Sometimes, an unforeseen event can force you to rapidly move your loved one into an assisted living community. When a situation like this arises, it can cause financial strain if funding sources are not immediately available – for example, if most of your loved one’s assets are tied up in their home and life insurance policies. A good solution for many seniors and their families is the senior line of credit. This option allows you and other family members some breathing room and time so you can liquidate assets at the best possible return to pay for your loved one’s housing and care and so you can evaluate longer-term financial plans to fund your loved one’s needs.
There are six key steps to establishing how big your senior line of credit needs to be:
1. Determine the monthly cost of care at your chosen assisted living community.
2. Clarify any additional monthly costs related to eldercare.
3. Ascertain any personal monthly costs not related to eldercare.
4. Find out how much financing your family has been approved for.
5. Establish how much your loved one can afford to pay out-of-pocket each month.
6. Discuss and decide how much you and other family members can contribute to your loved one’s care needs each month.
The above six-step process is critical and many families considering a senior line of credit turn to financial counseling with firms that have expertise in eldercare issues to help them navigate these unfamiliar waters.
Take note, though, that not every senior is a good candidate. This financial vehicle is only for seniors who are moving into an assisted living, senior living or retirement community. Payments are sent directly to the housing community; these payments come from the lender, not come from family members, thereby ensuring the integrity of the whole process. Families turn to a senior line of credit when they need time and flexibility while they wait for access to other financial resources, such as the proceeds from a home sale or veteran’s benefits. Many families find they don’t need a month-to-month solution, but rather some money to cover large upfront costs like first months’ rent or move-in-fees.
However, if the senior does not have a support system such as family, trusted financial planners or an eldercare attorney, the senior line of credit is not a good solution. Additionally, a single senior without a reliable support system will likely have trouble getting approved because it’s likely that his or her income will be insufficient to make the required payments. Seniors without family should enlist the help of a professional advisor to go over the process and the paperwork.
If you’re considering this option, be sure to look at all the implications and make sure all family members involved in the decision understand what’s required too. Tell us about your experiences obtaining a senior line of credit for your loved one.
Do you think a senior line of credit is for you?
If you think a senior line of credit might be an option for you or your families, make sure you learn the details yourself. A Senior Solutions executive director can refer you to a qualified provider.
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