I have encountered the following crisis too many times. A frail elder is living at home, and since the home is safe and nice, is happily aging in place. Once the homeowner reaches the point of hiring a home health aide, they start using up their savings. At that point, they place a reverse mortgage on the home. This provides a significant amount of cash that can be drawn out month after month to enable her to stay at home. It can be drawn down gradually like a line of credit. So far so good.
Someone needs to be minding the store to make sure that planning for the next phase begins well before the homeowner has exhausted the cash that’s available through the reverse mortgage.If the homeowner starts to develop Alzheimers dementia and has no one standing by to help, there can be a real crisis when the funds run out.
I have had several cases where the homeowner required 24/7 care, but the homeowner didn’t ask for help from their power of attorney, or the agent under power of attorney didn’t realize soon enough that the reverse mortgage was exhausted. There was no money to pay for an aide, and even an MLTSS/ Medicaid application could take months to process and wouldn’t provide 24/7 care at home. To get into a nursing home would be practically impossible at that point. Fortunately, we were able to work things out. But it was a major crisis for all involved, and totally avoidable.
Careful planning can prevent a crisis!
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