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The Kenyons' Payoff

When Your Spouse Gets Sick

Certified financial planner Ben Jennings has given Linda and Lloyd Kenyon a Money Makeover plan. Will they sell their house? Reallocate their investments? Bookmark this site to follow their story.

Feb. 27, 2009

Jennings’s plan has given Linda more confidence that she can indeed make the move to Salem, and she is considering hiring a contractor to finish the home renovation. She’s less certain about sacrificing price on her rental home to sell it quickly. “I need that money,” she argues. She agrees her investment portfolio is too heavy with stock and will begin reallocation by selling the company stock.

March 9, 2009

VA doctors have reduced Lloyd’s medications to make him less lethargic. Linda reports this has made him more difficult to handle: “He argues with me about everything,” she says. Nonetheless, she is determined to keep him at home for at least another year, ideally until after they complete the move to Salem.

March 12, 2009

Linda took a step toward securing a durable power-of-attorney (POA) for Lloyd: she dug up some blank POA forms she bought a few years earlier at a stationery store. The document will authorize her to be Lloyd's surrogate for most legal decisions once his signature is witnessed and notarized. Lloyd's dementia makes this task both a pressing issue and a delicate one. As long as Linda informs the notary of Lloyd's condition and picks a day when Lloyd's symptoms have abated enough to satisfy the notary that Lloyd knows what he is signing, Linda says that the POA will be legal in Oregon. She should know. Her background in title insurance makes her an old hand at authenticating documents. Says Linda, "I'll just have to wait until Lloyd's having a good day."

March 19, 2009

Linda looked into enrolling Lloyd in Medicare Part B, as Ben Jennings had suggested. Part B covers outpatient care and physicians' services. She was dismayed to learn that Lloyd had signed up for Part B seven or eight years ago (he was eligible because of his Social Security disability status) and later canceled, probably because he was getting free care as a veteran. To re-enroll him now, the Kenyons would have to pay an additional 10 percent on their premium for each year Lloyd was eligible for Part B but didn't pay in. This "drop-out" penalty would bring the monthly bill to $187.52. Jennings, when he heard about this new wrinkle, still thought getting Part B sooner than later would be a worthwhile precaution in case federal funding levels drop for veterans like Lloyd. While considering what to do, Linda came down with a terrible cold. "That's a lot of extra money every month," she says, "my head isn't clear enough to decide right now."

March 26, 2009

Linda has almost fully recovered from her cold—"I finally have my voice back," she says—and she's sent off the enrollment card for Lloyd's Medicare Part B coverage in plenty of time to beat a March 31 deadline. She worries about adding more than $2,000 in premium costs to the couple's annual expenses but says she's glad to have the extra layer of coverage in case regulations change, as they sometimes do, and Lloyd is no longer eligible for physician and outpatient services through the VA. "I'm keeping my fingers crossed that this will work out for us financially. I think it will."

This week Linda got all the necessary information on the couple's finances in 2008 to their tax preparer, but she doesn't yet know how much, if anything, they may owe. "I didn't pay quarterly taxes last year, so I will owe something," she figures. "Bob [the preparer] is going to get me set up to pay them regularly from now on."

April 2, 2009

When Linda picked up her tax returns, she was gratified to learn that she and Lloyd didn't owe anything additional to Uncle Sam. However, they do owe $1,647 to the state of Oregon."This state really socks it to you, and we have a large budget shortfall, so taxes will probably go up even more. Well, I hope mine go toward education," she says philosophically. On her tax preparer's advice, she plans to start making quarterly state tax payments of $250 so she won't face a big bill again next year.

Meanwhile, Linda has promised an old ATV that she and Lloyd never use to her rental house tenant, a former general contractor who is now unemployed. In return, he will do some of the work needed to make their residence saleable. First up: pressure washing the outside so Linda and a grandson can give it a badly needed paint job.

