• your child’s inheritance can be protected in a trust where things like future divorces, long-term care costs or creditors cannot “steal” it away.

While we often help clients who already have done planning elsewhere to update their plans, our Dynasty program has proven to be a simple and cost-effective way to make sure our clients’ plans are always up-to-date. Through this program, we follow up with our clients regularly to confirm that their plan is up to date with the law, but also that their plans capture any changes that have occurred in life, health or assets.

Even more important than updating your current plan, is making sure you have a plan in the first place. Our Intro to Edwards Group: Wills & Trusts Orientation is a perfect way to get started if you don’t have a plan (or if your plan is quite old – read about the risks of an old will here). Give us a call at 217-726-9200 and RSVP for one of our upcoming educational workshops. By attending a workshop, you’ll receive $200 off your initial meeting fee (if you schedule your appointment within 30 days of the workshop). We do this so you’ll know, before spending your hard-earned money, if we’re the right firm for you. Attending a workshop makes the planning process easier and more effective.

The greatest threat to an effective estate plan is not taking any action at all, so take a step today and call us t 217-726-9200.

Not Your Best Option: Life Estate Deeds

So, what are life estates or life estate deeds?

Sometimes, instead of using a trust, people will use a life estate deed to try and protect a house or farmland. This means they deed the land to their kids but reserve the right to still use the house or the farm as long as they are living. Because all of the instructions are contained in the deed itself, it can sound like a nice, simple solution. Life estates can seem like a cheaper and easier alternative to a trust…

But life estate deeds do not always work as advertised.

A Life Estate Case Study

The house had been put into a life estate a while back. The mom was now in a situation where she needed more care and was going to a nursing home. The family wanted to sell the house, but if they sold the house, then a percentage of the house would be considered an asset for the purposes of Medicaid. Even with good legal planning, some of the funds would have to be spent on nursing home costs, and the ultimate goal of planning is to protect your hard-earned money and assets (like your house) that you hoped could be a legacy for your family someday.We recently had a situation here at the office that is a good example of why life estates are generally not a good option.

4 Reasons Life Estates Don’t Work

1. They don’t protect ALL the value. People are surprised by how much of the value of their house or property is still considered theirs if they need Medicaid. This is all governed by a Medicaid table. (See it here.) So, what are the exact problems with life estates and why don’t life estate deeds “work”?

Here’s how that works: if someone is 65-years-old, Medicaid says that almost 68% of the house is still considered yours. At age 70, 60.5% is yours. At age 80, 43.66% of the value of the house still counts as yours. 

So what does this mean? It means that if you are 70-years-old, have a stroke and need to go to a nursing home, when your house is sold then 60.5% of the house sale money stays in your name and is exposed to long term care costs. This is true even if it has been more than 5 years since the deed was done.

2. You don’t own or fully control your house or property anymore. If something unexpected happens and you “need” to sell the property, you can’t without getting the kids to sign off on it, because they actually own the property. You don’t own it anymore (even though you have the right to use it for the rest of your life).

3. You can’t change who gets it after you are gone. With a deed, it’s a done deal. The house goes to your kids at your death — no matter what. There is no way to change it. So, if your child dies before you do, you can’t reconsider who the house or property goes to. It will go through his or her estate and be completely out of your control (even though you have the right to use it for the rest of your life).

4. Life estate deeds could prevent you from getting VA benefits. The VA sees things differently and assumes that any income interest or life estate you might have are entirely yours (and therefore counted as an asset). Depending on the situation, this could cause you to be denied VA benefits. For instance, farmland with a life estate would typically prevent VA benefits without further planning.

 What’s the Solution?

In contrast to the above issues with life estates, nest egg trusts can effectively address all of these issues:

• They can protect 100% of the value once 5 years has passed.

• You can be the trustee of the trust where your farm or home is kept, which means you can sell the property, buy a different house if you want, etc.

• You can reserve a rewrite power (called a “power of appointment”) so you can change who gets it at death. That way, if circumstances change, you can respond to them appropriately.

• A trust can be set up to allow VA benefits or be adjusted later to qualify for VA benefits.

Trusts are one of the best tools that we have in our legal toolbox to help clients, and our firm is one of the best at setting them up. If you are considering a life estate deed, please give us a call first to see if there are better options available for your unique situation.

