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Talking to Parents about Money

From Gentle Persuasion to a No-Nonsense Approach, Talking About Estate Plans

Sometimes the first attempt is a flop. Imaging this exchange: “So, do you want to talk about what happens when you die?” Answer: “Nope.” That’s what can happen, but it doesn’t have to, says The Wall Street Journal’s recent article “Readers Offer Their Advice on Talking to Aging Parents About Estate Plans.”

Many people have successfully begun this conversation with their aging parents. The gentle persuasion method is deemed to be the most successful. Treating elderly parents as adults, which they are, and asking about their fears and concerns is one way to start. Educating, not lecturing, is a respectful way to move the conversation forward.

Instead of asking a series of rapid-fire questions, provide information. One family assembled a notebook with articles about how to find an estate planning attorney, when people might need a trust, or why naming someone as power of attorney is so important.

Others begin by first talking about less important matters than bank accounts and bequests. Asking a parent for a list of utility companies with the account number, phone number and if they are paying bills online, their password, is an easy entry to thinking about next steps. Sometimes a gentle nudge, is all it takes to unlock the doors.

For some families, a more direct, less gentle approach gets the job done. That includes being willing to tell parents that not having an estate plan or not being willing to talk about their estate plan is going to lead to disaster for everyone. Warn them about taxes or remind them that the state will disburse all of their hard-earned assets, if they don’t have a plan in place.

One son tapped into his father’s strong dislike of paying taxes. He asked a tax attorney to figure out how much the family would have to pay in estate taxes, if there were no estate plan in place. It was an eye-opener, and the father became immediately receptive to sitting down with an estate planning attorney.

A daughter had tried repeatedly to get her father to speak with an estate planning attorney. His response was the same for several decades: he didn’t believe that his estate was big enough to warrant doing any kind of planning. One evening the daughter simply threw up her hands in frustration and told him, “Fine, if your favorite charity is the federal government, do nothing…but if you’d rather benefit the church or a university, do something and make your desires known.”

For months after seeing an estate attorney and putting a plan in place, he repeated the same phrase to her: “I had no idea we were worth so much.”

Between the extremes is a third option: letting someone else handle the conversation. Aging parents may be more receptive to listening to a trusted individual, who is of their same generation. One adult daughter contacted her wealthy mother’s estate planning attorney and financial advisor. The mother would not listen to the daughter, but she did listen to her estate planning attorney and her financial advisor, when they both reminded her that her estate plan had not been reviewed in years.

Reference: The Wall Street Journal (December 16, 2019) “Readers Offer Their Advice on Talking to Aging Parents About Estate Plans”

Suggested Key Terms: Estate Planning Attorney, Estate Taxes, Inheritance

Nursing Home

Nursing Home Placement – Know Your Rights

Whether you choose to reside in a nursing home, or circumstances require that you make the move, it’s a fact that you may give up a certain level of autonomy. This can lead to lapses in care. Understanding your rights as a nursing home resident is paramount to ensure that you receive the care you need and deserve. This article will walk you through those rights and provide you with resources to also ensure that you are not taken advantage of.

Nursing Home Resident’s Rights

In 1987, Congress enacted the Nursing Home Reform Law. In a nutshell, the law is designed to ensure that nursing home residents are provided whatever they need to function at the highest possible level. Specifically, the law provides the following rights:

