elder assets and healthcare

Question originally asked to Freed but interested in anyone's response...

Hi Freed, My question is about my parents and older folks generally. They have worked diligently for years, now retired, and like yourself now receive SS benefits deposited directly into the bank. And I see we all agree that SS$ is tax-free. Despite all their hundred thousand$ earned and diverted to govt/banking cartel they did manage to put a little away – some in a fully qualified retirement plan and some just dollars. As you know, the Golden Years often arrive with more ailments and more health concerns. And some of that elder healthcare is very expensive and there's always a possibility one of them will require something very costly like a nursing home (although I would try to avoid it). I've heard several scare stories here like "they take all your money" or "well you know they cost 12 thousand a month?" etc.. So my question relates not to passing savings on to heirs but more ... how to preserve some of that savings for the healthier parent, so he/she isn't left destitute by the sicker one's medical costs? I've received differing advice from people. Some talk about "lookback period" and Special Needs trust, and so forth. Do you have any words of wisdom?

Get some assets off the grid.

Anything in an ACCOUNT, I would kiss goodbye.
The same goes for anything registered. For what is registration, but another form of ACCOUNTing for management of such ACCOUNTS?

Learn what an account is at law.

It is wise to "run thin" on one's public business side.

I concur completely with shikamaru, you need to convert some assets into unregistered wealth, such as precious metals. Large purchases of gold or silver will involve large money transfers, and I am sure those are of interest to the IRS, who snoop continually through bank records. But so the metals are registered, or at least traceable, so what? That only proves you bought them, not that you still have them. Maybe you gave them away, lost them playing poker, had a boating accident, whatever. Just don't put them into a bank safety deposit box, as these are routinely robbed, both by the bank and the IRS. The best defense against "they take all your money" is to give the money away first, as in some years before the need arises to divest assets. Current law allows gifts of $11,000 annually per person. So your mother and father can each give $11,000 to you and $11,000 to your wife. Substantial estates can be vaporized pretty fast at $44,000 per year, but you need to start soon enough, and maybe have some kind of 'plan' so it does not look like you are shifting assets to avoid financial responsibility. I have made the decision to take full responsibility for my own needs, thus I don't have Medicare, and won't have Obamacare either. If I need medical care, I pay for it; socialism is fraud and theft on a grand scale, and it encourages all kinds of less desirable behavior. Insurance is an honorable contract, available by choice; I choose to be self-insured.

Supposing your parents choose to gift you some assets, you are now trustee of their 'final health care trust,' and you need to find some way to protect the value of the assets from the ravages of the Fed and Bernanke, who are counterfeiting FRN's at alarming speed. Here is a good article from ZeroHedge listing some twenty currency devaluations that have occurred since 1930, worldwide; average devaluation about 50%, which occurs overnight.

link: http://www.zerohedge.com/news/2013-0...-gold-standard

The US has not had a default since 1933, but FRN's have lost over 90% of their purchasing power since 1975; inflation, which is the inverse of devaluation, is running at 11% per year, and has been since 2000*. Since all the central bankers worldwide collude in this transfer of wealth, no paper currency has any future value. Thus precious metals are the preferred store of value, but the bankers will fight to prevent this from becoming widespread, so metals are not risk-free, but over long times are the only money that has survived.

*From ZeroHedge: This is a really interesting way to put the current Dow in perspective. The Dow Industrials Index (stock market) bought 10,718 gallons of gasoline in March of 1999; today the Dow will buy 3,812 gallons of gasoline. Thus 35% of the original buying power remains...

Freed G

I'm a big fan of Mark Nestmann and his "Lifeboat Strategy".

Everyone should have a lifeboat :).

Essentially, what it sounds like you are seeking is estate planning.

Having a will in place ready to go couldn't hurt.

Also, if there are any debts outstanding, seek to eliminate all of them as quickly as possible. Closing accounts after discharge is even better.

That gets rid of the creditors and helps to protect the estate.

In Canada you can buy up to 5K of gold/silver before you need ID.
Everyday. Everyone.
So two people just going to one shop can buy 50K worth of metals with no paper trail in one week not counting the weekends..
Two shops a day and you are up to 100K a week
So there are ways of buying these metals with no paper trails.

Avoiding assets stuck in probate is as easy as having no assets.
Living wills can work well.

With my father his pension checks were effected with land rental properties he had so we told him to give us the land and he can keep the rent.
He wanted to will us the land anyway.
He did and his pension cheques went up.

And when he passed there was no BS dealing with government agents holding back titles.

Very nice Walter. My parents do have a will and no debt, so all set there. I agree that anything dollar-denominated will suffer loss due to inflation and gold/silver is a great way to hold wealth.

