Financial Considerations for Aging Parents

One of the most difficult things in life is watching your parent age, as they find it more difficult to do the things they once did with ease. 

During such an emotional time, many people are blindsided with the cost and financial consequences of a long term care event. However, there are options for caring for elderly parents. With planning, one can greatly enhance this stage of life from both the adult child’s point of view and the elderly parents’ point of view. The options have a tendency to be complicated, though effective, and are best chosen with advanced planning. 

However, when planning for the declining years, steps can be taken now that will tip the balance in favor of meeting the parents’ wishes. For example:

  • Nursing home insurance policies come in a variety of shapes and sizes. In the past, if one did not need to draw on the nursing home policy, the insurance company kept all premiums paid. Now companies offer hybrid policies that pay for nursing home care, but if the insured never draws on the policy, then the premiums paid will go to the insured’s heirs. 
  • Montana has a program called the Montana Long Term Care Insurance Partnership in which a person can buy a long-term care policy and still qualify for Medicaid. In addition, the program may allow for the elderly parent to pass assets to their heirs.   
  • A parent can pay a family member for personal services. This allows the parent to spend down towards Medicaid eligibility and simultaneously transfer money to a family member. Note that the recipient of the payments from a personal services contract must report the payments on their income tax return.
  • A trust may be able to provide for a parents’ elder years and preserve wealth for the parent to transfer to their children.  
  • There are available options and strategies to reduce financial stress when planning for the elder years. The strategies are complex to implement, so engaging qualified professionals is strongly suggested.