As the number of family members providing care for aging parents increases, the solutions to find help with loss of income because of time off from employment for caregiving has become a major concern for many.

The demands on both the time and energy needed to provide the needed care can make it impossible to maintain both a full time job with full time caregiving.

Seeing a need to give support to family caregivers the federal government Administration on Aging created the National Family Caregiver Support Program.

State Area on Aging division manages this program on the state and community level to offer support services that include:

• Information to caregivers about available services;
• Assistance to caregivers in gaining access to supportive services;
• Individual counseling, organization of support groups, and caregiver training to assist caregivers in making decisions and solving problems relating to their roles;
• Respite care to enable caregivers to be temporarily relieved from their care giving responsibilities; and
• Supplemental services, on a limited basis, to complement the care provided by caregivers.

Medicaid Cash & Counseling Program

A Medicaid approved assistance program called Cash & Counseling may be used to provide funds to hire personal care aides as well as purchase items or services, including home modifications that help them live independently.

The PayingForSeniorCare.com website gives the following information about the program:

“For Medicaid eligible seniors, the process begins with an assessment in the home to determine the senior’s home care needs; this includes interviews with caregivers and possibly the senior’s physicians. A determination of how many monthly care hours are required is made. The benefit amount is calculated using that determination and cost of care for that geographic area. This amount can be increased or decreased as the senior’s needs change. A family care giver may need to qualify as a home health aid by the state to receive these funds.”

This program is executed by each individual state Area on Aging Services division. It is a relatively new program and is not yet available in all States. Check with your state Area on Aging Services department for availability.

Using the Veterans Aid and Attendance Pension Benefit

A totally overlooked source of money to pay family caregivers to provide care at home is the Aid and Attendance Pension Benefit. This money is available to veterans who served during a period of war. Pension money is also available to the widows of these veterans. This benefit, under the right circumstances, can provide up to $1,949 a month in additional income to pay family members to provide care at home.

Getting the aid and attendance benefit to pay for family caregivers is not an easy task. This is because there must be a caregiver contract in place, a physician medical evaluation done, income and asset qualifications met and proof of medical expenses provided. Submitting the correct forms and documentation can easily be completed with the help of a VA Accredited Consultant who understands the process.

Long Term Care Insurance Benefit

If the senior being cared for has a long term care insurance policy that covers home care, payment to the care giver from this source could be arranged. Some policies require the care provider to be through a licensed home car agency, but others will pay for individual aides certified as such. This would require some training by the family member to become certified. There are policies that pay a daily benefit amount to the insured to use as they want to pay for their care. Check with a long term care insurance professional about types of policies.

Caregiver Contract

In some cases the senior parent has the funds to pay for care. If a family member is giving care it is very important that a caregiver contract be in place. A signed and dated agreement will outline the services provided as well as the amount of pay for these services. The contract will eliminate questions about what is expected from both parent and caregiver as well as providing a legitimate contract and payment record of services to qualify for Medicaid.

Attorney John L Roberts, in his article titled “Caregiver Contracts that Protect Elders and Their Family Members” states:

“A written Caregiver Contract is a good idea for every family that wants to protect family harmony, and make sure everyone in the family understands how care is being provided to an elder.

The family member who provides care can save an elder from needing nursing home services, and may also protect assets if nursing home care is needed in the future. Elders who want to cover all of these bases must have a written Caregiver Contract. Whenever adult children and other family members are providing valuable care, only a written agreement will protect assets from nursing home care costs and qualify the elder for Medicaid.”

In having the parent pay a family member for caregiving, it will be an employer/employee situation and payroll records must be kept with payroll taxes paid.

This can also be set up by an elder law attorney at the time the contract is done.

Final Note

Taking the time to create the caregiver contract, research the government and state services that are available to caregivers and using community resources will make the family caregiving experience less stressful.

Because the home is the largest asset a couple can keep while still qualifying for Medicaid, it is also usually the main target of estate recovery.

