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    adult children

    Are you prepared to pay for your parents’ long term care?

    fressYour mom or dad may have decided to move to an assisted living residence or a nursing home if they need comprehensive long term care. The cost of this care can range from $5000-10,00 per month depending on their location and the extent of care. Unfortunately at some point they may run out of money to pay for these services. At that time they will need to apply for Medicaid, a program jointly funded by their state and the federal government, to pay for their nursing home care.

    In order to apply for Medicaid they must select a facility that is Medicaid approved. They must also meet the severe limitations on income and assets established by Medicaid. Medicaid funding has become a major budgetary issue for many states over the last few years, with states, on average, spending 16.8% of state general funds on the program. If the federal match expenditure is also counted, the program, on average, takes up 22% of each state’s budget.

    As baby boomers retire at the rate of 10,000 per day dependence on Medicaid is very likely to increase. At some point states may no longer be able to fund these increases. They may be required to implement the filial responsibility laws. These laws could hold children legally responsible for the long term care expenses of their parents. They are on the books in 30 states but have rarely been implemented.

    But recently the State of Pennsylvania enforced it filial support laws and found a defendant responsible for his mother’s long term care bill from a skilled nursing facility for $93,000. Other states may follow suit if their budgets get tighter.

    What does this mean for you and your family? This possibility makes it increasingly important that you have a conversation with your parents about their plans for long term care. You need to ask them three basic questions.

    1. If either one of them needs long term care do they plan to stay in their home?
    2. If either one of them is incapacitated who do they expect to be the caregiver?
    3. If they need long term care services how will they pare for this care?

    If initially your parents respond that this is really none of your business, you should tactfully answer that it may become your business. You can cite the case in Pennsylvania as an example.

    Your conversation with your parents may uncover their plans to stay at home if they need care. In that case they need to look carefully at their home to see if it safe for a physically limited person. You may learn that they expect your spouse to be their primary caregiver. This opens up a whole new area of conversation. You also may find that they have significant assets to provide their care or they have long term care insurance.

    You will not know the answers to these questions if you are afraid to engage them in this critical conversation. It all starts with three words… “Can we talk?

    Should you have a pre-paid funeral plan for your parents (or yourself)?

    Advantages and Disadvantages of Prepaid Plans

    One way to plan in advance for the end of one’s life is to sign a formal contract called a “preneed funeral plan.” With this plan, money to pay for a funeral and/or burial is held in a trust, in an escrow account or paid through an insurance policy on the life of the person desiring the plan. Parts of or all of the funeral service and burial are designed in advance and pre-funded in advance and the family has little to do but show up.

    This type of planning has become very popular in recent years. A survey conducted by the AARP in 1999 found that two out of five people over age 50 had been approached to pre-purchase funerals and burial goods and services. An AARP survey in 1998 indicates that 32% of all Americans over age 50, roughly 21 million people, have prepaid some or all of their funeral and or burial expenses (but not necessarily through a formal preneed plan). Breaking that down; about 25% of the over age 50 population have prepaid for their burials (cemetery plot, mausoleum or niche), 18% have prepaid for headstones, urns, caskets, grave liners or vaults, opening and closing of graves and so on and 13% have prepaid for goods or services from a funeral home or funeral director. The same survey indicates that over $25 billion is being held in preneed trust funds. Roughly another $25 billion is waiting to be paid out in life insurance benefits. Prepaid or preneed funerals and burials are big business.

    Funerals and burials funded privately by the family, or paid from an individual life insurance policy and arranged informally through a funeral home or funeral director are generally not subject to state regulation. Any formal arrangement through a second party or involving a contract is subject to regulation in all states. Each state has adopted different rules as to who can sell these plans, what the plans can provide, what contract provisions must be, how the plan is to be funded and what recourse purchasers might have in the event of fraud or default. All states call these regulated plans “preneed” funeral and burial arrangements.

    Here are some advantages as to why one would want to buy a preneed plan for funeral and burial services and goods.

    • It provides peace of mind knowing these arrangements have been made in advance.
    • It avoids the burden on family members to make decisions when they are most vulnerable to manipulation.
    • It allows one to virtually control from the grave by determining in advance the funeral products, funeral services, burial products and burial services that one would prefer having for final arrangements.
    • It helps the family to avoid taking loans, arranging finance plans, raiding savings or selling assets to pay for a funeral and burial.
    • It guarantees (for many contracts) that if products and services currently purchased are not available in the future, equivalent substitutes will be provided at no additional cost.
    • It locks in guaranteed prices (available with some contracts) forever.
    • It allows for inflation in future costs (for those contracts that do not guarantee prices) by investing money in an interest-bearing account or buying life insurance that increases in value over time.
    • Depending on the contract, it may allow for transfer to another funeral home or for a partial or full refund.

