Spending vs Leaving a Large Estate

[Cayman]

Quote:

Originally Posted by Amethyst Consider the high cost of long-term care, especially dementia care. That should scare anybody into hanging onto their money.

Close relative in their 70s is paying more than $110k/yr to live in a memory care facility. The spouse continues to live (separately) in the home they've had for years. No LTC insurance, They self fund. Thankfully it's not a financial concern for them, but it would be had they blown their dough while healthy and young.

[Sunset]

Quote:

Originally Posted by Amethyst Consider the high cost of long-term care, especially dementia care. That should scare anybody into hanging onto their money.

I'm busy looking at nursing home options for Dad.

One we toured last week was $123K entrance fee, then around $75K/yr for assisted living, and $200K/yr for nursing care.
He might need to go straight to nursing care.
At $200K/yr that adds up in 5 yr

[Bamaman]

Quote:

Originally Posted by Sunset I'm busy looking at nursing home options for Dad. One we toured last week was $123K entrance fee, then around $75K/yr for assisted living, and $200K/yr for nursing care. He might need to go straight to nursing care. At $200K/yr that adds up in 5 yr

We paid $177K security deposit to put my mother in a very plush CCRC apartment. It was $2,050 a month including 20 meals prepared by a Dutch chef. She ended up needing 24/7 private help @ $12 per hour, when she really needed to be in a nursing home setting. We got back 90% of the $177K at her passing.

Local nursing homes are about $7K a month. It doesn't take long to draw down pretty substantial savings of middle class people. Mom was down to her last $5k cash when she passed.

[Closet_Gamer]

DW had a great aunt who wound up in this spot.

When she was about 90, checks to the whole family started flying fast and furious.
She sent at $5000 to every extended family member down through great nephews/nieces. First gen nephews/nieces got more than that.

Fluctated each year from there, but she burned down the stash in a way that really made her happy and I can tell you really helped a lot of young families (like us). When she passed away there was a tidy final dispursement handled in the same way.

Each check came with a note typed on an old-fashioned type writer.

I think its a great thing to aspire to.

[savory]

Quote:

Originally Posted by pacergal Much can happen in the next 20-25 years. We most likely will not have that much, but more than our kids probably ever imagined. WE plan to continue spending as we wish, and as we feel comfortable, gifting to our kids, and charities as we go. I don't care if our kids inherit more than they think, they have been raised well, I believe, and are pretty good budgeting. If it makes their lives more comfortable, great. You never know what the future holds. If you have concerns about beneficiaries and "lottery syndrome", then give them less percentage and more to charities. Charities can always put money to use, no matter how much or how little.

This is consistent with our approach.

[donheff]

LOL. It is hard to blow that dough. Like Audrey, I take a 3% SWR each year and keep the unspent portion in a pseudo account for gifting and other blow that dough activities. I have tapped it for largish house down payments for DS and DD. Still, we have more than doubled our portfolio in the last 10 years. I'm approaching 73 and DW is 68 so our horizon is shortening. I still find it hard to spend "frivolously." Our oldest grandson is 7 years from college, three more grandkids will follow in the years after that. As long as the market keeps delivering until then, I expect to ramp up gifting significantly to help the kids with those expenses.

[jollystomper]

What we leave to our children is secondary to spending and enjoying life today, as well as setting aside for expenses to minimize the impact on our children (such as LTC costs).

We are 63 so we *might* have 25-30 years, but tomorrow is guaranteed for no one. So we spend to enjoy and make comfortable whatever time we have. Part of that enjoyment will be "small" gifting to children (as well as to charity) as needed and as we desire.

I understand that past performance is not indicative of future results, but my almost 3 years of retirement has increased our view that, despite the ups and downs, on our path, even with a few surprises, we are not going to run out of money.

[kcowan]

We have been at it for 19 years with perhaps another 19 to go. We have achieved a balance with more emphasis on blowing the dough. It has surprised some people but the charities and heirs keep quiet about it. Some of the charities have plaques or tiles but they are inconspicuous.

We are still accumulating because of an 85/15 allocation. We think The Fed rate will stay low because of post-pandemic inflation and that should continue to fuel the markets?

[Chuckanut]

Quote:

Originally Posted by Gumby It's a shame, because I have the money and don't mind spending it. And it's not just carpenters. I've had the same problems occur with plumbers, electricians, tree services and more. You name it, they apparently have no real interest in doing it.

It's the over emphasis on college in the school systems that is part of the problem. People who can make things and fix things are in high demand and often earn more than many college graduates. But, thanks to many state legislatures that demanded 'higher standards' the schools have to assume everybody is college bound. So, we will teach our children all about quadratic equations in high school, but nothing about how to hook up two switches to the same light fixture. Or repair a cracked pipe that froze. Or hang a new door onto your old shed.

[RunningBum]

Quote:

Originally Posted by OldShooter You're a trusts & estates specialist attorney? I'm not. All I know is that there can be some flexibility in CRTs. It is not for me to say that a CRT is suitable or not suitable to a particular situation. That's the "seek competent advice" piece.

Then why did you suggest looking into it when you clearly don't understand it? The link you provided reinforced my understanding of how they work, and there's not one thing I read that makes me think it helps the OP's dilemma.

[explanade]

Quote:

Originally Posted by Bamaman We paid $177K security deposit to put my mother in a very plush CCRC apartment. It was $2,050 a month including 20 meals prepared by a Dutch chef. She ended up needing 24/7 private help @ $12 per hour, when she really needed to be in a nursing home setting. We got back 90% of the $177K at her passing. Local nursing homes are about $7K a month. It doesn't take long to draw down pretty substantial savings of middle class people. Mom was down to her last $5k cash when she passed.

