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Farmers Fear Long-Term Care May Cost Farm

Farmers Seek Ways To Protect Operations From Asset Recovery

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farm, LongitudeLatitude (CC-BY)
LongitudeLatitude (CC-BY)

As farmers age, they’re growing more concerned about what happens to the family farm once they’re gone. Some are worried what will happen if they need long-term care.

The Wisconsin Farm Center has helped develop around 200 transition plans with farmers over the last couple years, according to the center’s economic development consultant Frank Friar. He said the majority of farmers are concerned about what happens if they end up in a nursing home.

“If they’ve had parents in a nursing home, they know some of the consequences. They’ve watched their savings dwindle away. It’s a difficult situation,” Friar said. “They want to pay their own way and be good citizens, but they don’t want to lose the farm in doing it.”

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Attorney George Twohig, who practices in Chilton, said he advises producers on transferring farms to the next generation. He said farmers tend to be cash-tight, but asset-heavy.

“So they become concerned that real estate would have to be sold to pay for the cost of long-term care,” Twohig said.

Twohig said many people are talking about Medicaid trusts where farmers divest their assets to protect the farm.

“If we divest the assets, give them away and reduce the person’s assets down to where they qualify for medical assistance, the idea is that eventually they will qualify to have the government pay for long-term care,” he said.

Twohig said Medicaid trusts are sometimes a good solution, but they’re not a cure-all. He fears financial advisers may focus on asset protection instead of preserving the farm for future generations.

Some farmers are pursuing other options to protect the farm from asset recovery related to health care costs, including purchasing life insurance or long-term care insurance. Dennis O’Connor, an accountant with O’Connor, Wells and Vander Werff in Waupun, said his firm serves around 1,000 farmers in the area. He said about 15 to 25 percent purchase long-term care insurance.

“They tend to be people that are a little bit more well-to-do that purchase that type of insurance … Another route is that people just don’t buy the insurance and are going to take the position that they’ll deal with it if it ever comes,” O’Connor said.

O’Connor said some may also invest money in the stock market or certificate of deposits to prepare for health care needs in retirement.