  1. Unnecessary Physical and Chemical Restraints. Unless authorized by a physician, and only for a limited time, nursing home facilities may not restrain residents using sedatives or other chemical restraints, or seatbelts, gloves and other physical restraints.
  2. Contact with Physician. Nursing home facilities must provide residents with the contact information for their primary care physician and allow them to participate in care planning meetings.
  3. Communication Regarding Health and Treatment. If the resident’s health deteriorates, or if a physician deems a change in treatment necessary, the facility must inform the resident, the primary care physician and the resident’s legal representative or designated family member.
  4. Right to Medical Records. If a resident requests their medical records, the facility must provide them within one business day and at a cost that is reasonable within the community. In addition, the facility must explain how to access the records and/or transfer authority to another person.
  5. Notification of Rights. Nursing home facilities must provide residents with a written copy of:
    1. their legal rights
    2. state laws about advance directives, living wills and durable power of attorney for healthcare
    3. the nursing home’s policies on carrying out the directives.
  6. Notification of Services. Nursing home facilities must provide residents with a list of services (and fees) provided by the facility at the time of admission and during their stay. Any services or rates not disclosed in advance, may not be charged to the resident.
  7. Right to Privacy. Nursing home residents have the right to privacy in all matters, including:
    1. Visiting family and friends
    2. Personal needs
    3. Making phone calls
    4. Sending mail
  8. Right to Assemble. Nursing home residents must be able to share a room with their spouse, gather with other residents without staff present, and to meet with a local or state ombudsman, law enforcement, or other official representatives without staff interference or presence.
  9. Right to Leave. Nursing home residents may leave the facility for any reason and may belong to a church or other social group.
  10. Right to Manage Finances. Nursing home residents have the right to manage their own finances and must not be required to deposit funds with the nursing home.
  11. Individual Preferences. Nursing home residents have the right to choose when to get up or go to sleep, when they have snacks, what they eat, what they wear and how they spend their time. The nursing home must offer a variety of choices at main meals to accommodate different tastes. Nursing home residents also have the right to administer their own medications and go to the bathroom, whenever they want.
  12. Personal Possessions. Nursing home residents have the right to bring any personal possessions to the nursing home, such as clothing, jewelry and furnishings. Staff must assist in safeguarding these items and assist in locating them, should they become lost.
  13. Nursing home staff must treat residents with respect at all times. Residents are expected to be treated as adults.
  14. Changing Locations. Before a resident can be moved to a different room or facility, they must be notified and afforded time to appeal. The facility must show that the move is in the resident’s best interest or is necessary to the health of other residents.
  15. Freedom from Interference. All nursing home residents have the right to exercise their rights without interference, coercion or backlash for exercising their rights. Nursing home staff are expected to assist residents in raising concerns and helping to resolve concerns.

This is an overview of nursing home resident’s rights. For a full list of nursing home resident rights, check out the ombudsman’s list.

For more information on nursing home resident’s rights or to report an incident and receive help, visit the long term care ombudsman’s office.


ElderLawAnswers. “The Rights of Nursing Home Residents” (Accessed November 29, 2019)

National Consumer Voice. “Nursing Home Resident’s Rights.” (Accessed November 29, 2019)

National Consumer Voice.National Ombudsman Reporting System” (Accessed November 29, 2019)

Suggested keywords: Nursing Home Resident’s Rights, rights as a nursing home resident

Caring for Aging Parents

Caring for Your Aging Parents – Top 5 Questions and Answers

Caring for aging parents can be stressful. It’s a new experience, and one that you’re not always prepared for. The good news is that there are plenty of resources out there to help you navigate this new chapter in your life. To help get the process started, we’ve curated the top 5 questions that people have about caring for an aging loved one and have provided answers to those burning questions.

Question #1 – How do I ensure their legal affairs are in order?

No one likes to think about, much less talk, about the end of their lives. Unfortunately, burying your head in the sand can lead to costly and frustrating situations, once your loved one has passed. Of course, coming out and asking if your parents have an estate-plan in place may not be the most tactful approach. Consider these icebreakers to get a conversation started:

  • “Bob and I just met with our estate planning attorney last week to update our will. Do you and dad have an estate plan in place?”
  • “I was so troubled to hear that Uncle Harry passed and left Aunt Hilary with such a financial mess. Do you think you and mom have your affairs, so that doesn’t happen to one of you?”
  • “We just sent Jenny off to college and our attorney recommended a HIPAA release and power of attorney, just in case something happens to her and we need to step in. Do you have a power of attorney?”

Question #2 – How can I gain access to their health information?

It’s not uncommon for parents to withhold healthcare information from their children. This is often because they don’t want to worry their adult children or grandchildren. It may also be because they don’t want to admit that they have a serious healthcare issue. Sometimes, this lack of disclosure can lead to lapses in care.

If you believe you need access to your parents’ medical records, you have a few options.

