Be Prepared for Senior Living with These Ten Pointers
Are you thinking about making a move to a senior living community, but don’t know how to start your research? Here are 10 pointers to consider:
1. Understand the kind of community and benefits you are looking forward to.
The typical options are:
- Over-55 (active adults)
- Independent living
- Assisted living
- Continuing care community housing
2. Understand the “Reservation” agreement.
Most are straightforward and the senior living community staff are very well versed in explaining the terms. But when in doubt, consult with an independent advisor or an attorney. The deadlines stated in these agreements are very important and if you miss a deadline, it can mean the end of your reservation.
3. Plan how you will line up the funds for the next phase.
At a certain point, you will need to put down more money to enter the senior living community. Learn more about expected costs for senior living in Planning to Protect Property from Nursing Home Costs.
4. Know the community’s options.
These options include apartment styles, possibilities for changes or upgrades, amenities, and whether there are other levels of living arrangements (for example, changing from independent living to assisted living) offered by or through the community.
5. Review the “residency” and/or “membership” agreement.
Specifically, we suggest looking for:
- Reservation deposit terms, including how long the reservation is good for, deadlines for refunds and final decisions to opt in.
- Membership fee, if any, and refund (if any) at the termination of the agreement
- Monthly fee
- Included services
- Separate utilities and optional services
- How to terminate the agreement. You will have to give notice if leaving of your own accord.
- Whether there is a handbook and regulations
- Certification as to your health status. This is also a good reminder to be realistic about changes in your health and how that may affect your final decision to move.
- Proper naming of a beneficiary to receive any refunds or payments from the community. We recommend a trust for this purpose. We generally do not suggest naming your children as direct beneficiaries because you do not know what their financial and legal situations will be at the time of the refund payout. If you have an irrevocable trust to protect assets from nursing home costs, this may be a good place to use it.
6. At the time of your move, make sure you have an apartment dweller’s insurance policy for liability and your own personal property protection.
7. Consider what it will take to become a resident of the state if you are not already one.
8. Have at your fingertips a copy of your power of attorney and healthcare proxy (power of attorney for healthcare), as these can sometimes be needed on very short notice.
9. Evaluate your estate plan for general purposes, and continue to review that plan at least every three years.
In your plan, consider the benefits of trusts.
- It may be a benefit to settle your estate through a trust. If you already have a trust, understand what it does.
- Know the difference between an irrevocable and a revocable trust, and the benefits and drawbacks of each:
- Many irrevocable trusts do not allow you to access the “principal,” meaning that you cannot personally spend whatever money is in the trust. Seek advice when you’re not sure what your trust does.
- Revocable trusts do not protect your assets for nearly any purpose except, possibly, avoiding probate and saving estate taxes.
In your plan, anticipate how to care for your loved ones, plan for your incapacity, protect assets from various types of claims, and settle your estate efficiently, without probate or taxation if possible. The federal estate tax when applicable is 40%. The Massachusetts tax, for those who reside here or have real property here, ranges from roughly 10 to 16%. Other states will vary.
10. Consider and plan for the income tax consequences of selling your current home.
This list is no substitute for your own self-study or for obtaining qualified advice. Feel free to reach out if you have any questions about your specific circumstances.
And then…look forward to this exciting change in your life!
