Enjoy (and protect) your money

[jodi]

I don't have enough assets to worry about yet, but I know a lot of you do. I also won't pretend to know the best advice on the topic, but maybe this will prompt some research and expertise from others.

My DH's grandfather went into a nursing home yesterday. Turns out Grandma and Grandpa are sitting on over half a million in liquid assets alone, not counting the house, stocks, antique store, etc. I am guessing that a huge chunk of that will now be gobbled up to pay for his care, since he will not even come close to qualifying for Medicaid and did not put anything into a trust.

What's my advice?

Enjoy your money (once all your debts are paid off, of course, and you are sitting on a half mil!). These two lived through the Depression and never spent a lot of money. Were they happy? Certainly. Could they have enjoyed things more? Maybe if they took the time to try instead of always trying to save a buck. I don't know the answer to that. But let's all remember to enjoy ourselves along this path we travel together.

Protect your assets if you can. My parents put everything they have into a trust for their children six years ago. It is now protected should one of them require nursing care. They worked all their lives for it - they want to see it last longer than them.

Even so, I have to admit an internal conflict over this. Yes, we all want top-notch medical care if we become infirm. Should we have to pay for it? Should it be available to all equally? Should the already-burdened government have to pay for care for those who can afford it, or should those people have to use up their estates first? I am glad that the option is there to create trusts, but it somehow feels like we are cheating the government to do so. How do others feel?

[boefixepa]

If you have the money to pay you should, end of story IMHO. I think there is a major entitlement issue to deal with here. Let the kids earn their own money...where is the law that says parents have to leave their children XX amount of money or they are bad parents? Not saying it wouldn't be nice, but not at the expense of having to pay more in taxes on this end!

There are too many family issues over estates already, mostly just greeedy kids wanting their money ASAP and not really caring about the parents. Wanting them to hurry up and die so they can get their money. If you were told up front that whatever left was going to the church or to charity then you wouldn't be expecting it. That would solve quite a few family problems! I now of very few families that were pleased with how money was divided. Those I know had nothing to divide, those are the familes that stuck to gether. I know families which were destroyed by it....make is wonder if blood really is thicker than money.

[pearlieq]

Originally Posted by boefixepa

If you have the money to pay you should, end of story IMHO. I think there is a major entitlement issue to deal with here. Let the kids earn their own money

I agree completely. I don't think it's ethical to shield or divert assets and then turn to the govenment for medical care. That's theft, pure and simple.

Unless there's a darn good reason (like a mentally or physically handicapped child) I don't thinks kids should be entitled to any of their parent's money. I don't think inheritances should be protected via trusts if there are not enough assets to pay for other expenses.

Yes, the idea of working all of my life to accumulate a nest egg only to have it sucked away by medical expenses or long term care does depress me a bit, but that's the breaks!

I don't intend to leave my kids much money, if any. My goal is to die with a net worth of $5! If there is money left over, it will largely be split between several charitable organizations. I may leave a modest amount to my kids, but definitley not the bulk.

[Ima saver]

I think that everyone should pay their own way and pay for their own nursing home expenses. I do not plan to leave money to any realatives. I would rather leave it to the humane society or to friends in need.

When my mother died, she had a simple will that stated everything should be divided equally between my sister and myself. My sister was 9 years older than I, and since my father died when I was a child, my mother put my sister's name on her house, car, savings accounts, etc. Of course, my sister took everything and even left her husband and kids and moved into the house.
We never spoke again.

[jodi]

I guess I should have explained our particular situation more - it's not as simple as cash in our family. My parents and brother own a farm together - and I currently live with my parents in the house on that farm. If they lost their assets, I don't know how that would affect the house and farm - meaning my brother's livelihood and my residence. So that is why my parents felt they had to protect their assets. The farm and house have been in our family for over 100 years. Should they have to lose that if they had to go into a nursing home? I think the house might be protected as long as one of them lived here, but how would my parent's share of the farm be quantified? This is why I am so conflicted - I too feel like we expect too much from the government, but there are always situations like this that don't seem to have a clear resolution.
BTW, I am forever telling my parents to spend more money on things they enjoy while they are here. They have worked very hard in their lives. I wish my dad would retire, but I know he will work every day until he physically cannot. Darn farmers

[disneysteve]

Nobody has mentioned the solution yet - Long term care insurance. When you get to be about 50, you need to seriously consider buying a good policy. Then when the time comes that you need care, you will have insurance to pick up much of the cost. That way your assets remain your assets and you aren't forced to blow your whole nest egg on medical care.