April 9, 2009

Linda is considering taking the rental house off the market soon—"I'd rather wait to move than sell too cheaply," she says—and has decided to remain in Keno at least through 2009 and possibly most of 2010. "By then, the market should have picked up at least some and I can try to sell the house then. I guess I can stand to shovel snow one more season."

Meanwhile, she contacted a realtor in Salem, where she plans to move, to get an idea of what kind of house she could buy for the $200,000 or so she hopes to spend. "I've been very disappointed. For that price, homes generally have only 1,200 square feet or so. I want about 1,500 square feet so that my daughter and grandson can comfortably live with us if they decide they want to."

"Linda should keep in mind," Ben Jennings notes, "that as home values in the Keno real estate market go up, home values in Salem are also likely to go up."

April 16, 2009

Linda knows she hasn't moved quickly to shift her investments, as Ben Jennings advised, but it's been a stressful time. Lloyd has become more delusional and restless over the past few weeks. Earlier in the month Linda wrote a letter to the editor of the daily newspaper in nearby Klamath Falls, the Herald and News, describing their situation. To her surprise, the paper asked if they could send a reporter to interview them. The resulting story ran on page one and generated a lot of sympathetic phone calls to Linda from local residents. One caller told her about a nearby caretakers' support group that meets once a month.

Linda has already phoned the group's leader to introduce herself. In addition to emotional comfort, the phone calls produced useful information about treatment options for dementia, which Linda discussed with Lloyd's nurse practitioner at the VA clinic. Now Lloyd is off one medication, taking less of another, and trying a third. Linda hopes the new regimen will make his behavior more manageable.

April 23, 2009

To Linda's delight, she has learned that her son, Nathan, and his wife, Julia, plan to move from Juneau, Alaska, to Bend, Ore. That's about a two-hour drive from Linda and Lloyd's home in Keno—and also just two hours from Salem, where Linda and Lloyd are planning to move.

"They're sick of Alaska's long, dark winters," says Linda. The couple, who are Northwest natives, chose Bend for two reasons. Nate, who works for Costco, says he has a good chance of getting a transfer to the company’s store there. The pair also loves the musical opportunities in the scenic town, and might even have a shot at joining the community symphony. Julia plays—and teaches—the viola; Nate plays the trombone, tuba, and euphonium.

Depending on how quickly the couple can make arrangements, the move may occur as early as this year. "If so, Nate offered to help me fix up our house for sale," says Linda. "He's very handy and that will save us a lot of money."

Another phone call brought more welcome news. As financial planner Ben Jennings suggested, Linda checked with her auto insurer to see if she could save money by adjusting her coverage. The answer was yes. By dropping comprehensive and collision coverage on her 1993 Ford Tempo, increasing the $500 deductible on her 2004 Honda Accord to $1,000, and proving (through annotated gas receipts) that she drives less than 7,500 miles a year, Linda will reduce her annual premium by $300.

May 7, 2009

Lloyd's dementia is worsening and Linda is now thinking seriously about nursing home placement for him. She doesn't regard hiring in-home help as an option. "I'm concerned about Lloyd's safety and the safety of others because of his delusions, his strength, and his bad temper," she says. "It breaks my heart to know I must do this."

She contacted Veterans Affairs to see whether Lloyd's military service would qualify him for admission to a VA nursing home. Unfortunately, the answer was no. Lloyd doesn't meet eligibility criteria because his disability is not related to his service. The only other option for subsidized care is Medicaid, the federal health insurance program for the indigent. But for Lloyd to qualify, Linda would first have to show that they have used up most of their joint assets.

From a recent conference with financial planner Ben Jennings, Linda learned that there are two strategies she can employ to protect assets. She can put as much money as possible into those assets that are excluded from Medicaid's calculation of wealth—such as her residence—and she can increase income that is hers alone, rather than Lloyd's or shared, since Medicaid exempts that as well.

To accomplish the first, Jennings recommends paying off the mortgage on her Keno home and boosting its value by completing the repairs and renovation that Lloyd started. Linda agrees and is already contemplating which stocks in her portfolio to sell to obtain the necessary capital.

