Five Key Components to Aging in Place – Financial and Legal Security

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Sally Smith:  Welcome to Age to Age.  I’m Sally Smith.  Let’s talk.  With us today is Paul Franklin, the very knowledgeable Chairman of Aging in Place, an organization dedicated to helping people stay in their own homes.  And, as it says, age in place, if that is what they want.  It’s a fantastic organization with thirty-three pages of resources, and growing every day.  It’s been fun to hear about, Paul.


One of the things that I’ve loved reading in your literature are these five points, Aging in Place connections, that are sort of the five major points that you feel need to be covered:  healthy living, livable homes, financial and legal, supportive relationships, and the all important, transportation.  We’ve talked about healthy living and livable homes, I’d like to know your capsule version, although I know it’s a very complicated subject and needs more time at a later date, what are the key points of financial and legal health?


Paul Franklin:  Great question.  You need to be thinking about, where are the resources going to come from in order to pay for a lot of the services that you’re going to need as you age in place?  I mean, if you want to remodel your house, for example, to accommodate your change in circumstances, or maybe some members of the family, or other people, that come and visit you, and your home is really not accessible like it should be. 


You have to spend some resources sometimes in order to accommodate those kinds of changes.  And, you know, some of that can be rather expensive when you start moving walls and putting in lifts, and things of that nature.  So it’s important to think about your financial situation and try to figure out where the money is going to come from.  For example, if something happens and you need care in the home, do you have resources that you can tap into to pay for home healthcare, people that could come in and help you dress and bathe, and feed, and that sort of thing, if you needed it?


It’s one of those things that you have to think about in advance and plan for.  If you think about it in advance, you can plan for it through long-term care insurance, which, many times today, will cover homecare.  It will cover assisted living, and it will cover skilled care.  In other words, it’s a pool of money that you could tap into to utilize for any of those needs that you might have. 


Another thing that you might do, to tap into resources, let’s say that you’re not eligible for insurance, let’s say you’re uninsurable for whatever reason, you may have to tap into the asset that’s in your home, or the equity there, in terms of a reverse mortgage.  This is a federal housing administration program that was signed by President Reagan in 1988, and the first ones went into effect in 1989.  It came about because seniors said, look, we have paid for our home but, because of increased taxes and home owner’s insurance, and upkeep on the home, plus medication, we’re being driven out of our homes and we want to stay here, what can you do to help?  So, this was the answer for people to try to help tap into some of that equity to use it for their current needs. 


Sally Smith:  So, in that particular scenario, you get a loan on your house and, at the end of the day, you either come up with the money to pay that back, in some form or fashion, or they get the house?  You get to live there, but you’re really kind of, it’s like rent-to-buy, I mean, they’re going to end up with the house?


Paul Franklin:  You know, that’s a misconception a lot of people have.  It’s really no different than a forward mortgage.  In other words, there’s a mortgage on the house, and it can be paid back, you know, at the end of the day, when you sell the home, or whatever.  But the title never changes.  People think that you give up title to the home, but that’s not the case. 


Sally Smith:  So, the only way you give up title on the home is if you default, and that’s basically the backup mode, just like it is for a regular mortgage?


Paul Franklin:  Right, except for the reverse mortgage, of course, there are no payments.  The whole idea is the bank is paying you.  There are no payments, so there’s no way that you can really default, unless you violate one of the conditions, which, basically, requires you to pay your property taxes and your home owner’s insurance, and that you live in your home.  Those are the three requirements.


There are some other things that I think are very important for people that we see all the time, and that is having their legal documents intact.  By that, I’m talking about a medical directive, making sure that the things that happen to you, if you do need care in a hospital, everyone is aware of what your wishes are.  The second thing that I think is very important, of course, is a will, so that you know about what’s going to happen with your estate.  I can assure you, I’ve run into many cases where people didn’t have a will and, guess what, the state has one for you.


Sally Smith:  If you can’t decide what to do, they will, right?


