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5 Myths: Nursing Home Costs & Estate Plans

As we observe Elder Law Month in May, it seems appropriate to share some common misunderstandings or myths about nursing homes and long-term care.

I apologize in advance if I step on toes or offend sensibilities of what is politically correct. Remember that the role of an elder law attorney is to be a client-centered advocate, which is a different assignment than being a taxpayer watchdog.

Myth No. 1: Prior to a married couple receiving any help from the government to pay for nursing home care, they must have spent at least half of their assets and everything except about $120,000.  If the person receiving nursing care is single, that individual must spend almost all assets on the cost of care before qualifying for aid.

Truth: Nursing homes have neither a legal duty nor self-interest to advise those who are admitted that reality differs from this myth.

Lessons from Myth No. 1: Several commonly understood opportunities to spend money on items other than nursing care include home improvements, debt retirement, a new car and prepayment of funerals. An experienced elder law attorney will know how to use a Medicaid-compliant annuity to preserve extensive assets without spending them on the cost of care.

Those who say that an attorney should not help a client to take advantage of legally permitted methods to save money might have their own agenda, and perhaps should lobby to change the laws if they do not agree with them. Experienced elder law attorneys help middle-class clients preserve some of their life savings, much like millionaires use tax accountants to minimize annual federal income taxes.

Myth No. 2: The nursing home will take our family’s house if we can’t pay for the cost of care.

Truth: Nursing homes do not want and will not take your home. They want to be paid. If you can’t afford to pay, the state will use federal Medicaid money to pay, as long as the family “ran out of money the right way.” Eventually, the state might attach a collection lien against the estate of the last surviving homeowner to recover funds the state has paid for care.

Lessons from Myth No. 2: A competent elder law attorney knows how to 1. Help the family run out of money the right way, as quickly as legally possible, so that the adult children cannot be sued for payment by a nursing home using filial responsibility collection rights; 2. Use what exceptions and loopholes exist to preserve the family home when possible; and 3. Avoid estate recovery liens by the state.

Myth No. 3: All nursing homes are alike, and our family has promised never to use one.

Truth: There are various care levels in facilities which offer help with dementia and frailties of aging, and sometimes care in a facility is more extensive than care provided at home.

Lessons from Myth No. 3: What our loved ones really want is for us to promise and constantly reassure them that they will never be cast off and abandoned, and that they will get the best care possible.

When home care is provided over too long a time period by a well spouse, often both spouses end up needing more care than if earlier intervention had occurred.

Myth No. 4: Because I love my children equally, and it is important that they get along after I am gone, I am going to appoint them to act together as my legal agent.

Truth: Occasionally, even siblings with the best of intentions have serious disagreements. Even when they agree, it is not necessary to have two people give formal approval when the signature of just one can be acceptable.

Lessons from Myth No. 4: When adult children cannot agree, disagreement escalates to a guardianship action and courtroom battle. Decisions are delayed and stress and expenses increase. If a parent cannot decide among children who should be agent, and the children cannot decide among themselves, a coin flip is a better solution than co-agency.

No law prevents the primary agent from making a call to another sibling to get a second opinion before signing a paper to implement a decision. Every agency appointment should have a backup in case the primary agent is unwilling or unable to act.

Myth No. 5: We did our last will and testament long ago, and our situation has not changed.

Truth: The most common last will and testament leaves everything to one’s spouse, and thereafter money goes to the children. Such a document is appropriate until someone shows signs of early stage dementia or is suddenly in a nursing home. If one spouse is in the nursing home and receiving financial assistance through a government benefit, eligibility for that assistance will be lost if the other spouse dies and leaves assets to the spouse who is in the nursing home.

Lessons from Myth No. 5: When facing long-term care, a fundamental element of any asset preservation strategy is to make changes to the will. It is neither necessary nor possible to cut the spouse in the nursing home out of the will entirely, but artful language can provide for that spouse, preserve assets and comply with state laws about minimal spousal election.

When early stage dementia occurs, an elder law attorney’s help should be obtained while the legal capacity remains to make changes to important legal documents.

Concluding Lesson: See a care-oriented elder law attorney sooner rather than later to make a plan for the best care and to preserve assets.

By Dave Nesbit, Attorney