Can I help my parents make decisions about their senior care without assuming financial responsibility?
Every state is different, but in Ohio, the answer is yes.
In this episode of “Simply Money,” Mark Reckman breaks down the dos and don’ts of setting up a parent in a care facility, the paperwork to watch for, and how to take care of your loved ones without putting yourself at financial risk.
Episode Transcription
Amy Wagner:
You’re listening to Simply Money, I’m Amy Wagner along with Steve Sprovach. So imagine this, your parents gets to the point where they need to go into a nursing home and after maybe a year, year and a half, couple of years, they pass away and have racked up a huge bill, $90,000 plus, $100,000. And all of a sudden you find out you’re on the hook for that bill. Could that really happen?
Joining us tonight is our estate planning expert from the law firm of Wood + Lamping, Mark Reckman. Mark, this is not a bill anyone wants to get, but you’re telling me it’s a possibility?
Mark Reckman:
It is a possibility, although, a little less so here in Ohio, it depends on what state you’re in. Several years ago, there was a Court of Appeals in Pennsylvania that ordered a son to pay a $93,000 nursing home bill for his mother. Pennsylvania is one of several states that make children responsible for the care of their parents. And actually these laws can be traced all the way back to colonial America.
Financial Responsibility vs Personal Care When Caring For Parents
Amy Wagner:
So let’s talk about what care means, because when I think of care, I think, you don’t leave your parents alone in a home if they can’t take care of themselves, you make sure they’ve got proper care. But I think a lot of people don’t think of it along the lines of financially caring, responsible for their bills. And so when and how can that happen?
Mark Reckman:
Well, that’s right. And states distinguish between those two, between financial responsibility and personal care. So there are 28 states that have these kinds of laws, Ohio, Kentucky and Indiana, all three have these kinds of laws. Oh, and by the way, all 50 states have laws obligating adults to take care of their minor children. 28 have laws to take care of their parents. Now these laws, they fall into two broad categories, the civil laws and the criminal laws. In a state with civil laws, what it means is that a kid can be stuck with the care cost of a parent. In criminal states, the kids are not stuck with the cost of care, but they can go to jail or be fined for failing to care for someone. This is also called elder abuse.
Amy Wagner:
I was going to say many times in the news we hear of elder abuse, elder neglect, things along those lines, horrible stories. So that’s when you can face criminal charges. But I think the fact that you can face civil ones as well are interesting. Is that something we would be facing in this area?
Mark Reckman:
Well, that’s right. So I’d like to talk about this criminal liability another time, in another program, but today I want to focus on the financial part. And here in Ohio, we have a criminal statute, but we do not have a civil statute. And that’s also true in Kentucky and Indiana. Now, the reason that I wanted to talk about this today, Amy, is because there’s been a lot of news recently about nursing homes suing people. And this has gone on in Western New York and in fact, in the last four years, over 150 cases have been filed against kids for financial responsibility. And I’ve read about such cases in Washington DC. So while Ohio, Kentucky and Indiana do have laws against elder abuse, they do not have laws that create civil liability. However, Amy, that’s really not the end of the conversation because you can still be liable for nursing home bills if you sign the wrong paperwork. And when you’re dealing with your Admission Agreements for your parents, you’ve got to be careful about what you sign.
Understanding Admission Agreements in Senior Living Facilities
Amy Wagner:
Let’s talk about that because, Mark, I know many people, when your parents get to that age, they’re not in a place where they can be maybe as involved in the process of selecting it as they would like to be so often that does fall on the kids. I mean, you’re going out and you’re touring these facilities, you’re trying to find the right ones for them and then you sit down with the administrators and you fill out the paperwork. So what’s the paperwork that we need to be aware of?
Mark Reckman:
Well, and you’re right. And often the case, there’s an emergency scenario where you’ve got a discharge from a hospital or a stroke or some major medical catastrophe where things are happening fast. So there really are two ways that you can end up being stuck with a nursing home bill. One is that if you sign an Admission Agreement on behalf of your parents and you sign your own name on the line that says, “Responsible party,” then you are committing your own resources.