I wonder if anyone has experience with nursing homes. After my grandfather passed away, my grandmother had a little nest egg saved up and went to live with my aunt & uncle. After awhile her health declined to the point where she needed full-time nursing care and was able to pay for it. But eventually she outlived her money (99 years) and Medicaid paid for her long term care. Yes, anyone can give $11,000 per year to any other person with no tax consequences but Medicaid is a different story. Medicaid will look-back 5 years for any asset transfers and if found those gifts may delay their eligibility. You know this might be as simple as separating account assets from joint to individual.

Thank you for the replies. Can I ask you Freed G, if you're married & retired?

True to both, JohnnyC. I retired some years ago (I'll be 67 today), and my wife is same age and also retired. Our parents are all gone; mine both avoided final care, died at home; both of wife's parents died in hospice care, about 10 days, minor costs, as both had Medicare. If you think your parents are near to needing final care, then the Medicaid lookback could be a problem, which is why I suggested a gifting program over several years. This at least will conserve some money for the surviving parent if the first one to go uses up all the (available) assets, which is not hard to do with hospital costs being what they are. My aunt and uncle both went to a publicly funded nursing home, near Austin. They didn't have any assets to start with, so Medicare paid it all. It was not fancy, but adequate and the staff were caring, so they both liked it. There are no good alternatives for final care, but hospitals are not intended for the dying, and cannot do much for the elderly, so should be avoided. Home care is best.
As to shikamura's comments about wills and estate planning, a will is definitely desirable, but a family trust (where your parents trust you to take care of assets they gift to you) is simple and executed without any participation by any outsiders, which is how you want to conduct most of your business... as to the joint account vs individual account, that would be determined by whether they live in a community property state. You are a good son to investigate while there is still time to plan.

Freed G

Here is something interesting to consider about this topic.

Why Doctors Die Differently
http://online.wsj.com/article/SB1000...242833962.html

Another thing I would like to mention.
In order to not have their bank accounts frozen if and when they pass you can get around this by having your name put onto the accounts as a joint account holder.
Also you can get them to grant you limited power of attorney to act for certain events on their behalf.

Thanks for the article Walter, bookmarked it. And I do have POA. I've done a little more study on this, and yes, even talked with an attorney :eek:

A little background on healthcare: Medicare is the federal health insurance program for folks 65 and older. Medicaid is a state health insurance program for the indigent (poor). Generally anyone eligible for SS is also eligible for Medicare and nearly every eligible senior buys in because as health insurance goes it's a great deal. It has 3 parts: Part A- hospital coverage, Part B- doctor office visits, and Part D- drug benefits. Part A is free to most folks, Part B costs about $100/ month, and Part D plans (from private companies) range from $10 to $50 a month. Part A generally pays the provider 100% of Medicare allowed amount, and Part B generally pays 80% of allowed leaving 20% for a supplemental plan (like BCBS) to pay or patient to pay without a secondary plan. It's possible to get both Medicare and Medicaid coverage.

My parents have both Medicare & private secondary insurance, a common setup. Now back to the original question/concern; how to preserve assets when one parent is heavily using up assets due to health. So the worst-case scenario here is one parent goes to an expensive nursing home. Medicare does not cover long-term care. Any retirement accounts in that patient's name will be used for their care (the income stream). If the assets are insufficient patient can apply for Medicaid. The "community spouse" (healthier parent) is given a resource allowance ($115k) not counted towards Medicaid eligibility; they can keep a car, life ins, & retirement accounts. Any SS, retirement or annuity payments would be used for that patients care; it would go to Medicaid. In my state the patient is allowed to keep assets up to $14400.

If the retirement assets are unbalanced between the parents, you could withdraw from one and add to the lower but any withdrawal will be treated as income. You might have to do that gradually to avoid a big tax hit. Attorney suggested changing retirement plan beneficiary from spouse to children, otherwise assets go to patient/Medicaid if community spouse dies first. Also suggested changing the comm. spouse will to create a trust (for the benefit of the patient controlled by kids) upon death so those assets don't go to state.

There are many types of care available to the elderly such as home health aid, adult day care, private duty nurse, etc. and these can greatly reduce the stress on the family/caregiver who is subject to burnout or health issues themselves. These are all options to checkout and make use of before deciding on the last resort of nursing home.

I learned that Medicare DOES cover some nursing home care. But there are limits. After a 3-day inpatient hospital stay for a related illness or injury, Medicare pays 100% of the first 20 days if it's medically necessary for member to have a "skilled level of care" and days 21–100 are partially-covered at a lower rate. However most patients require only a "custodial" level of care (help with bathing or dressing) which Medicare does not cover. Details here: http://www.medicare.gov/coverage/nursing-home-care.html

And yes, some of the nicer nursing homes (SNF) do cost over $12,000 per month.