How to Avoid Family Squabbles Over Cash if Mom and Dad Get Sick
I have a well-to-do retired optometrist client of
mine who inadvertantly taught me....a novel
method to prevent potential squabbles that often
occur when children know they have inheritance
money flowing in their direction sometime soon....
We were discussing the ramifications of nursing
homes and long term care concerns. He and his wife
were both 79 and were long time Ambiguous
Annuitants and they were considering "upping"
their guaranteed protection in their existing long
term care policies since, as California residents, they
could see they were going to have to dip into savings
if long term care ever arose. This was something
they did not want to do.
The conversation meandered to and fro as we were looking over old photographs of their children from earlier in their lives when the kids were high school age. Then the mother suddenly commented
to me that, "so and so" was going to "give us grief about the money some day...."
"What do you mean...?", I asked.
She replied, (and I will change his name here...) "Jonny always felt that his sister Susie had a free ride financially from us. I mean, we helped her after her divorce get back on her feet, and we helped her kids go to college...things that parents are supposed to do, but he feels we went way overboard and to this day he resents her for it. Everytime the family gets together we have to be very careful not to even come close to discussing money..."
"How do you think he might react if you ever need to get long term care ?", I then asked.
" I don't want to think about it; it will get ugly..." she answered.
And then it dawned on me that it may not be so ugly after all.
Instead of my clients children being tempted to squabble over a sizable estate (which will be coming to them, and therefore, at least in Jonny's eye's coming out of his money), ......the long term care policies can mitigate such fuss. Here is how:
When determining what form of long term care to provide for their parents
(in-home, assisted living, nursing home and what price range they want to
shop from), the children are going to be faced with a myriad of decisions,
and many of those decisions will be based on cost. If, as in the example
here, one or more of the children is concerned that the cost is too
prohibitive, and they are fearful (I know, this is pathetic and ridiculous)
that it is too much money to take care of the person who brought you
into this world, it will be good to recognize that the long term care
policies are only useful IF there is a claim.
In other words, the kids might as well use the long term care policies
INSTEAD of all the money in the pot because these policies are ready to trigger
at any time; They were purchased for this exact purpose, and they are not useful
(or little do the heirs know) to the heirs.
So if Jonny finds out that dad has an LTC policy, he can rest assured that his
inheritance that he is so patiently waiting for (I am becoming ill now) will be safe
and untouched. Le Voila, no fights with Susie. It is all turn - key.
Now what Jonny does not realize is that the kind of policy I sold his parents actually will be going to Jonny in the form of a sizable tax free death benefit some day if his parents never use some, or all, of the policy.
So, for example, one of the policies I sold their Dad cost $50,000. If Dad never uses it, Jonnie will be getting between $65,000 and $85,000 depending on when dad dies. If Dad does use it, the policy will pay for up to $130,000 in long term care coverage. If Dad only uses some of it, then the remainder goes into Jonny's hot hands.
But we do not have to inform Jonny of this at this time. All he needs to know is that Mom and dad were thoughtful enough to get some Long Term Care Policies so that his birthright will not be trifled with..
Spoiled Bast.....Never Mind....You know what I mean..