As always, if you have any questions or concerns about estate planning or elder law, Medicaid planning, long-term care planning or Veterans benefits, please give us a call at 217-726-9200. We’d be more than happy to speak with you!

 

asset protection

Threats to Medicaid: Can You Prove It?

Cash payments or informal caregiver arrangements can affect your loved one’s ability to qualify for Medicaid upon going into a nursing home. Here’s what you need to know…

Giving Money to Family Can Jeopardize Medicaid Eligibility

When someone applies for Medicaid, the state looks back 5 years to see if any money was given away to the family. If so, the state imposes a penalty, or a delay of benefits. Sometimes money was clearly given to the family. Other times, it was used for the loved one, but the family can’t prove it. Check out the case below for a specific example.

Michigan Family’s Benefits Delayed – No Proof of Expenses

Betty Jensen was aging and suffering from dementia. She remained in her own home, but started needing more and more assistance to stay there. In May of 2011, her grandson (Jason) acted on her behalf and hired someone to be Ms. Jensen’s caregiver.

When he hired the caregiver, Jason did so informally without a written contract. For nearly a year, Jason paid the caregiver using almost $19,000 worth of Ms. Jensen’s assets. In March of 2012, Ms. Jensen’s dementia progressed to the point where she had to enter a nursing home.

In April of 2012, Jason applied for Medicaid benefits to help offset the cost of his grandmother’s care. While she was found eligible for benefits, the Department of Human Services (DHS) penalized her for “divesting” funds. They classified the payments to the caregiver (along with some other “gifts”) as “divestments.” That meant her Medicaid benefits were delayed for 7 months and 2 days.

Sadly, Ms. Jensen died before Medicaid started covering her nursing home expenses. (In Central Illinois, this delay would have cost Ms. Jensen and/or her family approximately $35,000!)

Her grandson appealed the ruling and lost, because the payments were made to the caregiver without a written agreement that should have been put into place before care began. The case was appealed several more times with varying results, but ultimately the courts sided with DHS, stating that an agreement with a caregiver needs to be written and official.

Caregiver Agreements in Illinois

The above case happened in Michigan, but the same thing could have easily happened in Illinois. The problem with paying cash for caregivers or hiring home help without any documentation is that there is no proof where the money went. Any “gifts” can cause a delay in benefits. And if a family member is taking out large amounts of cash or writing checks without documentation, the caseworkers may assume they are gifts.

Read more about ways elder law attorneys like us can help with in-home care: 9 Ways Elder Law Attorneys Can Help with In-home Care

The Complex World of Medicaid

Medicaid is our country’s largest healthcare benefits program, paying 70% of all nursing home bills in the US. One in six Americans are covered by it. The laws governing Medicaid are some of the most complex and confusing laws in existence. They are often nearly impossible to understand without highly experienced legal assistance. Without proper planning and advice, many people unnecessarily jeopardize their future care, their well-being, and the security of their family.

Medicaid Planning Can Help Even if You’re Already in Nursing Care

Medicaid planning (or what we here like to call Life Care Planning) ideally should be started when you are still able to make sound legal and financial decisions. (Somewhere around the age of 65.) That way you can still have control over what you want and how you want to live.

What many don’t know is that even if you’re already in a nursing home, it’s rarely too late to do planning that can save some of your financial resources. Read our article, “7 Ways an Elder Law Attorney Can Help Even if Your Loved One is in a Nursing Facility

To find out more about avoiding the crushing costs of long-term care, make plans to attend one of our upcoming workshops – How to Protect Your House & Life Savings from the Nursing HomeIf, after attending the workshop (where you won’t be pressured at all) you decide to work with us, you’ll receive $200 off your initial meeting fee if you schedule it within 30 days of attending the workshop. Give us a call at 217-726-9200 to sign up for our next workshop.

secret to estate planning

The Secret Test for Your Named Helper

Naming a helper for your plan is one of the most important decisions you’ll ever have to make, but you don’t have to do it alone. Read on for guidance in choosing your executor, trustee or power of attorney.

Be Careful Who You Choose

I heard another heartbreaking story the other day – an older couple, the man has a terminal illness and he’s worried about his wife after he’s gone. (That part’s normal.) The heartbreaking part is he’s worried because his wife can’t say no to their youngest son (and the son has been named executor because he lives so close by), but the son is taking advantage of his mom financially even while the husband is still alive. The husband is wondering, “What on earth will happen after I’m gone, if he’s already caused this much damage with me keeping an eye on her?”