  • Go to the doctor with your parents. Ask questions.
  • Ask your parents to make you their personal representative for healthcare matters.
  • Ask your parents to request in writing that medical records be sent to you.

If your parent is incapacitated and unable to give consent, the healthcare provider may share personal healthcare information, if they believe that disclosure is in your parent’s best interest.

Question #3 – Is it time to move them to a care home?

When the family home becomes unsafe for one or both of your aging parents, it may be time to consider some sort of alternative arrangement. Nursing homes are not the only alternatives, however. You might consider an incremental approach that includes things like:

  • In-home Care
  • Senior Daycare
  • Assisted Living Communities
  • Additional Dwelling Units

Discuss these options with your parents and other family members to determine what is best for the whole family.

Question #4 – Should they be driving?

Driving is one of the most important activities to one’s independence. Losing the ability to drive is naturally one of aging people’s top fears. Therefore, of course, you want to let them drive as long as it is safe for them to do so. Once reflexes begin to slow, flexibility declines, hearing levels decrease and peripheral vision narrows, it’s time to start assessing the safety of their driving.

How do you assess their abilities? Take a drive with them. See how they do with highways, traffic, driving at night and during inclement weather. It may not be that they need to give up driving all at once. Perhaps night driving becomes a problem at first. If that’s the case, ask them to agree to let you drive at night.

Question #5 – Am I partnering—or parenting my parents?

Often, when adult children are faced with caring for their parents, the go-to position is one of “parent.” It may be one you’re naturally disposed to, because you have children of your own. It could also be that you’re simply mirroring the role your parents played with you. While natural, this may not be the best approach, because your parents may perceive this new scenario as you taking their independence from them.

Instead of dictating terms and telling them how it’s going to be, reframe your roles from parent-child to partnership. Just because they may be lower on energy or losing memory function, doesn’t mean they can’t make decisions. Talk to them like the adults they are, making sure that each of you is maintaining boundaries and autonomy. You may find them more receptive to your help, which will make things much easier in the long run.


The Healthy. “8 Questions You Must Ask to Keep Your Aging Parents Safe and Healthy” (Accessed November 29, 2019) “Under HIPAA, when can a family member of an individual access the individual’s PHI from a health care provider or health plan?” (Accessed November 29, 2019)

Suggested keywords: caring for aging parents, questions for adult children of aging parents

Guardianship Hearing

Top 6 Questions (and Answers) about Conservatorships and Guardianships

What is a guardian?

When someone becomes incapacitated due to illness, injury or disability, the court appoints a guardian to handle healthcare and certain non-financial decisions for that person. A guardian can be anyone over the age of 18, but must also be able to show that they are qualified to make these decisions for their loved one.  A guardian is not necessarily the person who is the caregiver over the incapacitated individual.

What is a conservator?

A conservator is appointed by the court to make financial decisions for an incapacitated person. In some states, those who are appointed “conservator of the estate” are those who make financial decisions. Those who are appointed “conservator of the person” handle the same issues as a “guardian.” Conservators can be expensive, as is the process to obtain one. There is also the potential that the incapacitated individual may be taken advantage of. To avoid a conservatorship, designate a power of attorney for your financial and medical care.

Does my elderly loved one need a guardian?

If your family member is unable to make healthcare decisions on her own, due to an injury following an accident, an illness, or disability, and she has not designated a healthcare power of attorney, she will need a guardian.

When is a conservator more appropriate than a guardian?

In some cases, someone may be perfectly capable of making her own healthcare decisions, but are unable to manage her finances. In this case, a conservator would be more appropriate. If an individual cannot make financial or healthcare decisions, both may be appropriate.

Who does the court appoint as guardian or conservator?

A court will appoint the person it deems most competent to fill the role of conservator or guardian. In general, the person must be over the age of 18. The court’s first choice is a spouse, or other close family member. If none of those is available or is unwilling to serve, then they may consider extended family or friends. If those are unwilling or unavailable, then the court will appoint a neutral third party, such as an attorney, to act as conservator or guardian.

How do I relinquish guardianship over my wife?