    Unfortunately, there are also problems with prepaid, pre-planned final arrangements.

    • With some trust fund and insurance funding options, there may be no refund if someone wants to cancel the plan in the future.
    • If a purchaser moves to another state there may be no transfer options or there may be different rules governing the funding option.
    • In some contracts, interest earnings on investments resulting in excess money not needed for the plan may be retained by the funeral home or funeral director.
    • On installment plans, interest may be charged but not credited to the account.
    • In certain insurance-funded contracts, the ownership or death benefit may be irrevocably assigned to the contract holder (funeral home), preventing the purchaser from enjoying ownership rights in the policy.
    • In certain insurance funded contracts, a growth in the death benefit over time that exceeds the cost of the preneed plan services and goods may be pocketed by the contract holder (funeral home) instead of being refunded.
    • If the contract provider goes out of business or fails to secure 100% of the funds for future payment, there may be no recourse to get all of the money back that was put in.
    • If certain services or goods that were purchased initially are not available in the future, but more expensive versions might be, the family may be forced to pay extra for those items.
    • In certain insurance funded plans, if the insured dies too soon, there may have been a waiting period in which few or no benefits are paid at death, thus forcing the family to pay out of pocket for the funeral.
    • Certain unscrupulous providers may have failed to provide an itemized list of services and goods or failed to identify properly, specific services and goods, thus allowing the provider in the future to substitute less expensive items or to leave out services and goods that were originally anticipated in the agreement.


    Financial Advisors may reprint any articles from The Gift of Communication Blog in your own print or electronic newsletter. But please include the following paragraph:

    Reprinted from Bob Mauterstock’s The Gift of Communication Blog. Subscribe at  and receive Bob’s Family Meeting Checklist Guide.

    Communicating with an Alzheimer’s Patient

    I’ve discovered a very valuable resource recently, available from the National Institute on Aging through ADEAR, The Alzheimer’s Disease and Referral Center. It’s a guide called Caring for a Person with Alzheimer’s Disease. It is written in a style we can all understand.

    One of the most helpful sections of the guide relates to the communication problems we have with Alzheimer’s patients. When my mom was in the early stage of Alzheimer’s Disease, I could communicate with her reasonably well. Our conversations would usually revolve around the same basic issues, her need for an eye examination, her desire for a phone to call her friends and an explanation of how my father died. She would readily admit that she had forgotten a lot and was often frustrated by not being able to remember things like her mother’s funeral or my Dad’s illness.

    One of the important things I learned during this process was to never use the phrase “Do you remember…..” The guide was helpful in improving my ability to communicate with my mother and reduce her frustration when talking to me.

    The ADEAR guide has recommended these tips to improve communication with an AD patient:

    • Make eye contact to get his or her attention, and call the person by name.
    • Be aware of your tone and how loud your voice is, how you look at the person, and your “body language.” Body language is the message you send just by the way you hold your body. For example, if you stand with your arms folded very tightly, you may send a message that you are tense or angry.
    • Be open to the person’s concerns, even if he or she is hard to understand. This helps the person with AD feel better about himself or herself.
    • Use other methods besides speaking to help the person, such as gentle touching to guide him or her.
    • Try distracting someone with AD if communication creates problems. For example, offer a fun activity such as a snack or a walk around the neighborhood.

    To encourage the person with AD to communicate with you:

    • Show a warm, loving, matter-of-fact manner.
    • Hold the person’s hand while you talk.
    • Be open to the person’s concerns, even if they are hard to understand.
    • Let him or her make some decisions and stay involved.
    • Be patient with angry outbursts. Remember, it’s the illness “talking.”
    • If you become frustrated, take a “timeout” for yourself.

    To speak effectively with a person who has AD:

    • Offer simple, step-by-step instructions.
    • Repeat instructions and allow more time for a response. Try not to interrupt.
    • Don’t talk about the person as if he or she isn’t there.
    • Don’t talk to the person using “baby talk” or a “baby voice.”

    Here are some examples of what you can say:

    • “Let’s try this way,” instead of pointing out mistakes.
    • “Please do this,” instead of “Don’t do this.”
    • “Thanks for helping,” even if the results aren’t perfect.

