People are living longer and inheritances are getting smaller


According to the Center for Disease Control, a person’s average life expectancy these days is approximately 78 years. That is a 10 year increase from a life expectancy of only 68 years in 1970, and a 5 year increase from 1990.  That is great news, and all of us hope and pray that these numbers should only increase.

However, with monthly eldercare costs staggering around $3,500-$5,000+ a month (depending where you live and what type of care is being provided), you can see that family inheritances are being diverted to nursing homes and home health aides.

In today’s day and age, a decision about how to care for an elderly parent or family member has real financial ramifications for families and extended families.  No longer is it just about what nursing home has better food, a nicer facility, or a more active social program. It is a real “dollar and cents” financial decision for families, especially when that decision has to be made by children in different economic situations, who might be looking at their shared inheritance in a different light.

For example, a rich child who is not counting on his/her inheritance for upward economic mobility, might want the best care and/or most luxurious nursing home for mom and dad, regardless of the cost (so long as the money is coming from the would-be inheritance).

That rich child, however, may have less well-off siblings who are struggling paycheck-to-paycheck. Unlike the rich child, those siblings might be counting on their inheritance to put them on ” easy” street.  Accordingly, the economic disadvantaged siblings may fight hard to make sure that any eldercare decision also makes the most economic sense to their bottom line. Let’s just say that these conflicts can get very ugly, very fast.  And do yourself a favor, please don’t read this kidding yourself that this won’t happen to you because your kids get along, or they were not raised like that.  Remember, inheritance is poison.  An inheritance will ruin even the best of kids and families.

Further compounding this issue is that many instances of financial abuse of elderly family members arise when a family member (the “family care-giver”) insists that the elderly member live with them to help defer these staggering eldercare costs.  While that might sound great to the family “on paper”, the reality is that this decision can become the most expensive decision your family ever makes.  Because, if that elderly family member becomes a victim of financial exploitation by the family care-giver then say say, “hello” to vexatious litigation, and “good-bye” to your family.

How does this happen? Well, for starters, taking care of an elderly family member is hard work.  Often, the family care-giver finds themselves under-qualified, over-worked, and ill-equipped for the awesome responsibility of the job. Even if the family care-giver is getting paid, that payment may pale in comparison to the resentment they feel from the massive duties and responsibilities that have been thrust upon them.

Unfortunately, what can happen next is that the family care-giver begins to feel entitled to take more than his/her share of the elderly family member’s money.  This can be done through the misuse of  a durable power of attorney, unauthorized withdrawals from joint accounts, misuse of credit cards, unduly influencing estate planning documents, and other forms of elder abuse.  When the other family members finally catch on to what has happened, then you can count on two things likely happening:  1. A complete nuclear melt-down of your family of the highest degree; and 2. Lawyers “inheriting” whatever is left of your inheritance.

Make sure that this does not happen to your family.   Try to take your eldercare decisions out of their hands. Try to have a plan in place long before you need it.  Sit down with your familyand tell them how and where you want to live when the time comes.  Go to your financial adviser and come up with a projected cost for that care. Decide if (and how) you will be able to afford it. Talk to your kids about it. Talk to your wealthier kid(s) if they would help and step forward to pay for your excess care costs–if needed.  Discuss whether that help would cause those wealthier sibling(s) to feel resentment towards the less-wealthy siblings.  Things sometimes can go better if you, as matriarch or patriarch are leading these discussions.

Regardless, however, do not shy away from discussing the cost, fees, and particulars of your eldercare with your family, and make a family plan. Don’t leave these delicate decisions to chance. Because, always remember, inheritance is poison.