Category Archives: CCRC
Did you catch last Sunday’s Washington Post article by David Hilzenrath, about the October bankruptcy filing of Erickson Retirement Communities? My phone has been ringing all week with people concerned about this news, because Erickson is a major developer and manager of Continuing Care Retirement Communities (CCRCs) for senior citizens.
In the Washington area, Erickson communities include: Greenspring in Springfield, Virginia; Ashby Ponds in Ashburn, Virginia; and Riderwood in Silver Spring, Maryland. I spoke with the author prior to the article and gave him some of the information that he referenced in the article. As he explained, the recession and the real estate crisis have raised concerns for people who paid significant money — often hundreds of thousands of dollars — to enter CCRCs such as these.
It’s important to understand that the deposits that senior pay are simply for the privilege of moving in; at most CCRCs, the deposits generally do not confer any ownership in the real estate, and the deposits are in addition to the regular monthly fees for the facility, which increase as the level of care increases — from independent living up to assisted living and eventually nursing home care. Here’s a link for the article in case you missed it: http://tinyurl.com/EricksonBankruptcy.
In a companion article (http://tinyurl.com/ScrutinizeContracts), headlined Scrutinize any contract to avoid nasty surprises at continuing care community, the author points out that the entrance agreements for these facilities should always be reviewed by an attorney. “If you are considering moving to a continuing care retirement community,” the author says, “you would do well to consult a lawyer and read the fine print of any contract to determine whether the potential benefits outweigh the risks.” I have recommended this to my clients for years, and encourage everyone in the Northern Virginia area moving into a CCRC to have me review the contract. But please note — it is very important to have me review the contract prior to signing the contract. For many of the people calling me this week who read the article and are concerned, there’s nothing I can do because they already signed their contract. These folks I referred to a real estate litigation attorney to discuss the possible results of what might happen if they fail to go through with their contract. Those results could include being sued for breach of contract by the owner of the facility, and possibly being forced to pay significant monetary damages.
One risk in connection with the entrance contract is that most CCRC contracts require you to agree not to give away any assets that would bring your net worth below a minimum requirement (in order to help assure management that you have the ability to pay their ongoing charges). The author quotes me in article, saying “Evan H. Farr, a Fairfax lawyer who specializes in issues facing the elderly, recommends putting any extra assets in an asset protection trust before you move in.”
I’m very glad that the author included this quote in his article, because far too many people move into these types of facilities without giving asset protection a second thought. If you are considering moving into a CCRC, it behooves you to not just have me review the contract, but to also have me create the proper type of asset protection trust for you to put your extra assets in before you move in to the community. What is the proper type of asset protection trust? It’s my proprietary Living Trust PlusTM Asset Protection Trust — the trust that protects your assets from the expenses of probate PLUS lawsuits PLUS the catastrophic expenses of nursing home care.
As the creator of the Living Trust PlusTM and the leading expert on this type of trust in the country, I’ve taught thousands of attorney across the country about the benefits of these trusts, and I’m actually teaching another course on this subject to attorneys tomorrow at an annual conference of the National Academy of Elder Law Attorneys. If you want to find out more about the Living Trust PlusTM, please come to a free class I’m teaching for members of the public on Saturday, November 14, 2009 at 10:00:00 AM, at the Tysons Corner Mariott, 1960-A Chain Bridge Road, McLean, VA 22012.
By coming to this FREE class, you’ll learn what thousands of attorneys and clients already know . . .
- That a Will puts your assets through probate, and is a very poor estate planning document.
- That a regular living trust protects your assets from probate, but offers you no asset protection.
- That my Living Trust PlusTM Asset Protection Trust protects your assets from the expenses of probate PLUS lawsuits PLUS the catastrophic expenses of nursing home care.
To register, just go to http://evanfarr.com/seminars.html.
I hope to see you soon!
An 88-year-old California widow is challenging an attempt by her continuing care retirement community (CCRC) to move her from her private apartment to an assisted living unit. If she is successful, the outcome could set a legal precedent for more than 5 million Americans living in retirement communities, CCRCs, and assisted living facilities.
In 1991, Sally Herriot and her husband, John, paid a $180,000 non-refundable entrance fee to Channing House, a Palo Alto that offers residents a continuum of care, from independent living to skilled nursing units. As is typical of CCRC contracts, the Herriot’s admission agreement gave Channing House’s administrators the right to determine the appropriate level of care for the couple and the authority to move either of them into an assisted living unit or a skilled nursing facility if and when it determined they needed more care.
Mr. Herriot died in 2005. Last year, Channing House notified Mrs. Herriot — who uses a walker, needs help getting dressed and has problems with her eyes — of their intention to move her from her spacious ninth-floor apartment with a covered balcony to a much smaller, hospital-like assisted-living unit where she would share a room but also be served by a trained nursing staff. Mrs. Herriot resisted, saying that with the help of the round-the-clock private aides she hires herself, she has everything she needs and does not require a higher level of care.
Mrs. Herriot’s attorneys, Michael Allen and Susan Silverstein (who is with AARP), filed a lawsuit alleging that by forcing Mrs. Herriot to move, Channing House is violating anti-discrimination housing and disability laws. Channing House’s executive director, Carl Braginsky, counters that decisions to move residents from one level of care to another are made only after careful consideration and consultation with medical staff. Paul Gordon, one of Channing House’s attorneys, rejected as “insulting and misleading” Mrs. Herriot’s attorneys’ assertions that such decisions are motivated by the opportunity for financial gain, such as from the sale of Mrs. Herriot’s now greatly-appreciated apartment.
The result of the case could have lasting repercussions on how America’s burgeoning population of seniors is allowed to age. “If Sally Herriot can be forced to move, then it undermines the whole concept of aging in place,” her attorney Michael Allen told the San Francisco Chronicle.
Lawyers on both sides are scheduled to begin mediation in April, and considering that CCRCs are in the business of marketing peace of mind, Channing House may have additional incentives to avoid a trial.