[jodi]

So no one here is going to have a trust made up? You will instead liquidate your assets to pay for all of your nursing home expenses out-of-pocket, until you run out and can get Medicad to pick up the tab?

Good point, disneysteve. Like I said, I'm no expert and certainly (admittedly) not thinking much about it at age 28, but I hadn't even thought of long-term care insurance.

Just playing devil's advocate here...is it okay then to spend all of your money on vacations, whatever, knowing full well that you may need that money for nursing home care later on (i.e. degenerative disease)? Is it your responsibility to save all the money you can for medical needs to avoid having to use government assistance?

[thekid]

Originally Posted by jodi

So no one here is going to have a trust made up? You will instead liquidate your assets to pay for all of your nursing home expenses out-of-pocket, until you run out and can get Medicad to pick up the tab?

Good point, disneysteve. Like I said, I'm no expert and certainly (admittedly) not thinking much about it at age 28, but I hadn't even thought of long-term care insurance.

Just playing devil's advocate here...is it okay then to spend all of your money on vacations, whatever, knowing full well that you may need that money for nursing home care later on (i.e. degenerative disease)? Is it your responsibility to save all the money you can for medical needs to avoid having to use government assistance?

Good points and I agree. I really don't get the perceived negative connotations here towards wanting to leave a good chunk of your egg nest to your children. As everyone knows here, many people do not save. Why should those who save be penalized in the end?

[pearlieq]

Originally Posted by disneysteve

Nobody has mentioned the solution yet - Long term care insurance.

A great solution, but unfortunately not THE solution. It's been very hard to find companies even willing to consider underwriting a policy for my diabetic DH (diagnosed at 25) and darn near impossible to find one willing to underwrite a policy for my mother, who is a cancer survivor.

To answer the OP's last question, no I do not intend to create trusts to shield my assets, unless I have a child who is disabled and dependent upon me for support. If the time comes and I have medical costs beyond what my insurance will pay, my assets will be liquidated to pay for my care. If my assets are insufficient, then I will need to rely on government help.

Yes, a person's home should have to be liquidated to pay for their care. It sucks, and no one said it didn't, but that's the fair and honest thing to do.

And no, I don't think it's acceptable to fritter away your money when you are young and healthy and expect someone else to pay for your care. I don't think the expectation should be that we save every available dime, but I think a good-faith effort at a reasonable savings should be expected of everyone.

[thekid]

[quote=pearlieq I don't think the expectation should be that we save every available dime, but I think a good-faith effort at a reasonable savings should be expected of everyone.[/QUOTE]


I would agree if the majority of society would do this. I however think it is reasonable to state that most people do not make consistent good faith efforts to save nearly enough to cover long term old age care. Hence, only those (relatively few) that do have to pony up themselves. In this context, and considering that substantrial taxes will already have been paid on every income making up that egg nest, I do not feel at all guilty about shielding it by every legal means available and letting my children benefit. I really don't see why those that save should have to pay as much as possible to the detriment of their children, while those that spend and live it up all their lives get the free ride.

[disneysteve]

Originally Posted by pearlieq

A great solution, but unfortunately not THE solution. It's been very hard to find companies even willing to consider underwriting a policy for my diabetic DH (diagnosed at 25) and darn near impossible to find one willing to underwrite a policy for my mother, who is a cancer survivor.

True. Though I do think we may start seeing the limitations easing, just as we've seen life insurance premiums get lower and lower as people live longer and healthier lives and people with medical conditions getting coverage when they once couldn't. I have a feeling LTC will follow that same path. At least we can hope it does.

[boefixepa]

I agree with Pear...that's my thoughts too...so if my kids think they are getting a hand out when I die....well they will know they are not...sorry...Love ya, but not putting a price on my head. I will (hopefully) have prepared them to take care of themselves.

I also can't make someone do what I think they should do...all I can do is live my life with the best value system that I can. Will others take advantage...probably, but that does not give me the right to do the same.

As far as the orignal poster, you're right, a very complicated situation. Personally I think you and your brother owe it to your parents to 'buy them out' at a resonable price. In your situation I certainly think it's time to get some legal help dealing with all the details since things are so intermingled.

[getforfree]

Those people who spend all their money, and have nothing when they retire, will get the medicare from govmt, but those, who saved, will have to pay for everything themselves. What a "great" inspiration to save money.

I do want to save money, but save it, deprive myself, so then I could pay for medical expences instead of letting the medicare pay for it, is not what I want to do. What's the point of saving then?