Sidney and Rachel’s Story:
Sidney and Rachel had lived in their home since it was new. They built it just after Sidney got a promotion to regional sales manager for a shoe distributor. Through the years, the house was remodeled twice and expanded to add a loft bedroom. Even when their children were grown with families of their own, they all remained close, with frequent family gatherings for holidays and birthdays.

Sidney and Rachel had paid off the mortgage and two second mortgages before Sidney retired. So in addition to being the center of family life, the house had also become the couple’s biggest asset.

Rachel always hoped the house would remain in the family when she and Sidney were gone. She often talked about leaving it to their oldest son, Mark, who promised that he and his wife would continue the tradition of hosting the family for holidays and birthday dinners. However, as Sidney’s Alzheimer’s disease progressed, Rachel worried that Sidney would need to move into a nursing home. With the high cost of long-term care, Rachel knew their savings wouldn’t last long. Sidney would eventually need to qualify for Medicaid to pay the bills.

Her biggest question was, “Will I lose my home?”

A Common Question Indeed

For a great many people who need Medicaid benefits for long term care, the home makes up most of their life savings.  Often, it’s all a couple has to pass on to their children.

You may not know that the home is an exempt asset according to Medicaid. It continues to be exempt as long as the community spouse lives there.  However, after both the ill spouse and the healthy spouse pass away, the property may no longer be protected.

What Is Estate Recovery?

According to the Omnibus Budget Reconciliation Act of 1993 (OBRA-93), the state has the right to take back whatever it paid for the care of a Medicaid applicant. And because you have to be “broke” to qualify for Medicaid, usually the only property of substantial value that a person on Medicaid is likely to own when they die is their own home. When OBRA-93 was passed, each state established an Estate Recovery Unit (ERU) to go out and find what assets they can take back from those that received Medicaid benefits!

Because the home is the largest asset a couple can keep (while still qualifying for Medicaid), in most states it is also the main target of estate recovery.

After both the community spouse and the ill spouse die, the state’s estate recovery unit has the authority to take just about any property that the Medicaid recipient had their name on.  In most cases, that means going back to the house.

For example, if Sidney dies before Rachel after living in a nursing home for two years and Medicaid has paid the nursing home $3,000 per month, the state will have paid $72,000 for Sidney’s care ($3,000 per month times 24 months). If the family home where Rachel lives is worth $100,000, the state would have a claim for the first $72,000 that comes from the sale of the house.

So, the house is protected while Rachel is alive. However, when she passes, the state may force the sale of the house. Whatever’s left over after Medicaid is paid back ($100,000 minus the $72,000 taken out to repay Medicaid) would go to their children.

A Married Couple Strategy For Protecting The Family Home From Recovery

According to federal law, a married Medicaid applicant is allowed to transfer the home to his or her spouse – without any penalty. Once the transfer is made (meaning the ill spouse no longer has any interest in the house), the community spouse may be able to make some changes to that asset. In some states the community spouse can even give the house away!

That sort of gift, of course, would create a period of Medicaid ineligibility if the community spouse needs nursing home care within the five-year look-back period.

The family home remains one of the most difficult assets to protect because of timing, but there are proven strategies that make it possible to protect the home from Medicaid Recovery.

The Society of Medicaid Planners offers a free download of their report “Medicaid Secrets Revealed by Dan Stemen. The report offers information on qualifying for Nursing Home Medicaid without losing the family home to recovery or spending down your life savings.

The National Care Planning Council provides a resource for long term care planning with educational information and lists of professional elder care service providers.

When Robert and Anne bought their family home thirty years ago, their plan was to live through retirement in this home. They had furnished their home with refurbished antiques acquired from their many trips together. It was one of their cherished antique coffee tables that Robert tripped over, breaking his hip.  Now with his return from the hospital in a wheelchair, the overwhelming task of making their home accessible for Robert’s wheelchair and safe for both of them faced Anne.