Every plan needs a good helper. We talk about it ALL the time because it’s vitally important. Everyone will come to a point in their life where they will need some sort of helper, whether that be a power of attorney, a trustee or an executor.

About two years ago we created a paper newsletter with expanded information on choosing good helpers. Even now, we still use it because it’s full of great information. If you’d like a copy of our paper newsletter on choosing good helpers, you can get instant access to it by clicking this link. But if you’d prefer, you can call us at 217-726-9200 and ask us to mail you a copy.

The Secret Test for a Helper

So, what’s the secret test for a named helper? How can you know if you can’t trust a potential helper to make decisions for you when you can’t make decisions yourself?

The secret test of a helper is to look at them and see how they handle their own lives now.

  • Are they organized?
  • Do they have things “under control”?
  • Do they make wise decisions?
  • Are they handling their own money well?
  • Are they generous and kind?

People will generally handle your money worse than they handle their own. They will generally be more difficult to deal with in serving as your helper than they are in dealing with their own lives. This is just the cold, hard truth that we’ve seen over and over.

Being a helper is stressful (especially since if often happens after a crisis or death), and the stress leads people to act worse than they normally do.

So, however they’re handling things now, they’ll actually do a worse job after you’re gone. Does that give you cause for concern? If so, you should pick a different helper. As you think about someone to be a helper, consider these duties they will possibly help with. And learn more about “7 Types of Helpers to Watch Out For” here.

How Edwards Group Can Help

We help families choose good helpers everyday. This is a difficult decision and one of the most important you’ll ever make. You don’t have to do it alone. We can guide you through the process of deciding who is best. While you’ll only do this once in your lifetime (maybe twice), we’ve helped hundreds of families in the seven years our firm has been solely dedicated to estate planning and elder law. We’ve seen A LOT and gained a lot of wisdom from the families we help on a daily basis. We can help you know what to do and what NOT to do.

Give us a call at 217-726-9200 and plan to attend an upcoming workshop today. If you attend one of our workshops, you’ll receive $200 off your initial meeting fee (if you schedule your appointment within 30 days of the workshop). We do this so you’ll know, before spending your hard-earned money, if we’re the right firm for you. Attending a workshop makes the planning process easier and more effective.

The greatest threat to an effective estate plan is not taking any action at all, so take your first step today and call us at 217-726-9200.

The Top 2 Concerns of Planning

When a loved one is facing long-term care the first concern people have when they come to us for planning is how to get the best care possible. The second concern is how to pay for it.

Getting Good Care

People come to us worried about an aging family member or friend all the time. Their primary concerns are making sure their loved one is provided for, making sure they’re safe and getting the medical care that they need, while helping them have quality of life as much as possible. And these are the primary goals for our firm as well. We want to help decrease stress, increase quality of life and preserve family relationships during the last decades of life.

Paying for Care

This is the issue that usually adds the most stress for families because they don’t know where to turn or where to get good advice about the options that are out there. The scary truth is that a lot of people are given wrong information and think there’s nothing that can be done if you can’t afford care on your own.

In reality, there are many planning tools that we can use to protect assets and gain benefits, even if someone is already in a nursing home. Our firm finds ways to maximize benefits available to pay for care, and protect some of the assets that mom hoped she would leave her family someday. Even if somebody’s been in a nursing home for months or years, it’s oftentimes not too late to get benefits to pay for care.

As long as somebody is writing personal checks to the nursing home every month, it is not too late to plan and save some of those assets.

The key is working with an experienced elder law attorney. Most “estate planning” attorneys just do what we call “death planning” (last will and testament, etc.), but elder law attorneys (like Edwards Group) have specialized training and expertise, and that means we deal with Medicaid and VA benefits every single day. We help you use the legal tools to their full advantage. And that means, in most cases, we can qualify someone for benefits faster than they ever expected, get more benefits than they ever expected, and in the end, protect much more of their life savings than they thought possible!

apply for medicaid; medicaid eligibility

6 Reasons You Should Never Apply for Medicaid On Your Own

While it may seem like a good idea that things like Medicaid applications and Veterans benefit apps are accessible and do-it-yourself, as with many things relating to government, it’s really not that simple. There are many things that can go wrong when people apply for Medicaid without the help of an experienced guide.

