A Family Owned Business Long Term Care Nightmare (Part 1)
George built his manufacturing business from scratch. He and his wife, Claire, had raised a family of 2 boys and a girl, but George treated the business like another child, nurturing it from infancy to maturity. It had allowed him to provide for his family, putting all 3 children through college, and it now also supported his boys, John and James, who both joined the business and are raising families of their own. At 70, George still worked full time. He loved it and couldn’t see retiring. But then tragedy struck when George suffered a stroke.
At first, it looked like George would make a complete recovery, but then he suffered a setback, a second stroke resulting in permanent paralysis. It became clear that he would need long term care. Claire didn’t want to place him in a nursing home, thinking she would be able to care for him at home. Very quickly, however, the family realized that they would need home health aides. Providing care is exhausting, physically and emotionally, and Claire, at 70, just couldn’t provide the round the clock care that was needed.
For the first time, George’s family faced the reality of the long term care system and they were shocked. George and Claire never did buy long term care insurance. The health insurance plan that they had for years through the business, they soon learned, didn’t cover the type of custodial care George needed. They were facing $100,000 a year in expenses and no insurance coverage for it.
That’s when John called us, hoping we could help. I went over the financial numbers. George and Claire owned a house and about $800,000 in investments. George also owned the business and the building which houses the business, John estimated the combined value at over $1,000,000 but he wasn’t confident in those numbers since they had never before valued either. Then John asked the $64,000 question. Could they get any help, meaning government benefits?
I explained how Medicaid works, that it’s a needs based program. Claire, as the healthy spouse, could keep the house and just under $110,000 before Medicaid would cover George’s care. “Does that include the business and the building?”, John asked. “Dad always talked about a succession plan to transfer ownership to James and I, but he just never got around to doing it.” Next week I’ll tell you what I told John.