Mark Reckman:
So don’t do that, Amy. That’s not what you should do. And the solution here is quite simple and that is that if you are signing, if your parents cannot sign for themselves, and that’s always your first choice, always the first choice is you have mom or dad sign their own name themselves. But if for some reason you cannot do that and that you have to sign on their behalf, sign their name, followed by your name, followed by the letters POA. Now that indicates that you’re signing on their behalf, you’re committing their financial resources, you’re signing as their agent, not yourself personally.
Benefits of a Power of Attorney
Amy Wagner:
As their Power of Attorney, I’m assuming that you also have to have the legal documents to back that up as Power of Attorney or no?
Mark Reckman:
That’s right. You have to have a Power of Attorney, if you don’t have one in place, you need to go get one.
Mark Reckman:
So this is the way that a Power of Attorney is used. A Power of Attorney will not commit you to use your own resources to pay someone else’s bills. What it does is it gives you authority to commit their resources to pay their bills.
Amy Wagner:
What else do we need to look out for here, Mark?
Mark Reckman:
Well, the other scenario is that some Admission Agreements have boxes to check that says whether or not the child will be responsible. And here again, don’t sign your name as a guarantor or as a responsible party or check the box that says, “I’m responsible for the bills.” Now that doesn’t mean… You can be responsible for the bills to the extent that the bills are mailed to you and that you’re responsible for using your parents’ money to pay them. And that’s where it gets confusing because I may be responsible for seeing to it that the bills are paid, that’s different than me being responsible personally to pay them with my own money.
And there are not really very many cases on the books, I did some digging to find out what kind of cases are around, I could not find any cases on this in Kentucky so clearly these laws are not being enforced in Kentucky. There are some cases in Ohio, back in 1986, there was a nursing home that sued child for civil liability and the court threw the case out because there was no payment guarantee. There was a case in 2010, up in Warren County where a nursing home sued a wife and a son for an unpaid bill. And in that case, the nursing home won because the wife and the son did not answer, they didn’t contest the claim at all.
There was a case right here in Hamilton County where the child took the parents’ house when they went into the nursing home, the child transferred the house to himself and then the nursing home couldn’t be paid and the nursing home couldn’t qualify for nursing home because of the gift of the house. Now in that case, the nursing home won because the child actually impoverished the parent by taking away the asset that could be used to pay for the nursing home care.
Amy Wagner:
So for a lot of people, I think that’s the question. What if your parents do have some financial assets, but they go into the nursing home? We’ve talked many times, my goodness, how expensive these are. I mean, they can be thousands of dollars a month in some cases to stay in a nursing home. So all of a sudden your parents have now gone through all of their money and then the question is, okay, now, am I liable for the rest of these bills?
Am I Liable for the Bills of a Deceased Parent?
Mark Reckman:
And the answer to that is Ohio, Kentucky and Indiana, you are not liable unless you’ve signed a payment guarantee in your own name personally. And that’s what you want to avoid. In fact, there was a case just two years ago, up in Cleveland where a nursing home sued a resident’s daughter for $70,000 in care costs. And in that case, the nursing home failed because the daughter had checked, there was a box on the Admission Agreement where you check whether or not you’re responsible for those payments personally and she checked the box on the form that said she would not be responsible. Why the nursing home sued her? My guess is that they didn’t read their own paperwork. But they lost the case.
Amy Wagner:
And I think this is such good information because you kind of alluded to this earlier, but often when we are putting our parents into these facilities, it’s an emotional time. They could be very sick, they could be getting out of the hospital, you mentioned stroke, that’s obviously something that could happen or a horrible fall. And so it’s very easy to be overwhelmed during these times. There’s lots of paperwork, lots of things to think through, lots of boxes to check. So understanding what to look for in this paperwork to make sure that you are financially not liable for what could be, without a doubt, tens of thousands of dollars, is incredibly important. So great insights as always from Mark Reckman, our estate planning expert from the law firm of Wood + Lamping. You’re listening to Simply Money, here on 55KRC THE Talk Station.