To relinquish guardianship over any loved one, you must go to court and petition to do so. It is best if you have someone else in mind to take over when you submit your petition, to ensure your loved one’s needs are met.


ElderLawAnswers. (Accessed November 29, 2019) (Accessed November 29, 2019)

Suggested Keywords: conservatorship, guardianship

Taxing Your 401(k)

How Will My 401(k) Be Taxed When I Retire?

For most individuals and with most 401(k)s, distributions are taxed as ordinary income. However, the tax burden varies by the type of 401(k) you have and by how and when you withdraw funds.

Investopedia’s recent article, “How Is Your 401(k) Taxed When You Retire?” explains that distributions from a regular, or traditional, 401(k) are fairly simple in their tax treatment. Your contributions to the plan were paid with pre-tax dollars (taxes were taken “off the top” of your gross salary), which reduces your taxable earned income and the income taxes you paid at that time. Because of that deferral, taxes become due on the 401(k) funds, once the distributions start.

These types of distributions from such plans are typically taxed as ordinary income at the rate for your tax bracket in the year in which you make the withdrawal. However, there are a couple of exceptions, including if you were born before 1936 and you take your distribution as a lump sum.  You may then qualify for special tax treatment.

It’s much the same for a traditional IRA. Contributions to traditional IRAs are also made with pre-tax dollars. Therefore, taxes are due, when the money is withdrawn.

Note that Social Security retirement benefits aren’t usually subject to income tax, unless the recipient’s overall annual income exceeds a certain amount. A big 401(k) distribution could push a person’s income over that threshold and cause a large chunk of Social Security benefits to become taxable, when they would’ve been untaxed without the distribution being made.

With a Roth 401(k), the tax situation is different. Like a Roth IRA, the money you contribute to a Roth 401(k) is made with after-tax dollars, so you didn’t get a tax deduction for the contribution at the time. Since you’ve already been taxed on the contributions, it’s unlikely you’ll also be taxed on your distributions, provided your distributions are qualified. For distributions to qualify, the Roth must have sufficiently “aged” (that is, been established) from the time you contributed to it, and you must be old enough to make withdrawals without a penalty. There’s a five-year aging rule and the plan distribution rules to receive tax-free distribution treatment, once you reach the age of 59½.

Unlike the traditional 401(k), you can take distributions of your contributions from the Roth variety at any time without penalty. The earnings, however, still need to be reported on your tax return, as does the entire distribution. Like the traditional 401(k), the terms of Roth 401(k)s say that required minimum distributions (RMDs) must start by age 70½ (unlike Roth IRAs).

However, your Roth 401(k) isn’t completely in the clear tax-wise, because if your employer matches your contributions to a Roth, that part of the money is considered to be made with pre-tax dollars. Therefore, you’ll have to pay taxes on those contributions when you take distributions, and they’re taxed as ordinary income.

For certain taxpayers, other strategies for retirement accounts may give you a reduction in the tax bite. Some companies reward employees with stock, and frequently encourage them to hold those investments within 401(k)s or other retirement accounts. Although this has the possibility for disadvantages, its potential benefits can include more favorable tax treatment. Employer stock held in the 401(k) can be eligible for net unrealized appreciation treatment. This means that the growth of the stock above the basis is treated to capital gain rates, not ordinary income. This can be a big tax savings.

Like many other retirement decisions, the choice between Roth and regular accounts will depend on individual factors like your age, income, tax bracket and domestic status.

Reference: Investopedia (November 20, 2019) “How Is Your 401(k) Taxed When You Retire?”

Suggested Key Terms: Tax Planning, Financial Planning, Retirement Planning, Required Minimum Distribution (RMD), Social Security, Roth IRA, 401(k)

Silver Tsunami

Careful–the Silver Tsunami is Coming!

Approximately one in three homes in the U.S. is owned by someone who is 60 and older. As these millions of boomers decide it’s time to sell their homes and move to another location or to a retirement community, that will have an impact on housing markets, says the article from Market Watch “These housing markets will feel the biggest impact from the ‘Silver Tsunami.’”