Here are six reasons you should not apply for Medicaid without the help of an experienced elder law attorney:

 

1. You’ll lose all your hard-earned money.

Typically, when someone goes into a nursing home, the admissions people or case workers at the home tell people, “Spend all your money and then let us know when you’re ready to apply for Medicaid.” The best solution they can offer families is to “spend down” every dime of their hard-earned money on the astronomical price of nursing care! Planning with an experienced elder law attorney who is familiar with the ins and outs of Medicaid, oftentimes results in protecting 50% of the life savings so it can be used for later expenses or as a legacy for your family.

2. You’ll go crazy with the stress of the complex and bureaucratic process.

If you’ve been an adult for any amount of time then you know how difficult it can be to deal with government agencies. We have endless stories of families who get caught up in the paperwork, losing money and time with their aging loved ones while they “fight” the process trying to qualify and apply for help through Medicaid. (The picture above is three Medicaid applications before we sent them off for approval. It’s A LOT of paperwork!)

3. You (or your loved one) will be left with $1 a day to live on.

Without proper Medicaid planning, all your funds will have to be “spent down” in order to allow the Medicaid benefits to begin. This basically means that your family will have to spend their own money if you need something outside of the included costs of the nursing home. Learn more about that when you subscribe to our Medicaid Planning e-course.

4. You may not qualify for benefits because of a simple error on the Medicaid application.

Again, we have a lot of stories about families who filled something out wrong, didn’t get something in on time or didn’t phrase something just right. We also have stories about the caseworkers themselves making mistakes that disqualified the families. These mistakes are just too costly.

5. Delays in the application could cost tens of thousands of dollars.

People who apply for Medicaid benefits on their own can take longer to jump through all the hoops which can delay the start of money to pay for care. On average, it takes us 6 to 8 weeks to get a Medicaid application filed, but it can take a year or longer to get approved. That timeline can be even longer when people try to do it on their own. We have 2.5 team members who are dedicated to this process alone, and they are experts at what they do. (Read about our Benefits Coordinator, Melissa Coulter.)

6. You won’t have anyone to turn to for help.

Filling out a Medicaid application is unlike anything you’ve ever done before and much more difficult than most people imagine. You don’t have to do it alone. Relying on the knowledge and expertise of a trustworthy elder law attorney who has been down this road hundreds of times before is invaluable. We know this because we have people come to us all the time who have tried to do a Medicaid application on their own and failed. We absolutely hate to see this. We also hear from grateful clients on a regular basis who are so glad they turned to us for help. (See a testimonial like this below.)

Medicaid Planning is Some of the Best Money You’ll Ever Spend

The cost of an elder law attorney who helps you plan and apply for Medicaid is more than offset by what you save in out-of-pocket nursing home costs. Without an attorney, all of your family’s money will inevitably go to the nursing home. With the help of an elder law attorney, even after legal fees, you’ll be left with more money than if you had done the application on your own. If the money is going to disappear anyway, why not use that money to pay an attorney who will guide your family through the stressful benefits process as quickly as possible, maximizing the money available to pay for care?

With good planning, you are more proactive; therefore you get much better results. (It’s a lot like using an accountant to make sure you don’t pay too many taxes.) Working with an elder law attorney insures that you get the best possible result instead of the worst possible result. And the worst possible result is what most people believe they HAVE TO DO when it comes to paying for nursing care — spend all their money until it’s gone. The best possible result means pursuing all the benefits that are legally available (like taking all the possible tax deductions when working on your taxes), and protecting your hard-earned money so it’s available to you and your family to use later on.

Here’s what one of our clients had to say about the process after it was done:

“I want to thank you again for all your hard work in helping my family. It has meant so much to have someone to answer questions, explain things and especially hold my hand through this amazing journey. I had moments where I wondered, ‘What am I doing spending [so much] of my parent’s money?’ Then I would wonder if we were ever going to get everything transferred, completed and filed. [When] I began to see the light at the end of the tunnel, I knew in my heart we had made the right decision. The professionalism shown by Edwards Group, which includes [Melissa] and Dave, has far exceeded my expectation. On behalf of my family, thank you again for all the phone calls, emails, texts, and especially the support. You have been amazing.”  DC from Glendale, MO

If you’d like to continue learning more about Medicaid Planning and how an experienced elder law attorney can help make the process of applying for Medicaid faster and less stressful, be sure to check out our FREE Medicaid Planning e-course. You’ll receive several emails in succession telling you about the Medicaid application process while also giving you tangible steps you can take to begin the process. If your family is in a nursing home crisis situation, please call us right away at 217-726-9200. Our staff will be happy to assist you and answer your questions.

