Dear Michael: My dad died a few years back and left my mother with some substantial cash assets, as well as ownership of the farm. She has in excess of $400,000.

She is approaching her mid-70s and has now become concerned with long-term care insurance as she has seen a few of her friends end up in facilities.

I keep telling her between the savings and the cash rents I pay her, she has more than enough to pay to pay for any long-term care costs, so why bother paying a premium on something that she has enough income and assets to use to pay for her care?

- Mom Won’t Listen.

Dear Mom Won’t Listen: To start off with, I’ll ask you some basic questions about your mom’s situation.

Does she have a home and does she insure that home? If so, because based on what you’re saying why insure anything if you have enough money or income to replace it?

People won’t sleep at night if they suddenly remember they forgot to pay their homeowners insurance, yet the chances of losing your home or sustaining major damage to the point of being uninhabitable is one in 20,000.

Your mom’s chances of needing some type of care someday? About 50/50 or one in two people her age will need some type of assistance. Just like insuring your car or your home, though, the amount of the payment of the claim depends on the event that causes a claim. If she falls and breaks a hip and needs rehab for six months and then goes home, not much of a claim. If she falls and breaks her hip and can’t move without assistance, huge claim.

Everyone in advance always comes up with ways to mitigate that claim. “We can take care of Mom at home with us” or “My wife is an LPN.” This is the same as saying she doesn’t need hail insurance on her home because you’ll come over and reroof the home if it gets hailed on.

So, people buy insurance for security and peace of mind.

Digging deeper into the issue, people who have long-term care insurance are more apt to reach out for help sooner than those who do not, no matter how much money they have in the bank. I’ve seen millionaires who ended up laying on their bathroom floor for two days waiting for help – when they shouldn’t have been alone for the past few years – because, “By God, I’m not going to spend good money on any help” and end up costing hundreds of thousands of dollars in care costs when they push it too far past the sane and reasonable limits of self-care.

It’s a quality of life decision we all have to make someday, and it would be great if everyone would make this decision in their late 50s or early 60s when the prices are still reasonable.

Last but not least, if you’re cash renting the farm, then I’m guessing you want the farm someday. Your mom probably has this money earmarked to go to your sibling(s) in lieu of receiving any farmland. And you’d better hope your siblings will still talk to you after their inheritance is gone. The worst case scenario would be if they end up suing you for what they feel they had coming as was specified in the will.

Do you still feel like gambling that her assets and the cash rent you pay will cover any long-term care costs?

Factor in that average costs of care rise by 9 percent each year, and you are now approaching $100,000 per year.

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Michael Baron provides estate planning guidance at Great Plains Diversified Services in Bismarck, North Dakota. Email him at


Michael Baron provides estate planning guidance at Great Plains Diversified Services in Bismarck, North Dakota.