Remodeling for wheelchair access, organizing home furnishings and daily living items or downsizing and relocating to a smaller living area are monumental tasks that are many times thrust on senior home owners.  Sometimes the need to do this is brought on by injury or age related illness. Home and yard maintenance can become a daunting chore for even the healthiest of seniors, requiring them to make a downsizing decision.

There is a large and growing industry of specialists who understand these challenges of elderly homeowners and are ready and willing to help with remodeling, organizing or the sale of the home and with the move to a new location.

A professional organizer provides skills in making the home safe and manageable. Relocating furniture, removing hazards such as electrical cords, throw rugs, heavy objects on shelves that might fall are some of the ways they make a home more senior friendly.  They specialize in helping seniors part with items that clutter or have no valued use, so to make rooms less crowded or to make ready for a move to a smaller living space.

Handicap remodeling services and senior safety services offer help in adding wheelchair ramps and widening doorways. Bathrooms are made more accessible and safe, with hand rails, walk-in bath facilities and easier access to toilets.

If moving to a smaller retirement home or care facility is the best solution there is another senior specialty provider to call on called a Seniors Real Estate Specialist.

The Senior Real Estate Specialist concentrates more on a complete service package for the sale of the property and/or the purchase of a new living arrangement. The specialist also arranges for the services of a relocation specialist or Senior Move Manager to provide a complete, stress-free package for the elderly homeowner.

A move often requires downsizing and getting rid of a tremendous number of acquired possessions. The relocation specialist or Senior Move Manager, as they are often called, will typically provide a turnkey operation that includes assessing and identifying items to keep, arranging for auction or other disposal, cleaning the home, moving the belongings and setting up the new residence. The manager may also work closely with a real estate agent to arrange for the sale of the home and may also be involved in the financial transactions necessary to move into a new living arrangement.

All the help available to seniors may in itself be overwhelming.  How do seniors choose the right service provider for their needs?  How do they know they will hire someone qualified, responsible and honest?  Area Agencies on Aging and State Better Business Bureaus are good resources to check out available service providers.

Family, friends and religious leaders can be valuable resources to seniors in referring service providers and helping to manage the hiring and supervision.

The National Care Planning Council’s website www.longtermcarelink.net provides educational articles and information on eldercare providers throughout the nation.

Q. I’m moving to the Silicon Vally/San Jose area from San Diego and I’m looking for active living opportunities for seniors and proximity to good health care facilities. Can you help me identify my options?

There is a lot to offer active adults in San Jose. First and foremost we are blessed with some of the best medical facilities in the country. Locally, some of the options are the world renowned Stanford Hospital in Palo Alto, the University of San Francisco Medical Center, and the extensive Kaiser Medical System available throughout the Bay Area.

Secondly, the community and senior centers offer a great deal of activities to choose from and there is almost one in every neighborhood. These centers provide everything from organized trips to Las Vegas to computer classes, to community gardening. I have included a link but you can also search the web for senior centers San Jose and read about all the different activities.

Finally, the mass transit system is not as connected as other metro areas but if you choose the right neighborhood, you can access the light rail, Cal Train, and BART fairly easily. There also several transport services in the area to help those with special needs.

I believe the strongest vote for San Jose and elders is the variety of activities the city has to offer. Theater, community groups, an active library system, and lots of volunteer opportunities allow many opportunities for the active adult. Contact me if you would like more specific information about a certain area of San Jose.

Got a Question? Talk to CJ!

We can’t really say the housing market has hit rock bottom but talk to folks in Alum Rock and they are feeling like the fault line may not be the only thing shaking their home values. Some homes have lost nearly 20% of their value. The last time I ran the stats, some homes were getting close to 1999 price levels. Particularly hard hit were first time buyer units in East San Jose. Two years ago you could not find a 2BR condo under $400,000. Now you can find over 100 units. Some are now reaching the $350,000 price range.

You could say, good for buyers. But the lenders have got their fist so tight around their loan approvals that the type of buyers being approved aren’t in the market for a first time condo in East San Jose. With 20% down and a FICO score over 720, they are looking at neighborhoods as close to Cupertino as they can find to insure their children’s public education and the value of their investment.

