Financial tips for the community spouse

One of the most challenging decisions for any spouse is when to place his or her disabled partner in an assisted living facility. The cost, logistics and emotional toll can overwhelm the healthy spouse and trigger a postponement that ends up being dangerous for them both. Of course, we advocate setting up contingency plans and having honest conversations with each other about how you will handle it if one of you becomes disabled. Ideally, you will have time to analyze and purchase an appropriate policy to pay for long-term care, visit facilities together to pick out one you both approve, and write out a step-by-step plan you can activate should the time come. Not everyone enjoys the luxury of time, though. Disabilities and scary diagnoses can sneak up through the shadows of our life and leave us shocked and ill-prepared. Should this happen (and, frankly, even if it doesn’t) you need to rely on the advocacy and wisdom of your financial advisor, preferably one with a fiduciary relationship to you. Your advisor will be able to guide you through the prickly maze of protecting both the ailing spouse and the assets you’ve both accumulated over a lifetime. While some advisors encourage their clients to divest themselves of their assets in order to qualify for Medicaid, we want you to understand that this plan can cause even more troubles down the road. Most facilities cap the amount of Medicaid patients they accept, and those open beds fill up fast. In your effort to control the disbursement of your finances, you may lose the ability to choose the place you and/or your spouse will spend the rest of your lives. While federal Medicaid rules protect a recipient’s home and the property the house is on when calculating Medicaid eligibility, these allowances can vary from state-to-state, especially when the recipient has no plans to return home. Currently, monthly maintenance needs allowances range from… | Read More »

LTC planning and the bobcat in your woods

Last weekend, our friend Tom, an experienced hunter, shot a deer with his cross bow from his stand on our property in northern Wisconsin. With a light snow falling, Tom left his stand, tracked the deer a ways, found and began field dressing the animal. A noise caught his attention and he looked up. Just to his left, a large bobcat stood ready to pounce. Tom stood and made himself large, and the bobcat ran away. But, what turned out to be a cool hunting story could have had more dire consequences. It’s important to consider your surroundings when moving through the woods. Not understanding the full picture can unnecessarily land you in a dangerous position. It’s the same with finances. An advisor has to consider your whole landscape – age, income, budget, life expectancy, marital status, risk tolerance – when addressing each element of a retirement plan.  Danger lurks in the woods. Will your money last your life? Will an unexpected health crisis drain your finances?  Can you maintain control over your healthcare decisions? Do you understand your policy’s fine print? In order to provide the best answers to these questions, and to solve some of the issues they raise, a registered investment advisor has a fiduciary responsibility to review your financial documents, to clear the woods of any visible threats. Your retirement plan should be tailored to your current and anticipated needs. The good news is resources are available to do this. For instance, there are a lot of options to pay for long-term care – traditional long term care policies, annuity hybrid policies, life insurance with LTC riders, self-funding and more. These opportunities are all available for you, but it’s important to get a clear look at your financial picture to choose the most appropriate one. November marks deer hunting season in Wisconsin, and it is also Long Term Care Awareness month.  If you have any concerns… | Read More »

Be careful where you retire. Not all Partnership programs are equal.

In an effort to encourage more people to purchase long-term care insurance, the Deficit Reduction Act of 2005 (DRA) created the Qualified State Long Term Care Partnership program. The program offers special long-term care policies that allow buyers to protect assets and still qualify for Medicaid when the long-term care policy runs out. If your LTC policy qualifies for this program it essentially doubles the amount of possible protection from that LTC policy; you not only receive the policy payout to cover the cost of your care, but you also avoid having those assets count against your estate if your policy runs out and you have to apply for LTC through Medicaid. Because these programs run through the state government, it is critical to consider where you intend to retire. Not all states have this program, and even some that do will not honor a policy sold in a different Partnership Qualified state. For instance, these eight states have no Partnership LTC program: New Mexico, Alaska, Hawaii, Mississippi, Illinois, Michigan, Vermont, and Massachusetts.  Not only do they not have the program, they also will not honor a Partnership qualified LTC policy sold in another state if you move there and apply for Medicaid LTC services. California has a Partnership program but doesn’t have reciprocity with other states and will not honor a policy from another Partnership state. All the other states have Partnership programs and have reciprocity with other Partnership states and will honor qualifying policies sold in those states. It is possible that the states listed above without Partnership LTC programs could develop them in the future.  As always things change in the government on a state and federal level frequently. Part of our job here at Winch Financial is to keep up with those changes to give the best advice our clients.  If you have a LTC policy that qualifies for the Partnership program in the state you… | Read More »