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Posted: Wed May 06, 2009 6:50 am
We're looking at the situation of an aging relative who owns a home. They're in relatively good health at this time. But we've heard plenty of horror stories about people who wind up in nursing homes and lose their homes and life savings to pay for their care. Aside from extended care insurance, is anyone familiar with general strategies to protect assets in such situations? I've heard general stories about trusts and other methods, but never talked to anyone who's actually used them.
Posted: Wed May 06, 2009 9:44 am
There is a "look back" period of time for assets.
This person should accelerate any giving planned to trusted individuals, so that you can artificially impoverish the person ahead of schedule.
The 10,000 per person per year gift should be used liberally, and first to people who will be providing financial and other support to this person.
The home should be disposed of as soon as possible, and then rented back from the buyer (sell at a low price including all furnishings, pay some higher than market rent back on the "fully furnished" home). Now is an especially good time to make a low-ball sale which may still meet the smell test even though the sale is not an arm's length transaction. Don't sell it for a dollar but well below the appraised, tax value, or zillow.com value might be fine.
Consult with a CPA and attorney about all of these issues, but that's the basics.
It's probably far too late to buy long term care insurance, when someone is so old and an assisted living or nursing home situation is just around the corner.
I recently paid approx. 50,000 per year for assisted living, for a loved one. Shop around because some places are pretty horrible. We found a nice place about an hour from the cities, where another family member was staying and near the family farm / other relatives.