The Importance of Keeping Good Financial Records

Folder-303891_640Whenever we meet with clients to create estate planning documents, one of the things we suggest they do is to begin keeping a rolling five years of financial records.

By that we mean that they should keep records of all bank statements, checkbook ledgers, statements for investment accounts, records of any gifts they make (though we generally advise against gifting as part of estate planning), sales or purchases of real estate, motor and other types of vehicles (boats, RVs, trailers, etc.) and other similar transactions, for a five-year period. It is rolling in that after the end of the sixth year, they can discard the records from the first year.

For example, if a client started the rolling records on January 1, 2019, then he or she would keep records for all of 2019, 2020, 2021, 2022, and 2023, and 2024. On January 1, 2025, the client could then discard the 2019 records, and so on, leaving five full years of records.

The reason for this is that, if they or their spouse should need to go into a nursing home or need in-home care, then we can protect some or all of their assets, and qualify them for Medicaid reasonably quickly. (There are income limits to qualify for Medicaid provided in-home care.)

We have written numerous blogs on this subject, so the intent of this blog is not to rehash that information.

In order to be able to file a Medicaid application, the applicant needs to submit five years of financial records. We are well experienced in filing such applications for clients and protecting their assets and can do so reasonably quickly.

However, we can only file the application once we have all of the client’s required financial information and statements. That can take months for the family to collect, can often be quite costly, and delays our ability to file for Medicaid for the client. With nursing home costs in York County running between $10,000 and $12,000 a month, filing delays are very costly to the family, and will quickly reduce the assets which can be protected.

If, on the other hand, you begin keeping financial records now, and keep that rolling five years of records, if the time comes when you or your spouse needs to enter a nursing home, you already have all the records you need, and greatly accelerate the Medicaid filing process, thus saving your family significant time and assets.

Many people say to us that is a lot of paper to hold onto. That is true, but in this day and age, if you have a scanner (most computer printers today are also scanners), then you can scan those records into the computer as they come in. Just be sure to back the computer records up, or better yet, save them to a thumb drive/flash drive. Just don’t lose it!

If you begin this habit today, no matter how young you are, then you and your family will always be prepared in the event you ever have to go into a nursing home. Remember the Boy Scout motto:  Be prepared!

To join us for one of our upcoming workshops just click here and pick the date and time that work best for you!

Jeff Bellomo

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