A common step taken near retirement is that of downsizing one’s home so as to reduce the amount of work and expense associated with maintaining a large home as well as to encourage us to dispose of some of our belongings. Some of us are better at this than others, but it is definitely a way to both simplify our lives and make it easier on the family to handle things when we no longer can. Another, somewhat related and hopefully far in the future step is addressing the question of what do we do with a home when we can no longer take care of ourselves and need to move to assisted living or even a higher level of care?
Unlike a decision to downsize, the decision to leave one’s home, planning never to return, is a much more difficult conversation to have and action to take. While downsizing is a choice and one can exercise much control and engage in the process, leaving home permanently is a decision often wholly outside one’s control and which may not permit one’s participation in any meaningful way. This leads us to our first question: who makes the decision that a person – we’ll call this person the patient – is leaving their home?
In the best case, the patient can make his or her own decision at a time when he begins to need increased assistance and understands that this need is best met by a move away from home. Sometimes, it takes the advice of a primary physician who, knowing the patient, their living situation and physical state, can say that it is time to make that move. In other cases, it may be a spouse or other family member or friend who holds the health care power of attorney. It might even be a group of family members, who, seeing they can no longer provide sufficient care for the patient in the home, understand it is time to move. In the most extreme case, it might take a court order to ensure that the patient is moved but in most cases that will not be necessary.
Obviously, the next question is likely to be where is the patient moving to live? Here is where research by the patient, the family and friends may be very important. Knowing of a facility which would meet the needs of the patient and is appealing to the patient is best. One elderly woman knew of a facility in a nearby city where she had family connections and history and chose that over moving to a facility closer to her adult child. Being able to make that choice was important to her and relieved the family of any burden in that regard. Other resources in the search for an appropriate facility may include a variety of health care professionals, family friends, a church, and so on.
Most facilities providing assisted living and long term care services will require information about the patient as a prospective resident, including health, finances, interests, and more. That part of the process is beyond the scope of this article as we will focus on leaving home rather more than the arrival at the facility ultimately chosen.
Turning to the home that the patient plans to leave, a big question and bigger project is what is to be done with the home as well as the contents of that home. Where there is a spouse or other family member remaining in the home, then addressing these questions may not be an immediate need but the problems are only deferred.
In most cases, some special belongings, including even furniture and other furnishings, may make the move to the new facility with the patient. These items help to provide continuity and familiarity for the patient. However, where a person has resided for many years in the same home, there is likely to be a substantial inventory of items that are no longer needed, cannot remain in the home and must be disposed of in some fashion. The related questions – and tasks – are obvious: who decides what happens to the contents, who is going to take the inventory, who is entitled to receive (or ask for) any of the contents, who is going to do the work of distributing them to family, charity, estate sale or the trash? This can be as simple as naming a family member, such as the holder of a power of attorney, to take charge of the process. However, in potentially complicated family situations, it may be preferable to name an independent outsider to oversee the process.
In dealing with questions regarding personal belongings, it is important to consider that as we age, our physical abilities decline and so might our emotional capacity and energy level that would be required to help with the process of disposing of the personal property in the home. In one case, an elderly person recently moved into long term care declined even to discuss with his family the disposition of any personal property in his home, saying that it no longer mattered to him. That is not an uncommon approach and places the burden for the process directly upon the power holder or other personal representative.
Sometimes equally as complicated as disposing of personal property is the process of selling or otherwise handling the home which is no longer to be the patient’s residence. What is done with the house will depend not only on the patient’s wishes but also the actions of those working with and for the patient, including the holder of any power of attorney, a realtor or a combination of family members and professionals. Then we have to deal with the realities of the local market for real estate, necessary preparation of the home for sale or rent, pricing, and other costs affecting the sale or other disposition. Fortunately, much of the process is safely in the hands of the real estate professionals.
Finally, we have another important question, namely how does the transfer of personal and real property – the home and its contents– affect the patient’s income, tax liability and the needs for funding the costs of his or her ongoing care? Certainly, having the resources available to pay the foreseeable expenses of the patient’s care is central to the plan. Working with the financial planner and accountant will be helpful in making the best of the situation. One aspect of the finances which is important to consider will be any impact of the sale of the home and contents on the availability of various forms of assistance for the patient. For example, there may be too many resources to qualify for some programs when the home is converted to cash, VA benefits could be lost, eligibility for Medicaid may be deferred and so on.
As you can see, there are a lot of things to think about when one arrives at the point of making the big life change of leaving home for an assisted living or long term care facility. Understanding the range of issues and what may safely be left to others is very important. Working with your professional advisors, including attorney, accountant, investment adviser, realtor and more will help for a smooth transition.
George Chamberlin & Mentor RIA Consulting © 2017