I think, if I would have any properties or other estates, I will give it to my kids even before I retire. That way, I make sure they get equal amount, they won't have to wait until I die, and because I will be "poor", I will get all the benefits. The main reason why I save is so my kids won't have to start their life from $0, like I had to.

[jodi]

Originally Posted by boefixepa

As far as the orignal poster, you're right, a very complicated situation. Personally I think you and your brother owe it to your parents to 'buy them out' at a resonable price. In your situation I certainly think it's time to get some legal help dealing with all the details since things are so intermingled.

The reason that family farms are passed down is that they are too expensive to buy outright. Land, machinery, animals - you are talking several hundred thousand dollars. My dad didn't buy it from his father - he worked it until my grandfather died, then inherited it. It's one of the reasons not many people get into farming who aren't born into it. my brother, making maybe $20-30k per year could never afford to buy out the farm - and my father does NOT want him too. They are partners.
As for the house, I can't buy them out. They live here, and quite frankly, they won't even take rent from me My father was born in this house and never lived anywhere else - nor will he, if he has any say.
My parents have gotten legal help and have done exactly what they were told to do - establish an irrevocable trust so that everything they have is passed to their children directly. The trust is actually in our name, with them having life use of everything, the freedom to sell or liquidate assets, etc. They can do whatever they want with their money and assets - but when they are gone, it will be ours.
They did this without our knowledge or prompting - I am certainly not waiting for my handout. I would gladly take nothing to have them around for the rest of my life! They know how the system works, they made a choice to preserve their assets so that their children can continue to live the way we were raised (on a farm).

But I digress...the original idea of this post was really to tell everyone to enjoy what they have worked for!

[disneysteve]

Originally Posted by getforfree

I think, if I would have any properties or other estates, I will give it to my kids even before I retire. That way, I make sure they get equal amount, they won't have to wait until I die, and because I will be "poor", I will get all the benefits.

The one problem is you need to give the money away at least 5 years before entering a nursing home. It used to be 3 years but they changed the rule. But there is the gifting policy that lets you give away thousands of dollars each year with no tax implication. You could also donate to charity by doing a charitable annuity where you make a lump sum donation and receive a monthly check for life. When you die, the charity gets the principal.

There are lots of ways that folks with substantial means can still donate them or pass them down without being sucked dry by nursing homes.

[boefixepa]

Way to go Jodi! I think you and your parents have everything worked out well for your situation. Family farms are certainly more complicated, and I'm happy that there are not any hard feelings your family is having to deal with! May you love and enjoy your parents for as long as you have them! (I was under the impression there was nothing worked out, and by reasonable I did not mean market value...I was thinking in legal terms of what needed to be done to transfer title, but it appears your parents already had it all figured out!)

[pearlieq]

Originally Posted by boefixepa

I also can't make someone do what I think they should do...all I can do is live my life with the best value system that I can. Will others take advantage...probably, but that does not give me the right to do the same.

Well said!

[JanH]

I think that a family farm (we have that too) should be passed down and steps taken to ensure that. On the other side, after my other grandfather died, my grandmother's alzheimer's deepened. My mother tried to take care of her at home, but that didn't work out well for my grandmother. So since my grandparents had saved money, my mother was able to afford to put her in a private assistant living facility for several years. It was a wonderful place for my grandmother, but would not have been affordable or allowable on government money. So the money they saved did serve a great purpose. After it was used up, my mother had to move her because the nursing home facilities offered by the private company was so expensive. She was fortunate that she found a very nice facility near her home. My mother did not want any of my grandparents' money. She wanted to use it up taking care of her mother. We plan to do the same with my parents' money when the time comes.

[jodi]

Good point, Jan. Having the money available may be the difference between an average facility and one that is really outstanding.
I hope none of us ever have to deal with making these decisions for our loved ones. I know too someday I may have to make a tough choice if I can't care for them at home, but I also know that I will keep them here at home as long as possible...and cross my fingers that this issue is at least another 30 years away! (that would put my dad at over 100...wouldn't that be great?!)

[JanH]

Originally Posted by jodi

..and cross my fingers that this issue is at least another 30 years away! (that would put my dad at over 100...wouldn't that be great?!)

I hope the same for my parents! They would also be 100. My mother gave me a book once about making the tough decisions about care and nursing homes. After looking at this discussion, I think it's time for me to quit putting it off and read the book. Then talk with my parents. I think the book is also about how to deal with the feelings you have when you have to put your parent in a nursing facility because it is beyond your ability to care for them. Thoughtful of her to try to help me before it happened to me and for her care. She loves me alot to do that.