What resources are available to our client? In addition to public benefits that may be available to the client at reduced or no cost, access to long-term care usually depends upon the client’s own resources. Although long-term care is available to persons with limited means, having money gives people more choices. That may not seem fair, but it is a fact of life.
Most older persons have Social Security retirement income. Some have pension benefits, earned over a lifetime of employment with a single employer, that are a steady and seemingly assured stream of income for the rest of their lives.
A few of our older clients still have wages or self-employment income, to provide funds for investment and add routine and socialization to life. For our elderly clients who have chronic care needs, however, employment is usually not feasible.
Property and funds held for investment take many forms, including cash, bank accounts, CDs, IRAs and other retirement plans, life insurance, stocks, bonds, mutual funds, deferred annuities, investment real estate, and many other financial products. These assets often prove to be critical in attaining our goal of promoting the good health, safety, and well-being of our clients. Surprisingly, many of our clients do not know what their net worth is and how their funds can be safely invested and tapped to improve their quality of life and quality of care. Our client-elders typically view their monthly income stream from Social Security and pension as the foundation of their security. Appropriate investment counseling can help improve the client’s financial situation by emphasizing safe investment appreciation and earnings. It thus becomes crucial for the elderly client and his or her care planning team (that’s us, the Elder Law Practice) to consult with a qualified investment adviser who can be apprised by us of the client’s immediate and projected long-term care needs. The investment advisor must help analyze the individual’s risk tolerance, as well as an appropriate balance of income and equity growth, to devise a long-term care financial plan suitable for the client’s circumstances.
3. The Home
Many persons are, understandably, emotionally attached to the homes they have worked hard to own and maintain. Many older clients underestimate the importance of their home for their future care and security. Their home is frequently their most valuable investment, and where they are likely to receive future long-term care services. The functional usefulness of the home should be judged in terms of the care, mobility, and transportation needs of our client and spouse, as well as the maintenance costs of the property.
With declining government support for long-term care services, it is becoming more common for individuals to use home equity to fund essential care. The financial value of the home may become available through a home equity loan, a reverse mortgage, or proceeds from the sale of the home. Many persons want to leave their home to their family through an immediate deed, life estate, or passing through their estate after death. Many financial, tax, Medicaid, and long-term case issues must be considered when transferring the home to family members, however. Many older persons will have to use the value in their home to fund adequate care for themselves and their spouse.
Our role as the Elder Law Attorney will be to help our clients build plans to constructively use home equity to access quality care for the balance of the their lives, and the lives of their spouses, partners, and other dependents.
4. Long-Term Care Insurance
The primary purpose of long-term care insurance is to provide access to quality long-term care services, not just to protect assets until the person can qualify for Medicaid, or to preserve them for the elder-client’s heirs. Long-term care insurance can complement a client’s income, investments, and home equity as part of a strategy to fund appropriate long-term care services, regardless of the future availability of government assistance.