John Talbott has some valuable tips listed in his recent article on “Five Ways to Survive the Housing Slump”. John’s an expert but it didn’t take a wise person to advise that it is better to secure a fixed interest loan if you can. Most folks in Northern California dream they might someday afford the payments on a fixed rate loan. Interest only loans came about for a reason. Housing afford- ability far exceeds the average Bay Area residents’ salary.

The one item that I whole-heartedly agree on is the idea of “renovations are an expense and not an investment.” If you are planning to renovate, do it because you want to enjoy a new, modern kitchen. Also realize that placing your home on the market with an old kitchen will place you at the bottom of the listing barrel. Buyers that are serious have the ideal market conditions to be picky. They can and will expect home owners to have made the appropriate updates to a house they are paying nearly a million dollars for. Gone are the days (at least for awhile) where buyers are squeezing through the crowded front door screaming, “I’ll take it! I don’t care what is wrong with it!”

John and I also agree on the point that it may be better to sell sooner than later. Yes, if you sell in 2008 you will probably sell 10% lower than you would have in 2006. But it ain’t 2006 anymore and unless you can wait until about 2011 it may be better to take what you can get and get on with your life.

Finally, if you do have one of the ever-rising adjustable mortgages keep your ear very close to market news and stay in touch with your lender. If there is any truth to lender flexibility or governmental aide coming down the pipe, make sure-for-sure your payments are on time and that you are very pleasant when you make those phone calls requesting information. Keep in touch with your Realtor and Mortgage Broker to keep up with the changes. Educating yourself is the sixth way to surviving this changing housing market.

Many of our older Americans are saving the family home as a legacy for their children and therefore do not want to use any of the equity in the home. But many of us children would rather see our parents and grandparents live comfortable lives over receiving a trust. Some parents will not tell their children that they use credit cards to pay for their groceries or are so cash poor that the real reason they don’t get out is so they have enough money for food and medicine. I would much rather see my parents enjoy that trip to the Tetons that they have always talked about over receiving an inheritance.

Reverse mortgages are like any other mortgage in that you must learn about the details of each program. The AARP web site is a great place to start learning about reverse mortgages. The HUD web site also has great information about reverse mortgages and how to obtain financial counseling to avoid reverse mortgage scams.

Reverse mortgages are different than equity loans, second mortgages, credit cards, and lines of credit because they aren’t repaid via a monthly payment. With a reverse mortgage the loan is paid back when the house is sold or when the primary owners have passed away. If one spouse passes away before the other, the loan is not due until the surviving spouse no longer lives in the home as their primary residence. You can never owe more than the value of the home when the loan is paid off. If there is remaining equity in the home after the loan is paid off that equity can be transferred to your heirs.

HUD offers reverse mortgages that have some advantages over private lender reverse mortgages. To compete with HUD, lenders are starting to offer more features. The owner can receive funds in the form of a lump sum, monthly payment, a line of credit, or a combination of methods. The borrower must be at least 62 years of age and their home must be owned free and clear or the mortgage owed must be paid off as a part of the reverse mortgage. The home owner is still responsible for paying property taxes and maintaining insurance. Some who have utilized reverse mortgages in California use it for paying property taxes and insurance.

The IRS does not consider the money borrowed through a reverse mortgage as income. The loan proceeds do not affect Social Security eligibility. To receive a reverse mortgage HUD requires the applicant to complete financial counseling. You can find out more at www.reversemortgage.org.

The best advice I can offer is to sit down and talk with your family about finances and see if a reverse mortgage may be exactly the right thing for relieving worry and/or simply opening doors to dreams they have always had. If you knew that the best holiday gift you could give would be allowing your parents or grandparents to use their equity on something they always wanted to do instead of leaving it to you, what would you do?

For more information about reverse mortgages, contact me for an information packet. You can also contact Maureen Schwartz at Countrywide. She’ll be happy to sit down with you and explain all that Countrywide has to offer. With over 20 years of experience in the residential market, Maureen is a great local resource.