4 Periods of Planning for a Nursing Home

We got another one of those calls the other day. It went something like this: “Mom has been in the nursing home for 3 years now and her money is gone. Is there anything we can do?” Our hearts sink when we hear this, because for this family, it’s too late for a lot of planning options.

How do you deal with a parent or spouse who can’t stay at home anymore? It’s one of the most stressful things a family can face. Few know what to do because they have never faced this issue before.

The key is the earlier we can plan, the more we can do, the more assets we can protect, and the easier we can make it on the family.

Generally, we see 4 different periods of planning. How much we can do declines as time passes.

1. Too late. When the money has all been spent on the nursing home over several years, it might be too late to protect assets. But we can help the family deal with all the mountains of paperwork and complete the Medicaid application. Oftentimes, our Medicaid team spends 40-50 hours completing a Medicaid application! How long would it take someone less experienced? We can help take the stress off of the family.

2. Not too late. “Mom’s Medicare coverage for nursing home care runs out in about 3 weeks. What do we do?” At this point, the family hasn’t spent any of mom’s money, but in 3 weeks they will start spending A LOT of her savings on the nursing home. (Around $6500 per month in Central Illinois.) We can still do a lot for this family. We call this a “crisis plan” and we move quickly to maximize Medicaid and VA benefits. Often we can still protect 50% or more of mom’s assets.

3. Protect your nest egg. What if mom is still living at home, but her health is going downhill? The family sees a point in the future when she will need care. So how do you plan ahead? One option is to create a special kind of trust, a Medicaid Asset Protection Trust, to protect the nest egg. The nest egg includes the assets she doesn’t plan to need or spend during her life. Maybe we protect the house or some savings or investments, while still leaving enough for her to continue to live well. Whatever assets were placed in the trust will be 100% protected once 5 years have passed.

4. Best option. The absolute best option is to buy long-term care insurance when you are still young and healthy. Often it’s too expensive or not available once you hit retirement age. Those who buy good long-term care insurance can rest easy, knowing the insurance company will help pay for their future care, instead of it coming out of their family’s inheritance.

For more details on how nursing home crisis planning works, click here to read a case study. To learn more about Medicaid Planning, sign up for our free 3-part email series on the topic.

To find out when our next free workshop on long-term care planning will be held, click here.

3 Ways to Pay for a Nursing Home

It’s difficult to face, but statistics show that 70% of people who reach the age of 70 will need some sort of long-term care (like a nursing home). The need for long-term care can arise because of stroke, dementia or any number of health problems. When that happens, you and your family will have to figure out a way to pay for it. There are really only three ways to pay for long-term care:

1. Use your own assets or income to pay for care. You could use your savings, your pension, your Social Security, your IRA, your investments or sell your house to pay for care. Even the wealthiest of people generally have trouble doing this for any length of time because the average cost of nursing care in Central Illinois is around $6500 per month! With the average nursing home stay lasting nearly 2.5 years, that’s $195,000!

2. Let the insurance company pay for it. If you buy long-term care insurance, or buy a life insurance policy with a long-term care rider, when the time comes your family won’t have to use their own savings. If you can purchase long-term care insurance early enough, this can be a good option for helping pay for care. However, there will come a point in life when purchasing LTC insurance just isn’t an option.

3. Use benefits paid for by your taxes. Many people do not want to rely on government help as they age, yet 70% of nursing home residents rely on Medicaid to pay the exorbitant costs of care. Until something changes, this benefit will continue to play a vital role in making sure people get the care they need as they age. You’ve paid a lifetime of taxes. Why not use this benefit just like you use Medicare or Social Security? Another very important benefit in paying for long-term care is the Veteran’s Pension and Survivor’s Pension Programs (often called “Aid and Attendance”). This benefit is available to a wide range of Veterans who often do not even know about the program. (Only 28% of those eligible actually take advantage of the program.) It is a great help in providing in-home care or nursing care.

The key is to plan ahead as to which of these options you hope to use to pay for your care. The tragic family situations regarding long-term care happen when people don’t plan ahead and then are surprised or having an immediate crisis which results in a worst-case scenario of depleting their life savings.