In the ten years between 2007-2017, around 730,000 homes that had been owned by seniors went on the market every year. That number is expected to grow enormously over the next few decades. A news analysis from Zillow says that as many as 920,000 homes will go on the market between 2017-2027.  In the ten years after that, the figure may go as high as 1.17 million homes per year.

In total, says Zillow, almost a third of currently owner-occupied homes, around 20 million properties, will go on sale as the direct result of a boomers dying or deciding to move to a smaller home or retirement facility.

The wave won’t hit all at once, and it won’t strike all markets equally.

The biggest impact is expected to be in the Tampa-St. Petersburg-Clearwater metropolitan area in Florida. The Tucson, Arizona area is next in line, with the Miami-Ft. Lauderdale-Port Saint Lucie and Orlando metro areas following.

At the far end of the spectrum, Salt Lake City, Utah, is expected to see the smallest impact from the Silver Tsunami. Less than 20% of homes there are expected to go up for sale, because of being owned by aging boomers.

A few other cities are expected to escape this trend with little impact. They include Austin, Houston, and Dallas, all in Texas.

In other cities, there are micro-neighborhoods that will feel the impact within cities. For instance, in greater Phoenix, all will be well. However, in the towns of El Mirage or Sun City, nearly two-thirds of all homes will be on the market, as they are mainly retirement communities.

Those who are planning to relocate for retirement may want to keep the Silver Tsunami in mind, if their retirement finances depend upon the value of their homes.

Reference: Market Watch (December 3, 2019) “These housing markets will feel the biggest impact from the ‘Silver Tsunami’”

Suggested Key Terms: Silver Tsunami, Retirement Communities, Home Values, Boomers

If I Roll All My IRA Money to a Roth, Will I Forfeit Some Tax Benefits?

Rolling over all of your assets from a traditional IRA to a Roth IRA can mean tax-free income down the road. However, remember that you’ll also pay taxes on the amount moved. That means there will be no future opportunity to reduce your tax rate further.

CNBC’s recent article, “Moving all your IRA money to a Roth means losing some tax benefits,” says that those lost tax benefits generally relate to medical expenses, charitable contributions and business losses. In contrast, if you leave too much in the IRA, the result may not be good. You may have higher required minimum distributions and taxes.

Roth IRAs grow tax-free and withdrawals generally are also untaxed. They also have no lifetime required minimum distributions, or RMDs. However, traditional IRAs have some potential tax benefits that are gone for good, once the money is moved.

The primary concept in managing taxes in retirement is that you want to get as much money out of your accounts at the lowest possible cost. When you roll over money from a traditional IRA to a Roth, the amount moved is taxed as ordinary income. As a result, you should complete the rollover when you’re in as low a tax bracket as possible. This means tax-free income available down the road, but it also means you’ll have already paid taxes on the rollover. Thus, there’s no opportunity to reduce your rate further. However, if you leave too much in the IRA, the result may not be good. If you think that you might have these future expenses, then it might make sense to keep money in the traditional IRA.

Medical expenses. These are usually a major expense for older Americans and that’s not including the cost of long-term care. However, a tax break for medical expenses is one of the few remaining deductions available to individuals, since the new tax law in 2018. It’s limited to the amount that exceeds 10% of your adjusted gross income and you must itemize your deductions to take advantage of it. However, those with high medical bills can potentially reduce their taxes by applying it. To take the deduction, you must have taxable income to weigh it against. So, if much of your income is coming from a Roth IRA tax-free, you could be restricted in whether you can take advantage of the break. If you took money from an IRA (whose withdrawals are taxed as ordinary income) to cover those health costs, you could use the medical deduction against that withdrawal. This could result in paying less in taxes than what you had paid by rolling that money to a Roth.

Qualified charitable distributions. If you give money to charity each year, keeping money in your traditional IRA to make those donations could be wise, because contributions made through qualified charitable distributions—funds sent directly to the charity from a traditional IRA—are excluded from your taxable income. However, the tax break for charitable contributions can only be used if you itemize your deductions, and generally, a deduction isn’t as valuable as an income exclusion.

