Inflation and estate and long-term care planning

If you spent $90,000, what would you like to show for it? There was a time when that would get you a mighty fine house. In the last six months, I've heard of people paying close to $90,000 for a pickup truck. The first time I heard someone say they'd paid about $90,000 for a pickup, I assumed I heard wrong or they were exaggerating. I then heard someone else talk about paying about that much for a truck. I just looked on the internet and saw a 2022 GMC Sierra Denali Ultimate pickup truck for sale for $80,395. I couldn't find a pickup truck for $90,000 for sale on the internet, although I didn't look too long, but I sure thought my acquaintance said that is what he paid. By the way, the picture of the GMC pickup truck in the ad didn't look much like my dad's old 3-speed on the column pickup I learned to drive on. And boy, did I always get a big smile on my face when dad would let me drive that truck to high school! I don't know how much dad paid for that truck, but I suspect it was just a few thousand dollars. Certainly, nowhere close to $90,000! If you spent $255,000, what would you like to show for it? If you spent $420,000, what would you like to show for it? Some of you are probably saying, "a house. Maybe a boat." Maybe some of you are saying, "some diplomas for your grandchildren." I'd be surprised if any of you said a stay in a nursing home for two-and-a-half years. Did you know that, in our area, some of the nursing homes cost about $8,500 per month per person? That equals $255,000 for a two-and-a-half-year stay. There is nothing magic about that length of stay. I have seen statistics that show the average nursing home stay is a bit longer than that and some that show an average stay that is shorter. Most statistics show women stay in the nursing home longer than men and single people longer than married. This makes sense to me as women generally live longer than men. And for married couples, the healthier spouse generally helps keep the sicker spouse out of the nursing home for as long as they can. A friend of mine who works at an estate planning and elder law firm in the Columbus area was telling me about a nursing home that was charging around $9,500 per month in December of 2021 and that in January of this year, the nursing home raised its rates to about $14,000 per month. That would equal $420,000 for a two-and-a-half-year stay. I asked my friend, Hope, what had changed. Did the nursing home get sold? Did they remodel? What happened? She said nothing had changed as far as she knew. Her suspicion was that the cost of finding and keeping good employees had gone up and the nursing home had raised rates to be able to afford to pay their employees enough to keep them so they could take care of their residents. We help lots of families that have loved ones in the nursing home and I'm not aware of any with rates near that much in our area. We still have some around $6,000 per month and some at about $10,000 a month and a lot in between. Should you be worried about these costs? Well, instead of worrying, we like to see families have a plan. I know some people never go to a nursing home. But some are there for many, many years. How much will nursing home care cost in the future? I don't know. But I suspect a lot more than now. We had a couple of families in the last year or so where both the husband and wife went into a nursing home at the same time. So, take all of the numbers I mentioned above and double them! I've also been watching as inflation has caused probate costs to go up. One of the main things we help families with when it comes to probate is helping when a house goes through probate. As you likely know, house prices have gone up a lot in the last year or so. As the house prices rise, the probate costs have gone up as well. People regularly tell me they don't want to leave a mess for the kids and they want to keep things out of probate. These are all goals that can be achieved so long as the person doing the planning is still alive and still competent. Once the person has passed, it's too late to do probate avoidance planning. By the way, if this article is making you think you should put your home in your kids' names, think again. I wrote an article a year or so ago that discussed the bad things that can happen to great kids that could cause you to lose your home. Also, gifting the home often creates a ticking tax time bomb. There are better ways to avoid probate and to protect homes from nursing home costs. If you are concerned about the above, my advice to you is to create the plan now that you want in place for you in the future.