    You can also:

    • Ask questions that require a yes or no answer. For example, you could say, “Are you tired?” instead of  “How do you feel?”
    • Limit the number of choices. For example, you could say, “Would you like a hamburger or chicken for dinner?” instead of “What would you like for dinner?”
    • Use different words if he or she doesn’t understand what you say the first time. For example, if you ask the person whether he or she is hungry and you don’t get a response, you could say, “Dinner is ready now. Let’s eat.”
    • Try not to say “Don’t you remember?” or “I told you.”


    Financial Advisors may reprint any articles from The Gift of Communication Blog in your own print or electronic newsletter. But please include the following paragraph:

    Reprinted from Bob Mauterstock’s The Gift of Communication Blog. Subscribe at  and receive Bob’s Family Meeting Checklist Guide.

    Give Your Children What They Deserve! Performance Based Inheritance

    Most of our parents don’t really think about how they want their inheritance distributed to their children. Often without much thought, they choose to divide everything up evenly between them, regardless of their children’s situations. In many case,s this can result in anger and hurt feelings for many years after they are gone.

    Let’s take a situation that I have seen very often. A daughter takes on the responsibility of watching over her parents, visiting them daily, cooking for them, driving them to their doctors and in some cases, bringing them into her home or living with them. When they pass, on she gets the same inheritance that her two brothers got despite her exceptional contribution to their well-being and her brothers’ lack of involvement.

    Why does this happen so often? Because most parents don’t want to face the issues head-on with their children while they are alive.They don’t want anyone to be upset. They don’t want to face a possible conflict within the family. As a result, they just split everything up and let the children work it out after they are gone. The conflict and hurt feelings often arise months and years in the future.

    How can your family avoid this situation if your parents don’t want to take the initiative to discuss these issues? It’s time for a family meeting, and it’s often the Alpha child’s job to make sure that meeting happens. Who is the Alpha Child? That ‘s the child who takes the most interest in his/her parents, has their trust and who they will listen to. That meeting often is facilitated by a family adviser or in some cases a professional mediator. When the meeting is over, everyone understands the parents’ position and what they can expect. There are no surprises when the will is read.


    Financial Advisors may reprint any articles from The Gift of Communication Blog in your own print or electronic newsletter. But please include the following paragraph:

    Reprinted from Bob Mauterstock’s The Gift of Communication Blog. Subscribe at  and receive Bob’s Family Meeting Checklist Guide.

    Aging Life Care Professionals, Angels in Disguise

    Often it is quite difficult to determine what level of care your parents need, where they can find help from agencies and organizations and what their care is going to cost. A new profession has emerged to help you with these decisions. These professionals are called Aging Life Care Professionals (ALCP). They are health and human services professionals who have come from a number of different fields. Many have been nurses or social workers who have developed an expertise in working with the elderly. They can help you in a number of different ways.

    In many cases the Aging Life Care Professional’s first job is to do an assessment of your elderly parent’s situation. What are their medical issues? How mobile are they? Do they have any cognitive limitations? They will give you an extensive report that will recommend the type of care your parents need. Can they stay at home? Would assisted living be the right situation? Does their memory impairment require round the clock care?

    Once the initial assessment is done the ALCP can help with placement in the right facility, or reorganizing the home to make it safer for your parent. They can monitor the hiring of home health aides, provide a bill paying service and coordinate meals on wheels services. In summary, they are angels in disguise.

    Aging Life Care Professionals are generally not covered by any insurance plan or medicare. However, If your parent had a long-term care policy, the better plans provide for payment of these professionals. Otherwise, you are on your own. Initial assessments can range from $200 to $850. Hourly rates generally are between $80-$200. But most families have found them to be well worth it. The ALCP may often find services or benefits through local or federal organizations that can pay for some of your parent’s costs.

    How do you find an Aging Life Care Professional? The first place to look is on their professional website, the Aging Life Care Association. Here you can learn more about the profession and find the names of ALCP’s in your area. Once you have found 2 or 3 within ten miles of your parent’s home, give them a call and have them come by to be interviewed. Conduct the interview with your parent present. See how they relate to mom or dad.  Then use your own intuition and your parent’s input to find the right person to work with. Finally give a long sigh of relief knowing that you no longer have to do this on your own.


    Financial Advisors may reprint any articles from The Gift of Communication Blog in your own print or electronic newsletter. But please include the following paragraph:

    Reprinted from Bob Mauterstock’s The Gift of Communication Blog. Subscribe at  and receive Bob’s Family Meeting Checklist Guide.