Note that this strategy is only available to IRA owners and beneficiaries who are age 70½ or older. Since that is the age when RMDs kick in, the move could reduce your tax liability on the RMD to zero. If your RMD is $5,000, but you give $5,000 to charity anyway, do the qualified charitable distribution, and you don’t have to pick up any of the income.

Business losses. These can only be claimed on your tax return, if you have income to claim them against.

General tax considerations. No matter your overall income, any amount that falls into each of seven defined brackets is taxed at a specific rate. Therefore, the more income you can get taxed at those lower rates, the better. If you could leave some money in the IRA to soak up some of those lower tax rates in the future, you may pay less in taxes on the money than if you converted it.

The current tax brackets and rates will go back to pre-2018 levels at the end of 2025, unless Congress takes action before that time. Therefore, while tax rates are low now, odds are good that they’ll be higher after 2025.

Reference: CNBC (November 27, 2019) “Moving all your IRA money to a Roth means losing some tax benefits”

Suggested Key Terms: Tax Planning, Financial Planning, Probate Attorney, IRA, Roth Conversion, Required Minimum Distribution (RMD), Charitable Donation, Qualified Charitable Distribution

Share your estate plan

Share Your Estate Plan Now to Protect Your Family When You Are Gone

If one child will receive more than his siblings, even though his need is obviously greater, will that shared info create fighting between the children? And should children even have advance knowledge that they are going to receive an inheritance? These are some of the questions examined in the article “Disclosing estate plans in advance can save strife later” from The Indiana Lawyer. In most situations, advance discussions between family members are better to ensure family harmony.

Many estate planning attorneys have the “fair does not always mean equal” discussion with their clients. For some families, there is one child who is in dire need, while the others have prospered and don’t really need help. Maybe one child has special needs, or just hasn’t been as successful in life. In other cases, one child has already received substantial property from the parents, so no portion of the estate will be left to them. Regardless of the circumstances, which vary widely, having a frank discussion with all of the children is better than a series of surprises.

Research from the Federal Reserve Board shows that more than half of any given inheritance equals $50,000 or less, and more than 80% of all inheritances are less than $250,000.

With only half of what most people inherit being generally used to invest or pay down debt, most of these inheritances are spent, invested, or donated.

Regardless of the size of the inheritance, most parents expect that the beneficiaries of their estate will protect and preserve their legacy and use the money wisely. That is not always the case. If the parents want heirs to be careful with inheritances, they need to have a plan that will prepare heirs to act as stewards of their inheritances. The plan may be as simple as a series of conversations about saving and investing, or making charitable donations. It might also be complex, like meeting with the parent’s financial advisor and estate planning attorney and discussing wealth transfer and the potential to grow the wealth for another generation.

Families with larger estates often involve their children in annual gifting to get them used to the experience of receiving significant assets and learning how to manage these gifts. This has the added impact of allowing the parents to see how their children will respond to windfalls, which may guide how they distribute wealth in their estate plan. If one child is a repeat spendthrift, for instance, a trust may be a better way to pass the wealth to the child, with a trustee who can determine when they receive assets.

Families who have worked hard to leave their children with an inheritance, regardless of the size, should prepare their children by teaching them, through the parent’s actions, how their values impact their wealth, and how to manage it for themselves and future generations.

Reference: The Indiana Lawyer (October 16, 2019) “Disclosing estate plans in advance can save strife later”

Suggested Key Terms: Inheritance, Legacy, Wealth Transfer, Gifting

Couple discussing their retirement

Now That I’ve Finally Retired, How Do I Manage My Retirement Funds?

A retirement plan is not just funding your retirement, but figuring out how to manage your funds while you are working and when at long last you finally do retire, says the article “What do I do with my retirement plan when I retire?” from the Shreveport Times. You need a retirement plan while you are working to know how funds will be spent, which will impact how you should be saving and investing.

There are four strategic functions of money in retirement. If you know what they are, you’ll be able to do a better job of saving.

When you stop working, your income from work does too. Unless you are one of the few Americans retiring with a pension, it will be up to you to translate retirement assets into retirement income. Your first thought might be simply to start with taking out just a little bit, and live on that as best you can. Nope, that’s not a plan. The first question is: what’s is enough to live on, and the second—how long will it last?