Paul Franklin:  That’s exactly right.  And it may not be anywhere close to what you had in mind, so it’s very important to have a will.  The other thing that’s really important is durable power of attorney.  Let’s say, if you’re incapacitated, you haven’t died but you’re incapacitated, your power of attorney can come and help make sure that the bills get paid and that your financial life stays intact while you’re incapacitated.  So, those are three key documents that everyone needs.


Sally Smith:  Well, I think it’s interesting, too, to realize that they sound academic and overwhelming, when you think about it, but they’re actually very simple to achieve.  And the thing that’s interesting to me is they’re not all that expensive, and it just saves untold wear, tear and money.  And, in the case of my father, when he began to slip, and then mother was already slipping too, those documents were already there.  They had been made.  They just sat there.  Nobody needed them for years, but they sat there.  And the day we did need them, it wasn’t like we suddenly had to figure out how to get them and how to make it happen when they were no longer playing from a full deck.  It’s like an ounce of prevention is worth a pound of cure. 


Our 18-year-old has assigned healthcare power of attorney, because once you’re 18, your mother cannot say, hey, you know, they’re on life support and I want to unplug it.  Those things, they’re so easy to go ahead and get, and they last a lifetime, unless you want to change them, and that’s not that difficult.


Paul Franklin:  Look, the bottom line is, really, it gives you options.  If you have these things in place, you have a lot of options available to you.  Plus, it takes the worry out.  You know, you’ve planned, so you know what’s going to happen.  If certain situations take place, you’re prepared, and that gives you a lot of peace of mind.


Sally Smith:  You know, another thing you mentioned, being uninsurable, I’ve heard of some people who are uninsurable, they have, basically, self-insured.  And, by that, I mean that they have recognized that at some point that asset might have to be sold.  They might not love it, but that asset may have to be sold.  Just thinking ahead to scenarios can sometimes ease the way.  Now, where does the government come in here, Medicaid, Medicare, all that?


Paul Franklin:  Basically, Medicaid, of course, comes in if you’re broke.  That’s, basically, what the situation has to be.  You have to, basically, not have any financial resources in order to qualify for Medicaid.  It’s basically welfare.  Medicare, of course, is the health insurance that you have.  And that’s something that we all participate in at age 65.  And I would say that it’s important for seniors to also have Medicare supplements, something to back up and to supplement what Medicare doesn’t pay for.


Sally Smith:  So, it’s 65, you start?


Paul Franklin:  Medicare, yeah.


Sally Smith:  So, even if you’re uninsurable, you still get Medicare?


Paul Franklin:  Yeah, Medicare, at age 65, you’re going to get it, right.


Sally Smith:  Yeah.  Wow.  And there are people in your resources, and I know we’ve spoken to a gentleman, that focus on the legal documents for people that are making this kind of decision, just as geriatric doctors focus on aging, older, patients? This is well documented, and you can find these people right here in Charleston?


Paul Franklin:  There’s a specialty called elder law.


Sally Smith:  Elder law?


Paul Franklin:  Elder law is the specialty, and there are several good elder law attorneys in the area that we would certainly recommend that people go see.


Sally Smith:  We’ve had one, Dennis Christenson.


Paul Franklin:  Yes.


Sally Smith:  He spoke in our podcast about these certain documents and, the all important where you keep them and who gets them, and all that sort of thing.  But, no question, this is just something that’s so pivotal to a really smart plan.  So, I thank you for going over that with us, Paul.


Paul Franklin:  My pleasure.


Sally Smith:  And thanks to all of our listeners for joining us today.  We welcome your suggestions.  This is Sally Smith, Age to Age, saying good-bye and wishing you courage and joy on your journey.  We are all connected.


If you enjoy listening to Sally Smith, you can buy her book, The Circle.  It’s the story of how she personally responded to her mother’s journey with Alzheimer’s disease.  It’s a wonderful gift of hope for anyone with a parent with dementia.  Just click on Sally Smith’s name under the Health Professionals tab on the Podcast home page.  All profits support research at the Center on Aging.  Thanks.

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