(Eating an Elephant One Bite at a Time - Part 2)

Moving in with your children? Downsizing? Assisted Living? Senior housing? If you answered yes to any of these - willingly or not - you likely have a home to sell. Part 1 of the Elephant series acknowledged the enormity of such a task and offered some questions to help you (and possibly your children) make important moving decisions. Before you start packing, the first bite of Eating an Elephant is to gather information from a variety of professionals.

Unless you’ve been an investor or banker at some point in your life, your money management skills likely end with a basic understanding of your home and personal bank account. Statistically, it’s not uncommon for senior women to never have handled the family finances. A good Financial planner (FP) will help you determine exactly what kind of future housing you can afford. He or she may also make specific recommendations on how to make your housing choice work.    

A financial planner is not the same thing as an accountant. FPs manage your money; they address issues related to investing, moving, and budgeting finances. They can review your overall money picture and help prepare a plan that will maximize your assets. Accountants, on the other hand, keep track of money and file your annual taxes. Reputable FPs and accountants will meet with you at your home where they can display your financial picture right on their laptop computer.   

Once you’ve met with an FP and an accountant, you should have a pretty clear understanding of the state of your finances. Next, you’ll want to consult with an elder law, estate planning, and/or Medicaid attorney. These are the professionals who can help you legally “shelter” or “protect” your assets wherever possible. They’ll explain ways to help you retain as much of your money as possible to use for future housing.  

If you’re planning on paying for your next move with the proceeds from the sale of your current home, you may run out of money before you’re done needing it. In Massachusetts, Medicare (the federal health insurance program for people over 65) does not pay for custodial or long-term care in assisted living facilities. These costs are usually out-of-pocket (although long-term care insurance may cover a nursing home). When these funds are exhausted, you may need to turn to Medicaid (a federal- and state-funded health coverage plan for low income individuals), but you’ll have to qualify first. Some seniors may also be “dual eligibles” and qualify for both programs. 

There are multiple legal and ethical ways to “spend down” your liquid assets in order to qualify for Medicaid, many of which have to do with the equity in your home. Your attorney may also recommend that you create a trust for tax purposes, and protection of your assets in the event of death. A trust can also outline the ultimate disposition of any assets remaining after your death (ie: who gets what). 

Speaking with these professionals may feel a little overwhelming, so it may be helpful to bring one of your adult children or another trusted individual along. The important thing to remember is that consulting with a financial planner, an accountant, and a specialized attorney should be the first step in making decisions around selling your home. Your initial consultation with these professionals will likely be free, but make sure to ask when you make the appointment.

After speaking with these folks, you’ll have a pretty good idea of how to use your assets to fund your forever home, regardless of where that may be. Part 3 of the Eating an Elephant series will outline additional ways to get money when you don’t have money.

The contents of this article are intended to convey general information only and not to provide legal advice or opinions. Contact an attorney for specific legal advice.