What is a “negative inheritance?” It is what happens when the amount your children pay to provide for your care exceeds what they will inherit. Unfortunately, the phenomenon is growing more common. What can you do to prevent it from happening to you?

When your children promise that they will never let you go to a nursing home, it should give you a good feeling. It also can mean that they have undertaken an expensive and challenging task. Your assets may not cover the cost of care, even if you count the value of your home and retirement accounts. That may mean that your family pays out of their own pockets. They may be perfectly willing to do so, but you may be interested in trying to minimize that cost.

Media attention has recently focused on this concept of "negative inheritance," with articles from The Wall Street Journal and MSN touting the phrase. Other attention has come from online radio and, not surprisingly, the long-term care insurance industry. One of the better articles comes from our friends at Oast & Hook, a Virginia law firm well-known nationally for its advocacy in elder law and special needs planning (from here you can , the firm's excellent weekly newsletter).

So, what can you do to avoid the problem of "negative inheritance?" One choice you might look into is the possibility of securing long-term care insurance. Such policies are more widely available today than they were even a few years ago, and the combination of marketplace dynamics and government regulation have worked to improve the quality of insurance policies. If you qualify for, and can afford, long term-care insurance, you should definitely look into securing a policy.

Unfortunately, too many candidates for the purchase of long-term care insurance wait until they are not able to qualify for the coverage, or can not afford it, or both. As the relatively young industry struggles to figure out who it should cover and at what cost, it makes conservative estimates of risk. That means that you may not qualify for coverage if you have any of a number of diagnoses, even though you may have years before you are likely to need long-term care (during which you could be paying premiums). It also means that most long-term care insurance buyers are older than they should be when making their first purchase; we recommend that buyers look into the policies in their 50s, not their 80s.

If you are insurable but unable to afford premiums, it might make sense to have your children pay the cost of long-term care insurance. After all, it is their inheritance that you are trying to protect -- at the same time that you are hoping to arrange your affairs so you can live at home for the rest of your life.

Can you simply transfer all your assets to your children now, let them take care of you as long as the money lasts, and then move onto the government care system (Medicaid for most people)? Maybe. But most states do not provide much Medicaid coverage in home settings, and so that is a prescription for eventual nursing home placement — the very thing your children say they want to prevent.

Arizona’s long-term care Medicaid program (ALTCS) is, uncharacteristically, more generous here than most other states, with a significant share of long-term care costs being paid for care outside nursing homes. The services for home care are still sharply limited, though.

What else can you do? If amassing great wealth is not an option, your choices may be limited. Your best option may be to carefully manage both resources and care to maximize your ability to stay at home. That may mean involving an elder law attorney, a geriatric care manager and/or a financial planner. The planning choices might include sale of the family home and a move into more financially sustainable quarters -- thus freeing some of the assets tied up in home equity. Although there are plenty of minefields, it might be appropriate to look into a reverse mortgage, coupled with paying children for providing care.

Perhaps you are not considering these issues for yourself, but for an aging parent. We may still be able to help you strategize how to protect your inheritance from going negative -- all the while focusing (as we both should) primarily on the quality of life and care available for your parent.

A word about location: the elder law attorney you consult should probably practice in the geographic area where the senior resides. The availability and limitations of government programs, reverse mortgage options, and geriatric care managers vary widely by state and within states. That puts a premium on local knowledge -- and that is the qualified elder law attorney's stock in trade.

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