How does the deposit work, they don't draw the monthly and other costs from it so it's there in case you're unable to pay the monthly and other ongoing costs?


I wonder if the pandemic has changed perceptions of the nursing homes and other facilities for senior care.

Because some of the worst outbreaks occurred in these places and it's largely staff who didn't seem to care risking infecting the elders there.

There was one case where some nursing home facilities in Washington State went to some large wedding and they infected dozens of people across more than one facility.

This occurred well into the pandemic, when we knew large gatherings were a problem and how vulnerable seniors in nursing homes were.

In fact I believe the wedding party was breaking the state restrictions at the time on gatherings.

[audreyh1]

I think that particular wedding and outbreak was in Maine.

Personally I would feel just as vulnerable with nursing/helper staff taking care of me in my own home. Once you get to a certain age and need others to help you through daily living, you are vulnerable.

I would instead go for a facility with a happy well-trained decently paid staff and low turnover. I imagine nice CCRC type facilities are nearer the top of that list. 2020 can certainly give you a history of who handled it well and who didn’t.

[NW-Bound]

Quote:

Originally Posted by Chuckanut It's the over emphasis on college in the school systems that is part of the problem. People who can make things and fix things are in high demand and often earn more than many college graduates. But, thanks to many state legislatures that demanded 'higher standards' the schools have to assume everybody is college bound. So, we will teach our children all about quadratic equations in high school, but nothing about how to hook up two switches to the same light fixture. Or repair a cracked pipe that froze. Or hang a new door onto your old shed.

To be fair, they did not teach these life skills in school to me either. People developed and acquired survival skills and common sense outside of school. Kids did not have as many distractions as they do now.

Anyway, back on blowing dough by hiring help, I am still doing a lot of things around the house myself, but these are maintenance work or small projects, not back breaking work. I don't go to the gym, or take up heavy exercise or sports. I get my physical exercise from moving about, shoveling dirt, watering and fertilizing plants in the garden, washing and waxing my motorhome, etc... I read that the Provençal people stay fit and gain their longevity from working out in the outdoor, planting and pruning trees. They don't do weight lifting or run the marathon.

Not having anything to blow the dough on, maybe I will leave a lot of money to my kids. Well, I guess my wife will be the one to do that, as it is most likely that she will outlive me.

[daylatedollarshort]

We intentionally try to have low carbon footprint and look for ways to be happy that don't involve consumerism, so our extra will go to our kids and maybe charities. We've really enjoyed early retirement, which makes me happy to help fund that for our kids so they can enjoy it, too. They work pretty hard in their careers and are fairly careful with money, so I don't feel like money we leave them will be wasted. Plus homes are really expensive here, so we're happy to be in a position to consider helping them out when they seem interested in becoming home owners. Plus as others have posted, LTC is pretty expensive in the U.S. and who knows we could live to be over 100 in a care home.

[Ready]

Why do some LTC facilities require huge down payments, like hundreds of thousands of dollars, while others just charge a monthly fee for rent and care? And what happens to those substantial deposits when the person passes?

[marko]

Quote:

Originally Posted by Ready Why do some LTC facilities require huge down payments, like hundreds of thousands of dollars, while others just charge a monthly fee for rent and care? And what happens to those substantial deposits when the person passes?

AFAIK, the down payments are for facilities that offer more than just LTC.

They are intended for healthy, independent 60, 70 and 80 year olds, who live a normal life, come and go as you please; go to FL for the winter for all anyone cares. The down payment is for an on-site 'condo'/apartment and access to amenities like a pool, etc.

Then, as time marches on, you can be moved to an assisted living area with closer supervision and then lastly to a LTC/nursing home arrangement.

At your death, the down payment is returned to your estate.

At least, that's how it was explained to me.

[bbqcoder]

Quote:

Originally Posted by marko AFAIK, the down payments are for facilities that offer more than just LTC.

We were looking to move my Mom into an assisted living facility back in Dec 2020. Looked at places in FL, CT, MD, and MA. Out of the 20 places we checked out, only one place had a large upfront deposit. It was an older facility in the Boston area with lower monthly payments. All of the other facilities had the traditional larger monthly fee. It's my impression that places with a large upfront payment might not have good financial backing as other places.

[explanade]

I thought some facilities, you're actually buying an apt or condo and your heirs will have to sell it, either back to the facility operators or to other occupants of the facility?

[OldShooter]

Quote:

Originally Posted by bbqcoder ... It's my impression that places with a large upfront payment might not have good financial backing as other places.

Before plunking down a bunch of money, I'd suggest pulling and reviewing a D&B reprot. I think most attorneys can get them for less than individuals can, but it looks like worst case a couple hundred $ gets it done: https://www.dnb.com/ca-en/products/f...t-reports.html

When I used to get them they showed liens and judgments as well as estimated or submitted financials. Very illuminating.

[RunningBum]

Quote:

Originally Posted by explanade I thought some facilities, you're actually buying an apt or condo and your heirs will have to sell it, either back to the facility operators or to other occupants of the facility?

That's how it was for my parents at their first retirement place. When they decided to move into another place, they had to sell their existing place to get their money back. It would've been the same had they died living there. Their buy-in was barely six figures. Their second and third (current) places had no upfront fee, or maybe a trivial application or similar fee.

I don't know if that's true of all places where there's an upfront charge. Unless you have no other choice, there's no way I'd recommend moving into a place with a large six figures non-refundable up front charge. If it was a $300K buy in and you lived there 10 years, that works out to $2500 extra per month, and 10 years is probably longer than average.