Often, I have found that Solo Agers are most inclined to plan for themselves after having experienced it on the front lines as caregivers of their parents. For most people, this is their first exposure to the issues of obtaining care services or acting on behalf of someone else and managing finances.

These already difficult situations can be compounded by a Solo Ager feeling as if they don’t have a support system to lean on and the weight of the situation is all on their shoulders.

There are resources available to help Solo Agers as they care for an elderly parent. This blog discusses three main steps that Solo Agers can follow to prepare before an emergency develops.

Step One: Estate Planning Doesn’t Stop at a Will

Readers of my first blog “Estate Planning Basics: What Documents Do You Really Need?” will recognize this point. Do not fall into thinking that estate planning begins and ends with a Last Will and Testament. While helpful, a Will does nothing to assist a Solo Ager when they need to manage finances or healthcare on behalf of an aging parent.

It is at this time that a Power of Attorney (POA) document shows just how valuable it is. Nearly every financial institution will refuse to talk to anyone but the account owner, and this is oftentimes the first obstacle that a Solo Ager runs into. In order to ensure that bills get paid a Power of Attorney is essential.

Not only should the Power of Attorney be drawn up before it is actually needed, but a best practice would be to provide that document to every financial institution that a parent holds money through.

For example, if my mother has funds with Bank A, Bank B, and Investment Firm C, I would want to make sure that all three places receive a copy of the Power of Attorney long before it is needed. The reason for this is that banks often want to take time to review the document before they accept it.

Alongside a POA, a Solo Ager should ensure that a parent has executed a Living Will with the appointment of a health care representative. Similar to ensuring that a bank has a copy of the POA, a Solo Ager should ensure that their parent’s primary care doctor has a copy of this Living Will added to the parent’s medical records.

These two documents are really the foundation of any task that a Solo Ager might have to do for an aging parent. Without them every step is much more difficult.

Step Two: Identify What Kind of Care Is Needed

This step is much more fluid then some of the other steps involved in this blog. A Solo Ager may find themselves returning to this step as their parents age.

Care options are often divided into two options:

1. Homecare, which would refer to care providers coming into the parent’s home and providing companion or home-nursing care, and
2. Institutional care, which would refer to placement in either an assisted living facility or a skilled nursing facility.

This stage is best approached collaboratively alongside a parent to ensure that the care setting is appropriate for both parent and Solo Ager. However, if a parent has a degenerative cognitive illness, or refuses to accept help, it can make assisting a parent combative rather than collaborative.

I have counseled many a client on a parent who refuses to accept the situation that they are in, and for Solo Agers this can be a very difficult spot as they may not have siblings or other individuals to help them convince their parent to take a step towards more holistic care.

Often times a Solo Ager may find themselves involved in part or the entirety of their parents’ care plan. This can entail a Solo Ager either moving in with their parent or having a parent move in with them.

This living arrangement can help keep an aging parent safe, but it may also lead to caregiver burnout. If providing care alone becomes unsustainable, a Solo Ager should consider one of the two care options outlined above.

Step Three: Identify What Programs Are Available

Depending on the type of care needed, a parent may need to pay privately for services. Whether it’s for a few hours a week of homecare coming in to administer medications, or 24/7 care in a skilled-nursing home, cost is always a major factor in proper planning.

Solo Agers should be aware of public programs available to assist them in caring for their parents. The broadest of these programs is Medicaid, which in Connecticut can be utilized to pay the cost of care in a skilled-nursing facility, or for homecare under the Connecticut Homecare Program for Elders. (See the Medicaid State Profiles link at the end of this blog for information for your state.)

Under either of those programs, the Federal Government has set forward asset limits in order to be considered eligible for assistance.

For a Solo Ager caring for a single, widowed, or divorced parent, that parent is only allowed to have $1,600 in total assets. This includes real estate, bank accounts, investment accounts, retirement accounts and any other funds that can be used to pay for care. If their parent has more than $1,600, the state will require them to spend that money before services are provided.

When I tell a client that they are only allowed to have $1,600 in assets before the state will assist with the cost of their care, their first inclination is to transfer assets to their kids as gifts. The problem with this is Medicaid has in place something known as the “five-year lookback.”

When applying for assistance the state reviews five years of the applicants financial records to see if they have made any transfers of assets to anyone to avoid having to use that money for medical expenses. If so, the state can issue a penalty period and refuse to pay for services for a period of time.

A Solo Ager caring for a parent should be aware of two exceptions to the five-year lookback rule, they are known as the caregiver child exception, and other valuable consideration.

Under the caregiver child exception, a parent must be residing in a home that they own with their child, a common situation among Solo Agers. If the parent and child have been living together for a period of at least two years, and if the child has been their parent’s primary caregiver, the house can be protected if the parent’s doctor is willing to certify that the child has kept their parent out of a nursing home for those two years.

In other words, if the child had not been there then the parent likely would have needed to be placed in a nursing home. If this can be demonstrated, then the house can be transferred to the child outside of the five-year lookback.

When the situation is reversed and the parent is instead living with a child in a house that the child owns, but the parent has other assets they are looking to protect, they would be using the other valuable consideration exception instead.

Under this exception, the state puts a number on what the average cost of care in a nursing home in Connecticut is, currently it is $15,992 per month. (See the resources at the end of this blog for costs in your state.). If a parent’s doctor again certifies that the child kept them out of a nursing home for at least two years, or 24 months, the state will allow funds to be transferred to the child equating to the number of months multiplied by the average cost of care in a nursing home.

As an example, if a child has cared for their parent for the 24-month minimum that is 24 multiplied by $15,992, a grand total of $383,808. Each additional month results in an additional $15,992 which can allow for a great deal of assets to be protected.

Oftentimes unfortunately neither of these exceptions can be used. If that is the case, then the parent must spend down to the appropriate asset level without making gifts.

By using the above three steps to plan, a Solo Ager should be able to ensure they are prepared to care for an aging parent. By consulting with an elder law attorney a Solo Ager can determine what programs might be available to assist with a parents care and whether an assets can be protected.

RESOURCES

Estate Planning Basics: What Documents Do You Really Need? blog by Attorney Nathan Genest

Medicaid State Profiles

Calculate the cost of long-term care near you by CareScout

About Our Guest Author

Nathan Genest is an attorney with the Law Office of Bickford & Genest, LLC, located in East Granby, Connecticut. He specializes in Elder Law and Estate Planning.

Attorney Genest is a graduate of University of Connecticut where he graduated with a B.A. in History and graduated with honors from the University of Connecticut School of Law.

He is licensed to practice law in Connecticut.

Readers can reach Attorney Genest by phone or by email to schedule an Elder Law or Estate Planning consultation.