Maybe your parents worked hard for years to build a family business that has grown beyond anything they thought possible, and they have been able to provide very nicely for you and your siblings. They have been open with everyone from the beginning about who stands to inherit what. For instance, maybe they slated you to get their house, while your siblings split ownership of the family business.
So far, so good, right? Hopefully so, but it could be that you and your siblings will never see anything if your parents skip some precautions to ensure the carrying out of their wishes. Their estate could be at risk of going up in smoke to pay for long-term nursing care, medical bills and much more. One big risk factor is a lack of well-thought-out estate planning.
Lack of comprehensive estate planning
Having a will is not enough when it comes to ensuring that the wealth stays in the family. For example, long-term care options such as assisted living and nursing homes can be prohibitively expensive, as much as $253 a day in some cases and almost $100,000 a year. If your parents do not have estate planning and/or long-term care insurance, they will have to start out footing this bill themselves. Once their assets dip below a certain level, programs such as Medicaid can help pay for the huge majority of their care. However, the estate has to be down to virtually nothing by the time this happens.
Estate planning would ideally take place at least five years before any long-term care needs occur. This is because Medicaid has a lookback period of five years in which your parents can receive penalties for making any gifts, asset transfers and so on to you or others before going into long-term care. With smart estate planning and enough time, they can continue to live in their home until it comes time to leave and keep their estate intact to pass on. The “good” news, such as it is: Even if your parents’ estate is already being depleted to help pay for their care, there are likely still a few options to help preserve some assets, but it is important to move quickly.