Think college is expensive? Guess how much nursing home care costs
If you are like many people you are saving what you can for your children's college education and the skyrocketing tuition costs. You may also feel sandwiched if you also have senior parents who someday may need support whether it is an added hand around the house or financial support. Guess what you may be on the hook for your parents' six figure nursing home costs. There is a legal doctrine called filial responsibility. It is similar to the doctrine of necessities. Both doctrines deal with a family member's obligation to support another family member. For example under Virginia law if your spouse goes to the emergency room you are on the hook for the bills.
You will not enjoy, but your should nevertheless read this article in Forbes "You May Be On the Hook for Your Parents Nursing Home Costs." . First, the average cost of a nursing home bed is over $100,000/year. Some nursing home residents stay in a nursing home for years (hence the name "long term care"), so this is real money if you are not Bill Gates. Secondly, in some states filial support laws can come into play meaning adult children and even siblings can be held responsible for the bill.
Where does Virginia fall? Virginia is one of 29 states that has a filial support law. It is not used often but it is a viable legal doctrine. It has been applied in numerous circumstances including where one adult child has sued a sibling to pay part of the cost of their parents' care in an expensive assisted living facility. Here is the key portion of Virginia Code 20-88:
§ 20-88. Support of parents by children.
"It shall be the joint and several duty of all persons eighteen years of age or over, of sufficient earning capacity or income, after reasonably providing for his or her own immediate family, to assist in providing for the support and maintenance of his or her mother or father, he or she being then and there in necessitous circumstances."
To put it into plain Engish, an adult child is legally required to support his or her parents for necessary items like food, housing, medical care, etc. to the extent that the adult child can afford to after paying for his or her own immediate family's reasonable expenses.
What this all leads to is the importance of financial planning. Long term care insurance should be part of the discussion with a financial advisor. The other side of the coin is taking steps to qualify for Medicaid if you do not have long term care insurance. These plans must begin early, because Medicaid will look at transfers of assets in the prior 5 years. This is called the "Medicaid Look Back Period." There are also gift tax implications for transfers of assets.
Please talk to a financial advisor and a tax advisor about these issues. If you need recommendations I have a few suggestions.