Until those questions are answered, the other three can’t even begin to be addressed. Retirement income planning is something that many people do with professionals, because it’s not easy. This is the difficult place, where life planning and money planning meet. How long will you live? No one knows. How long will your assets be able to produce the income you need? Hard to know one without knowing the other. However, there are still ways to plan, so you can enjoy your retirement.

What’s your level of liquidity? These are things that you own that are not cash but can be turned into cash. Money in a checking account? 100% liquid. Funds in investment accounts are fairly liquid, but not as much as cash. Real estate is not liquid, unless you are in a booming market. What about any small business that you own? Probably not as liquid as you think.

There’s also something called “technical liquidity” and “practical liquidity.” Let’s say you are taking all of the interest and dividend interest from your investments but decide you need $50,000. What happens if you take that $50,000 from your investments? The interest and dividends that were being created by that sum are no longer being generated.

Contingencies are the big unexpected costs. The biggest one faced by retirees is long-term care. People underestimate this cost all the time. It’s not just the cost of a nursing home, although that is a huge cost. What about health that declines slowly, over an extended period of time? There will be caregivers who need to be paid, and care services. That can reach $10,000 a month easily in most states.

Legacies are another consideration. If you want to leave behind something for your heirs, or want to fund a cause or service that you are passionate about, will you build that into your retirement funds or your estate plan?

Reference: Shreveport Times (November 30, 2019) “What do I do with my retirement plan when I retire?”

Suggested Key Terms: Retirement Savings, Contingencies, Legacies, Investments, Liquidity, Pensions

Stethoscope chestpiece on a calculator

The Medicaid Medically Needy “Spend-Down Program” – What You Need to Know

If you’ve been denied Medicaid benefits because you have too many assets or too high an income, don’t give up. There are available programs that may enable you to qualify for Medicaid benefits, despite this setback. Each state may offer different programs, and the Affordable Care Act (ACA) has added new ways to obtain coverage. This article addresses the “spend down program” offered in every state.

Medicaid Spend-Down Program – The Basics

To qualify for Medicaid benefits, your income and assets may not exceed a certain amount set by law. If these items do exceed the legal limits, you may still qualify after a spend-down period. The medically needy spend-down program helps individuals over the age of 65, and some younger individuals with disabilities. To be eligible for this program, you must not be receiving public financial assistance.

Exempt & Non-Exempt Assets

It is not necessary to sell off everything you own to qualify for the spend-down program. You may keep a certain amount of “exempt assets,” such as the home you live in, your car (used for transportation), household furniture, clothes, jewelry and other personal items. None of these assets affect your eligibility, regardless of their value (unless you have high equity, say $1 million in an asset, in which case you may need to spend that down).

Non-exempt assets, on the other hand, do affect your eligibility for the spend-down program. These assets include bank accounts, stocks, investments, and cash over $2,000 for an individual or $3,000 for a married couple.

Amount of Income You Can Have to Apply

It does not matter how much income you have when you apply. The more income you have, though, the more medical expenses you must incur before your coverage can start. The way you spend down this income is by spending it on medical expenses, until you reach the income requirements for Medicaid. Interestingly, you just need to incur medical costs. You don’t have to actually pay them.

In addition, you can pay down accrued debt to spend down your income. Therefore, paying down credit card bills, car payments, or mortgage debt can count towards your spend down. Another tactic you can use, is to pay excess monthly amounts on old medical bills.

Seeking Professional Assistance

Medicaid programs are different in each state, and the laws change frequently. If done wrong, you could end up incurring penalties instead of obtaining benefits. It may be a good idea to enlist the help of a Medicaid specialist or elder law attorney to walk you through the process in a way that will avoid these types of penalties.


National Council on Aging. “Benefits Checkup” (Accessed November 28, 2019)

U.S. News and World Report. “How a Medicaid Spend Down Works.” (Accessed 28, 2019)

Suggested Key Terms: Medicaid spend down, medically needy spend down, Medicaid eligibility