The Long-Term Care Money Pit

In the 1986 comedy The Money Pit, Tom Hanks and Shelley Long play Walter and Anna, a young couple who suddenly find themselves in need of a place to live. They stumble across what appears to be the deal of a lifetime. They find a beautiful old mansion, available for a fraction of what a house like that should cost. The seller has a reason for needing to sell quickly, and while the place may need a little work, Walter and Anna believe they have found an opportunity too good to pass up.

They buy it, and the house begins to fall apart. Not figuratively. Literally. Doors come off. Plumbing fails. Electrical problems appear. The staircase collapses. Workers seem to be everywhere, yet nothing ever seems to get finished. And every time Walter thinks he has finally discovered the extent of the problem, something else breaks.

In the movie’s most famous scene, the bathtub actually crashes through the floor. Walter looks down at the destruction where his bathroom used to be and begins laughing hysterically. Things have gone so spectacularly wrong that there is apparently nothing left to do but laugh.

Meanwhile, the contractors have a running answer whenever Walter asks how much longer the repairs will take.

“Two weeks.”

It is always two weeks, but of course, it is never two weeks. What began as an incredible bargain becomes a seemingly endless collection of problems, expenses, and surprises. Before long, the house isn’t just consuming Walter and Anna’s money. It is consuming their lives and hurting their marriage.

I have seen a version of that story play out many times in my elder law practice. It usually starts when someone we love suddenly needs more care.

Maybe Mom has fallen and cannot safely return home. Maybe Dad’s dementia has progressed to the point that his spouse can no longer care for him alone. Maybe a hospital discharge planner tells the family that it is time to start looking at nursing homes.

At first, the family believes they are dealing with one problem:

“How are we going to pay for this?”

Then the proverbial bathtub falls through the floor. They discover that nursing home care can cost as much as $10,000 every month. They discover that Medicare generally does not pay for the kind of long-term custodial care many nursing home residents need.

These families hear about Medicaid, but that just leads to more questions. Does Mom have to spend everything she owns? What happens to the house? What if Dad is still living at home? Can we give money to the children? What about the money we already gave them? What happens to an IRA? Can Mom keep any of her income?

And somewhere in the middle of all of this, someone will usually offer a beautifully simple piece of advice:

“Just put everything in the kids’ names.”

That may be the elder law equivalent of “two weeks.”

Long-term care planning is complicated because it rarely involves just one rule. Medicaid has rules concerning income, assets, transfers, spouses, and the five-year lookback period. Different assets may be treated differently, and what works perfectly well for one family might create a serious problem for another.

But here is the part of the story I wish more families understood: A nursing home does not automatically have to become your own personal Money Pit. Too many people assume that if nursing home care costs thousands of dollars each month, they simply must keep writing checks until everything they spent a lifetime accumulating is gone. That is almost never the case.

The law contains important protections, particularly when one spouse requires care and the other remains at home. There might also be perfectly legal planning opportunities involving certain assets, income, and transfers. And while planning before a crisis usually gives us more options, families are often surprised to learn that there may still be planning opportunities even after someone has already entered a nursing home.

The worst time to learn all of this is in the middle of a crisis, when a family is exhausted, frightened, and watching the bills arrive. That’s because the real cost of a long-term care crisis is not always measured only in dollars. It can also be measured in the stress placed on a spouse, the exhaustion of a caregiving child, arguments between siblings, and the fear that Mom or Dad’s lifetime of savings is disappearing before anyone understands what could have been done differently.

Walter and Anna bought their house believing they could handle a few repairs. They simply had no idea what they were getting into. Most families dealing with long-term care feel the same way.

The good news is that, unlike Walter, you do not have to wait for the bathtub to fall through the floor before you make a plan. At The Elrod Firm, we help families facing this kind of situation every single day. Call or visit our website at elrodfirm.com for more information or to request a free initial consultation.