Protecting the Family Cottage from Nursing Home Costs

Attorney Peter B. Harbach recently appeared on WFRV's Local 5 Live to discuss the owning an Up North property and its potential impact on Long-Term Care planning.

Lisa Malak: Welcome back everybody. It is summer and a lot of people are talking about making that trip to the summer cottage.

Millaine Wells: But how does that property come into play in long-term care planning? Attorney Peter Harbach is here from Hooper Law Office. Good Morning.

Lisa Malak: Good morning.

Peter Harbach: Good morning.

Millaine Wells: So owning that Up North Property kind of a tradition for a lot of Wisconsin families. But what types of implications are there when one of those members needs long-term care?

Peter Harbach: Well what people need to realize is that in many instances, and depending on how the cabin is held, meaning owned by the family, that property can be considered an asset that can be eaten up by those nursing home costs just like cash in the bank. And there's no protection for that unless you create that protection yourself. And so the family cabin or for instance the hunting land that a couple of brothers might have inherited from their dad, that's going to be not just subject to their own care costs but also their spouses' care costs if that ever comes up in the future.

Lisa Malak: So you mentioned protections. How do we protect this property?

Peter Harbach: Well people have many more options if they act proactively, meaning if they do things in advance of needing care. That's when all the options are on the table. And there can be solutions through terms that people put in their wills, by use of trusts, and potentially use of LLCs. But each situation is a little different and so the right solution is something that's very particular to that family.

Millaine Wells: And even if we protect that property, our loved ones can still have access to quality care, correct?

Peter Harbach: Absolutely. The goal always is to make sure that the care that's being given to our loved ones is the best available. But a lot of people, it's their priority to make sure that the family cabin that they've had for many years and maybe through many generations doesn't get eaten up by those kinds of care costs.

Lisa Malak: So this can be probably a pretty sticky family situation discussion. How do we get it going?

Peter Harbach: Well again starting now is the way to do it [...] and talking to the family. It's well and good to protect something, but do the kids want it eventually? Do they want to co-own this property? And setting up a system for management once the parents are gone and it passes on to these people, to make sure that it's not this burden on somebody who maybe lives many miles away and never really uses the cabin. What's the system in place for being able to manage it? Who gets to use it and when? How are they going to afford it? And how are taxes going to get paid?

Millaine Wells: And it probably helps to have an expert like yourself or someone from your team making these recommendations as opposed to your big sister suggesting it. It probably comes a little easier from an expert like you.

Peter Harbach: Yeah getting a professional involved, our job is to think of things that people aren't thinking of for themselves. That's the role. So getting that conversation going, trying to work out the kinks before they actually come up is incredibly important for success.