Protecting Your Family Farm from Nursing Home Costs

Perhaps you and your spouse worry about succession of your family farm – whether you’ll be able to keep it in your family or you’ll need to sell it. Or maybe you’re facing an imminent medical problem in the family. In either case, you’re understandably concerned that so-called “creditors and predators” might undo all your hard work and put you at risk of losing the very thing you have worked and saved to protect.

In particular, the consequences and costs of nursing home care loom large. According to one analysis, 12 million Americans need nursing home and long term care, and the average cost is $73,000 a year. The cost in Arkansas is a bit less—at approximately $60,000 a year—but still substantial. Estimates suggest that that number will double over the next 10-15 years. As the Baby Boomers retire, the number of nursing home residents will increase by four million. Meanwhile, the average owner of a U.S. family farm is about 58 years old. These numbers all paint a disturbing picture: farmers who fail to understand and plan for long term care costs may wind up sacrificing their legacies.

The state Medicaid and the Medicare program can help pay for long term care costs; however, the conditions attached to these benefits are often complex and restrictive. For instance, short term Medicare benefits might pay for a few months of assisted living care… but only if you demonstrate that your health is improving, and you go to a Medicare approved facility. Medicaid benefits, on the other hand, can provide continuing coverage, but nearly half of all nursing home costs still come from personal assets.

So what can farmers and their families do?

Different instruments and strategies can work and shield farms and families. For instance, forming LLCs can prevent your family farm’s assets (e.g. tractors, equipment, internal processes you develop, etc.) from disqualifying you from Medicaid benefits. Tools such as Medicaid Asset Protection Trusts (MAPTs) can allow you (the farmer) to generate income from the farm, while a trustee (such as your child) owns the farm in your name.

Of course, nursing home planning can be quite complicated and dependent on your specific financial concerns, health risks, goals and risk tolerances. There are also Veterans benefits that may be available.  Call our experienced planners today to explore solutions and protect what you’ve worked so hard to build from being undermined by medical issues late in life. Call us now at 501-221-7776.