Reverse mortgages are not for everyone. Home equity is a very special asset that should be used wisely. Families should talk about how to utilize the assets they have in the best possible way. That may be exactly the peace of mind we are all looking for, especially during the holiday season.

CAR KEY TIPS!

Put your car keys beside your bed at night. If you hear a noise outside your home or someone trying to get in your house, just press the panic button for your car. The alarm will be set off, and the horn will continue to sound until either you turn it off or the car battery dies. This tip came from a neighborhood watch coordinator.

Next time you come home for the night and you start to put your keys away, think of this: It’s a security alarm system that you probably already have and requires no installation. Test it. It will go off from most everywhere inside your house and will keep honking until your battery runs down or until you reset it with the button on the key fob chain. It works if you park in your driveway or garage.

If your car alarm goes off when someone is trying to break in your house, odds are the intruder will not stick around. After a few seconds all the neighbors will be looking out their windows to see who is out there and sure enough the criminal won’t want that.

And remember to carry your keys while walking to your car in a parking lot.

One option involves utilizing the 1031 Exchangetax code. According to my friend Leonard Spoto at Asset Exchange Company based in San Francisco, most investors exchange for several reasons:

• the ability to defer taxes,
• leverage existing equity to buy a larger property or a property with higher value potential,
• to diversify their real estate holdings,
• to gain relief from management burden
• to exchange a fully depreciated property to a higher value property that can be depreciated.

Of course if you have heard anything about 1031 Exchanges you have heard the term, “like kind”. Like kind simply means that the property is “held for productive use in trade or business or for investment.” Currently, foreign property does not qualify as “like kind”. If your rental (investment) property is a single family residence, you can exchange it for an apartment complex, a shopping mall, multiple condominiums, or whatever – excluding foreign property. The key phrase here is “investment”.

Next you have to realize that with a 1031 exchange, “all cash from the sale must be reinvested” and that you should purchase a property equal or greater in value.
Then the next constraint is the time line. The time line is critical because the IRS does not accept, “oops” as a reason for not completing your time line requirements. Missing deadlines = capital gains on the sale. Period. The end. According to Asset Exchange Company you have, “180 days – or until your taxes are due for the year for the exchange to be completed. You also have a 45-day deadline in which the exchange properties must be identified.”

There are many reasons why a 1031 Exchange may be the right decision for you and your property. The reason to consider a 1031 Exchange is that it offers options for you to continue your investment in real estate beyond your current real estate holdings. If you are interested in learning more about 1031 Exchanges, please contact me.

Well, ta-da, here is a great web site that not only tells you the typical replacement costs of home maintenance items but also gives you the average life span of common home items. For example: The average garage door opener lasts about 10 years and cost somewhere between $275 and $375 to replace. Wood flooring can last up to 100 years and costs about $3.50-$10.00 per square foot depending on the type of wood you choose. Of course, these prices come from The Inspectors home town near Modesto, California, so for the Bay Area add 10%.

What I like about this resource is that it is great guide to how to schedule out and budget for typical home repairs. As the housing market changes building your equity no longer depends on simply sitting in your home long enough. To maximize your investment you need to maintain the home and plan for the appropriate updates. Check it out and let me know what you think. You can email me at: CJ@CJBRealEstate.com

And thanks to Mark for a great resource!

There are many simple changes you can make to your home that can greatly increase its comfort and safety. Some of our favorites are included here. And, most of the products needed for these modifications can be purchased at your local hardware store.

* Install handrails on both sides of all steps (inside and outside);
* Secure all carpets and area rugs with double-sided tape;
* Install easy to grasp shaped handles for all drawers and cabinet doors;
* Use brighter bulbs in all settings;
* Install nightlights in all areas of night activity;
* Add reflective, non-slip tape on all non-carpeted stairs;
* Install lever handles for all doors;
* Place a bench near entrances for setting down purchases and resting;
* Install closet lights, as well as adjustable rods and shelves;
* Install rocker light switches; consider illuminated ones in select areas.