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Stretching & Protecting Wealth

My estate planning and elder law practice have given me insights into these topics that I never thought possible. I encounter questions on a daily basis in my practice, how can an individual get the most out of retirement and how do you stretch your money and protect your wealth for future generations?

I am an estate planning and elder law attorney who happens to have a Masters in Laws and Taxation as well as being a Certified Elder Law Attorney under authorization of the Pennsylvania Supreme Court. However, more than any class or degrees I have received, representing numerous families over the years and watching their decisions, and in some cases mistakes, has really provided me the most prevalent insight into these questions and their answers. 

 I firmly believe it is very important to work with a financial professional to assist you during your working  or earning years, as well as heading into your retirement years. Although it is possible for some people to “do it alone,” I’m a firm believer in hiring professionals to provide assistance in their area of expertise.

The small fee you will pay will be far worth it in the long run versus what you would save in the short term. Having a financial professional and a plan for retirement, not only how to get there, but also how you will live during retirement — is imperative. Stretching your money during retirement is similar to when you were saving for retirement, being disciplined and having a goal in mind. 

 The one piece that no one ever wants to talk about is the cost of long-term care and how we’re going to pay for it. Although none of us really want to receive long-term care in our home or in a nursing facility, statistically it is a likely possibility that we need to consider.

Long-term care in a nursing home will cost anywhere from 10,000 to $12,000 a month. And in home care, depending on the amount of care that is being received, can cost anywhere from between $17,000 to $20,000 a month. This care is often necessary and needed but if there isn’t a plan in place, it can devastate a family pretty quickly and wipe out all of their savings. 

The most obvious way to pay for long-term care is to simply self-insure, make certain you have enough in assets or investments to cover the cost. I find this to be a very difficult proposition, not only because it is impossible to know ahead of time how much care you are going to need, but also the cost of the care in the future is very unpredictable. I remember at the beginning of my career the cost of a nursing home was around $5,000 a month, and now it is well over $10,000 and in some cases in our area $12,000.

I honestly don’t think it is out of the realm to predict the cost will more than double in a short period of time. But the people who were planning to self-insure, it was certainly a shock to them when they finally got to the point of needing it, and learning that we were closer to $12,000 a month. Although this can be possible for the wealthy individuals, it is not typically possible for the middle class, since they cannot accumulate enough wealth to absorb $12,000 a month in costs. The other thing to remember is that often times one spouse is the caregiver for another spouse, and when the well spouse ends up needing care himself or herself, both spouses end up in the nursing home to the tune of $25,000 a month. It would be very difficult to self-insure this kind of need. 

Another option is long-term care insurance. I am not licensed to sell insurance and have done numerous blogs on the topic of long-term care insurance. I am a big fan in general of the insurance because I love that it could keep an individual in their own home for as long as possible. If you are looking at long-term care insurance policies, I would definitely look at a rider that will pay for in home care.

Pennsylvania has products that are hybrid policies which are life insurance policies, as well as having the riders that provide for in-home care or nursing care. Pennsylvania also participates in the partnership plan, which will allow an individual who has a long-term care policy to exempt an amount of assets equal to the amount of benefit that they have received. I am a big fan of both of these, and if an individual is able to afford it, I believe it is absolutely a good investment. You certainly want to talk to an agent to determine if it is something that is possible for you and your loved one, as well as whether it is financially doable. 

In many cases self-insuring or long term care insurance is not an option, for a myriad of reasons, but often times we are stuck with a situation where a spouse does not have any way to pay for the long-term care, and they are reliant upon the crisis rules. Currently in the state of Pennsylvania, the crisis rules are very favorable, and will allow us to protect 100% of the assets for the spouse in the community. If you are interested in learning more about Medicaid crisis planning, please call our office at 717-845-5390, or click the link here to RSVP to our upcoming workshop to learn more about it. 

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jeffrey bellomo

Jeffrey R. Bellomo, Esquire is a Certified Elder Law Attorney by the National Elder Law Foundation under authorization of the Pennsylvania Supreme Court. As the owner of Bellomo & Associates, LLC he advises families about the legal challenges facing them today. He counsels clients and provides solutions on: Asset Protection, Special Needs Trusts, Wills, Trust Design, Guardianships, Medicaid and Estate Planning & Administration. His mission is to provide professional caring service to all his clients.

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