The second strategy has two prongs. "Linda can purchase an immediate, fixed annuity payable to her alone, and then she can pay back the Social Security benefits she has received to date and restart at a higher rate later," he says, citing a little-known provision in Social Security rules that allows such givebacks.

Both are major financial moves. With $300,000—most of her investment portfolio—Linda could purchase an immediate lifetime annuity that would start by paying her $1,300 a month and increase by 4 percent each year. That would come close to matching her current Social Security benefit of $1,394 a month, which she'd lose by repaying her past benefits to get more later. By returning the roughly $20,000 she has already collected from Social Security, Linda could boost the benefit she collects at age 70 by 32 percent and further reduce joint assets.

Still, Linda is wary. "I can't see parting with $300,000 right now," she says, "and I'm not keen on paying back my Social Security payments either, much less giving up my benefits for the next four years."

It's a lot to consider along with handling the emotional demands of finding a nursing home for Lloyd. The members of Linda's caregivers support group will likely be able to comfort and guide her through the stress, while, at Jennings suggestion, Linda consults an attorney specializing in Medicaid planning to clarify her options.

Aug. 4, 2009

Linda reports that the VA clinic has adjusted Lloyd's medication again, so he's awake and alert for longer periods during the day. "I still have to keep a constant eye on him, but the upside is that now he's doing more things for himself, like making his own breakfast," she says.

Feeling a bit less burdened, Linda has postponed finding a nursing home placement for Lloyd. She has learned that he may be eligible for an Aid and Attendance benefit, a little-known benefit for veterans who served during times of conflict, whether or not they faced hazardous duty themselves. If he qualifies, the benefit will help defray his long-term care costs. "I've requested Lloyd's discharge papers, which we'll need to apply," says Linda.

Meanwhile, she has taken planner Ben Jennings's advice about cashing out $100,000 of her stock portfolio to clear her debts and create an emergency fund. Linda used the money to pay off her home mortgage, her credit-card balance, and the loan on Lloyd's truck. She put the remaining $20,000 into a savings account for emergencies. She also took Ben's suggestion to get auto and homeowner's insurance from one carrier. That saved her enough money to add a new $1 million umbrella liability policy without increasing her total costs.

"I'm making progress slowly, but progress all the same," she says. "With the Visa, house, and truck paid off, I can easily cover our monthly bills, plus put money into savings. Such a lovely feeling!"

Sept. 10, 2009

Linda sold her rental house to her tenant for $135,000 in August. She took a $10,000 down payment and is holding a $125,000 mortgage that will pay her $682 per month for six years, after which the buyer will refinance and pay off the balance. The deal pleases Linda very much. "The mortgage payment is more than the $550 monthly rent I was getting, plus I'm rid of property taxes and maintenance,” she says. Since the title was in both her and Lloyd's names, Linda had to establish a guardianship for her impaired husband in order to complete the sale, "but I needed that anyway, so now it's done,” she says

Always a bargain hunter, Linda learned that comparison-shopping for home and auto insurance could trim almost $500 from her annual premiums, so she switched. "That saving more than covered the premium on a new umbrella policy Ben recommended, so now I'm better-protected at a better price," she says.

Dec. 3, 2009

Feeling more prosperous, Linda paid workmen and her grandson to finish most of the improvements that Lloyd had started on their residence. French doors in their master bedroom with a view of the Klamath River now open onto a small deck, rather than bare ground. "It cost me just $885," she says, "and how nice it is to sit out there with a cup of coffee." About $1,800 paid for resurfacing the broad concrete entryway to their front door and $100 worth of foam insulation for the foundation vents are keeping the house warmer than last winter, she reports. Lloyd's care is still a major issue for Linda. She pays a young man named Jason, who has experience with dementia patients, $40 to care for Lloyd for four hours each Wednesday while she runs errands. "He comes other times, too, if I need him. It's been a blessing," Linda says. Beyond that, she has not decided on future arrangements for Lloyd. "I'm still looking for a solution," she says. "I haven't given up."

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