Even if your loved one, with your help, follows all the advice given, it is still possible that there may not be enough money to pay for all the care he or she might need (especially if your loved one has a spouse who will also be depending on those assets for his or her long-term care). Remember the following two facts:
- Most American families cannot afford long stays in a nursing home. That's what Medicaid is for. Even though almost all your loved one's assets may have to be used up, you can at least rest assured that your loved one will receive care.
- No State or Federal agency or law requires that a family member (other than a spouse) pay for the care of an older relative or friend. You may choose to help but you are not legally obligated.
IMPORTANT NOTE: Avoid establishing a joint account with your loved one. If you intend to supplement the government assistance he or she will receive, pay for whatever goods or services are required out of your own funds. By putting a portion of your funds into a joint account, your loved one now has, in effect, 50% ownership of those assets. Consequently, those funds could be significant enough to disqualify him or her from government assistance.
If You Are Paying to Support Your Loved One
If you decide to help your loved one with the costs of his or her care, follow these pointers:
- Do not invade your retirement savings unless you can replace those assets in the near term. If your loved one requires extensive care for long periods of time he or she may eventually have to apply for Medicaid. In the meantime, you shouldn't risk using up your own retirement fund.
- Treat payments as loans—not gifts—and put it in writing. This debt will reduce your loved one's estate when they die. It also increases the chances you have of getting reimbursed before any other relatives or friends get an inheritance. This will also allow repayment before your loved one applies for Medicaid (without tripping the Medicaid throwback rules).
- If you are supplying more than half the support of an unmarried relative who lives in your home or in a nursing home, you may be able to claim him or her as a dependant on your tax return. Special rules apply.
- Make sure that you look to other relatives of your loved one to help shoulder the financial costs. It may be embarrassing to ask but do it anyway. Don't forget: You will need money one day for your own retirement!