Plan for Long-term Care and Leave a Legacy

Physician's Money Digest, April 2006, Volume 13, Issue 4

Imagine toiling for most of your lifeto build your practice,which is not unlike a small business. Along the way,you purchase a home, maybe even two, as well as possessionsyou hold dear. Now imagine living long enough thatyou need nursing care. To cover the expense, you are forcedto sell all of your worldly possessions and leave your childrenwith only bills when you pass. Consider the followingstory of two small business owners.

James and Irene Norris spent their lives surviving. Thecouple owned and operated a small business together forover 60 years and survived the Wall Street crash of 1929, theGreat Depression, 17 US presidencies, and two World Wars.They also raised two sons at the same time. But there wasone thing they didn't plan on: long-term care.

Once they closed their small business and became too frailto care for each other, they became trapped in an unfortunatefinancial situation that is becoming all too commontoday. After several medical problems, they were forced tochoose custodial care and they moved into a nursing home.Even though they had savings, it quickly disappeared whenfaced with the monthly nursing home costs. Medicare offeredlittle support, because it does not cover stays in nursinghomes for extended periods of time.

The bills continued to come, and they soon realized theyno longer had adequate financial resources to survive. Theyreached a turning point when they were forced to make themost painful decision of their lives. In order to qualify forMedicaid, they would not be able to hold on to all of theirfinancial resources and were forced to sell everything theyhad worked so hard to earn. Their prized possessions thatthey had so carefully collected through the years were soldto pay the medical bills that had piled up.

The Norris family had never consulted a financial planneror worried about saving for retirement. Had they even spenta small amount of time earlier in life with a financial plannerthey would have probably learned a few techniques thatwould have allowed them to hold on to more assets and stilllegally qualify for Medicaid.

Once on Medicaid, they were limitedin their options. They were forced tochoose only the care that Medicaidwould cover rather than what wouldtruly make them comfortable in theirfinal years. Finally, when they passedaway, the family was left with thousandsof dollars worth of debt from medicalexpenses and funeral arrangements.

This lack of preparation is common.It happens every day to hundreds ofmiddle-and upper-income familiesacross the United States, and it can easilybe prevented with some basic planning.Rather than watch your life'swork slip away because of costly medicalexpenses, just a little planning willensure that you leave a legacy behindthat will make your family proud andsecure. Rather than seeing your memoriessold, you can hold on to the thingsyou worked so hard to attain.

Long-term care planning doesn'tmean the end of your livelihood. Itmeans taking a small amount of timeto decide what options you and yourfamily will have in the future, andmaking sure you have something leftto pass on to the next generation.

When is long-term care needed?

Consider long-term care when someonecan no longer perform basic functionsby themselves. Perhaps they needa medical professional to assist themwith various tasks, which can be assimple as getting out of a chair or ascomplex as cooking a meal or bathing.Both mental and physical ailments canbring about a need for long-term care,including strokes and car accidents.Alzheimer's disease is just one of themany conditions that requires extensivelong-term care. According to theCenters for Disease Control andPrevention, 14.2% of all nursing homeresidents suffer from Alzheimer's disease.Nursing care is extremely costlyand can destroy your financial securityquicker than you think.

What long-term care options willI have? Most people automaticallythink of nursing homes as the onlylong-term care option. While it is truethat nursing homes account for a largepercentage of long-term care, it's certainlynot the only option available.Depending on the individual's abilityto perform tasks, there may be a widerange of options to choose from if youplan ahead. Insurance to help covercosts of nursing homes, assisted livingfacilities, and even in-home health careare all options to be considered.

What's the next step? Whendeciding what type of long-term careplanning you should do, it's alwaysbest to consult with your closest familymembers. Once you have decided topursue long-term care planning, atrusted financial advisor can help.

With just a small amount of financialplanning, you may be able tospend your final years in comfort andstability, without the added financialstress and anxiety. Your family memberswill be able to spend time sharingtheir love and support with you,instead of dealing with debt and foreclosure.You will be filled with prideknowing that all you worked for is stillintact. Just a small amount of long-termcare planning could ensure thatthe dreams you achieved in life don'tdisappear overnight.

Robert Valentine, of Huntington Beach,

Calif, is with Financial and Retirement

Management, a registered investment

advisory firm. He is a registered representative

of and offers securities through

Securities America, Inc, and is a registered broker/dealer,

member NASD/SIPC. He welcomes questions or comments

at 877-732-2637.