Will You Leave a “Negative Inheritance” for Your Children?
As published in The Retirement Connection Guide:
Article provided by: Tom Pixton, www.PixtonLaw.com
What is a negative inheritance? That’s what happens when the amount your children pay to provide for your care exceeds what they will inherit.
If your assets may not cover the cost of care, that may mean your family pays out of their own pockets. They may be willing to do so, but you may want to minimize that cost.
When a family comes to our elder law office with a health care crisis, our first approach is to carefully manage both resources and care. Usually the goal is to stay safe at home. That may mean a team approach involving an elder law attorney, a geriatric care manager and/or a financial planner. Here are some options, among many, that the health care team might consider:
- Restructure your investments for maximum income, not growth. Now is the time you need to “cash in” on that investment and riskier growth investments are no longer appropriate.
- Reverse mortgage. If you are over 62, you can tap most of the equity in your home;terms have become very competitive and government regulated for safety.
- Care agreements to pay children for providing care. These should be carefully drafted with legal advice.Sale of the family home and a move into more financially sustainable or more safe and comfortable quarters — thus freeing some of the assets tied up in home equity.
- Long-term care insurance. The combination of marketplace dynamics and government regulation have worked to improve the quality of insurance policies. We recommend that buyers look into the policies in their 50s, not their 80s. If you are insurable but unable to afford premiums, it might make sense to have your children pay the cost of long-term care insurance. After all, it is their inheritance that you are trying to protect.
- Legacy trusts. Under certain circumstances it may make sense to transfer a portion of your assets to your children now if you are certain you can manage your care for at least 5 years into the future.
- Medicaid. Your long term care management team may help you position yourself to qualify for Medicaid sooner rather than later with significant savings to the family. Oregon’s long-term care Medicaid program covers care at participating nursing homes (skilled nursing facilities) as well as participating community based care facilities such as assisted living facilities, foster homes, residential care facilities and limited in-home care.
We may be able to help you protect your children’s inheritance from going negative — all the while focusing primarily on your care and quality of life.
Tom Pixton
The Pixton Law Group
503-968-2020
www.Pixtonlaw.com
