I visited a farm-ranch operation recently and the farmer told me, “I just work all the time and I never much think about my estate planning other than I need to do it someday.  I keep telling myself when I get older, I’ll get stuff figured out for the farm and the kids.  But I’m worried. I just heard a story – my neighbor got really sick unexpectedly and he ended up in the nursing home. He died and his estate was hit with a huge lien against the farm. The family had to sell almost everything to pay the bill. Damn!  His life’s work just evaporated and there is little left to the family. The family farm is gone. I just can’t let that happen to my family.”

We hear this story often at the BorkusLaw Group.  Immediate issues are always more urgent than inevitable future problems, until one day the future comes calling. And the future is coming. If you fail to plan, there is a plan waiting for you that may involve losing your home or farm to the nursing home expense.

The average cost of nursing home care in North Dakota is $352 per day or nearly $130,000 per year.

So where will the money come from if you don’t have serious savings or long-term care insurance?  If you are not prepared for this expense, the nursing home will go after the most readily available asset – your real estate.

There are several ways you can plan for nursing home expenses and not lose your home, farm, or ranch:

•       One approach is to stash $350,000 – $500,000 in an account, or reserve 100 – 200 acres to sell, and use the proceeds when the time comes.

•       A more practical alternative is to purchase long-term care insurance at about $2,000 to $3,000 per year per person, or maybe purchase a life insurance policy with an extended care rider (long-term care like).  This will help cover nursing home expenses.

•       Alternatively, for those without long-term care insurance, there are specialty planning products available where you make an investment and enjoy three times your investment in health care related benefits. We call it a Tripler in our office.

Example: you invest $50,000 and after you become disabled you receive up to $150,000 of benefit that you can use as you wish for health and medical related expenses as well as in-home care, etc.

•       Yet another alternative is to gift your farm to an irrevocable trust for your family’s benefit.  With the farm owned by an irrevocable trust, the nursing home cannot place a lien on it, as you no longer own that asset.  The caveat is you gifted your farm away and you have a five-year look-back period where the gift would be counted against you should you become disabled before the five-year look-back period ends. This is also where last-minute planning will fall short.

•       Another option is a welfare or Medical Assistance program available to people of minimal means. Let’s be realistic, most farmers have far too many assets and income to qualify for welfare programs.  These programs only allow you to maintain minimal assets and receive very minimal income.  If you own a farm, you’re not going to be eligible.

The reality is that less than 20% of Americans have long-term care insurance as most never invested in it and what is worse is that many end up losing the coverage as they age because premiums increase with your age.

In reality, most who need protection never made the time to plan or simply refused to invest in the costs of protection. This means your home, farm or ranch are exposed and will likely be lost.

So please do not inadvertently plan to lose your home or farm to a nursing home.

If you would like to talk more about your specific situation, contact our team at Borkuslaw Group today and make a live or remote appointment!

Please note that information contained in this news alert is not and should not be construed as legal advice or opinion nor does this information alert create an attorney-client relationship

About the Author: Randall Borkus

We believe that business succession, asset protection and estate planning are less about numbers and much more about helping people preserve, protect, and provide for who and what is most important to them.