Making the right choices when considering a continuing care retirement center
Closing Thoughts by Jim Young
Sponsored by Andrews & Young, PC
Friday, August 22, 2014
HOME SOURCE www.theday.com/realestate
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For some of us a time comes
when we do not want to—or are
unable to—continue to live in
our homes. We need to move to a
new home where we can “age in
place,” as the saying now goes.
This can be a trying time. Options vary
greatly depending on one’s financial and
family circumstances and on how much support
I think back to my grandmothers. My
father’s mother came from County Cork in
New Jersey, after marrying my grandfather,
who also came from Ireland. They each had
many children and survived their husbands,
both of whom died before I was born.
My grandmothers died in their eighties,
when I was young, and my memories of them
are limited. My father’s mother lived at home
until her death with one of her sons, who was
a lifelong bachelor. I remember going to her
home after Sunday Mass in our good clothes
for weekly dinner. It was uncomfortable
being in an old house filled with old things
and with little to occupy me (though there
was a chicken coop in the back yard).
I arrived very late in her life and she doted
on me, pressing a quarter into my hand as
she placed a moist kiss on my cheek, despite
my squirming resistance. And there was her
glass eye, too. The highlight of the day would
come when my cousin Jack would sing the
old Irish songs for us. I think he must have
learned them from my grandmother.
My mother’s mother in her elder years
circulated among the houses of her many
daughters, spending some months at each
homeuntil shewouldmoveonto the nextone.
My many aunts and uncles, with one exception,
lived nearby their old family homes and
remained an active part of the lives of their
parents and siblings.
So many things have changed over the
years, some for the better and some for the
worse. But for many reasons, I think it is
becoming less and less common for seniors
to live the final years of their lives in the way
my grandmothers did.
One option available today is to move to
a facility that offers independent living,
assisted living, and skilled nursing options.
I recently had the opportunity to work with a
family where the patriarch moved into a continuing
care retirement center, or “CCRC,”
and I found the complexity of that arrangement
to be daunting.
To quote from an article dated Sept. 30,
2010, written by the Office of Legislative
Research for the Connecticut Legislature,
“CCRCs are retirement communities that
provide, generally under ‘life care’ contracts,
independent living units and a continuum of
long-term care services to elderly people,
allowing them to ‘age in place.’ They generally
require a very large upfront payment from
residents when they enter into the contracts,
along with a monthly maintenance fee.”
The types of services provided for this
monthly maintenance fee can vary considerably
based on options chosen by the prospective
resident when entering the facility.
Generally, the higher the monthly fee option
chosen on entering, themore services will be
provided in times of greater need without an
increase in cost.
The arrangement offered by the CCRC I
reviewed involved the resident paying a substantial
entrance fee—most of it designated
as a “loan” but one that bore no interest—for
the right to occupy a unit and pay a monthly
fee for services. All such loans made by residents
were to be secured by a mortgage on
the CCRC property, however one that was
junior and inferior to other mortgages the
CCRC might grant on the property. In the
event the resident wanted to leave the facility,
the resident would receive back a portion
of the entrance fee/loan, decreasing for each
month of residency.
The “refund” of the loan would be made
18 months after the resident’s departure or
when a new entrant to the facility wanted
to buy the license to occupy the unit occupied
by the resident, whichever came first.
As a practical matter this indefinite delay in
return of the entrance fee/loan could materially
hamper the ability of a resident to move
out of the facility.
I understand the policies of CCRCs on
this issue are not uniform. Connecticut
law requires that the operators of these
facilities, some being for profit and some
nonprofit, give prospective residents disclosures
about certain relevant facts regarding
the arrangement. The documents I saw
ran to well over 100 pages in total and read
much like a disclosure for a mutual fund or
investment governed by the SEC. To me, they
seemed ill-designed to give consumers plain
language information about some of the
most important things.
My understanding is that prospective residents
are encouraged, but not required, to
have the arrangement reviewed by an attorney
or financial advisor before loaning the
facility hundreds of thousands of dollars. My
sense is that prospective residents may see a
move into such facilities as “their last move”
and for that reason may not give as much
scrutiny to the instruments as is appropriate
for a complicated transaction of this nature.
I note there is a Connecticut Continuing
Care Advisory Committee, members of
which are appointed by the Commissioner
of the Department of Social Services. I was
interested to see that at a recent meeting,
the president of the Connecticut Continuing
Care Residents Association (ConnCCRA)
submitted a formal letter outlining areas of
concern as follows: that debt incurred by any
CCRC be incurred solely to benefit the CCRC
in question; that residents be allowed to participatemeaningfully
in budgetary decisions
that impact increases in monthly service
fees; that all such fees be used exclusively for
the CCRC that generate them; and that owners
of CCRCs be required to notify residents
in advance of any contemplated increases in
the debt that the CCRC carries.
No doubt entering a well-run and solvent
CCRC can be a good decision for those with
the means to afford such a move. That said,
the arrangement between the facility and its
residents strikes me as unique, complicated,
and likely of a sort that the consumer has not
encountered before. Therefore, in considering
buying into a CCRC, the consumer may
be at a substantial disadvantage in knowing
what to look for and what to ask about.
The relationship between the facility and
potential resident is, at least at the start,
that of a seller to a buyer; and in my experience,
sellers want to sell their products.
Buyer beware, as the old saying goes.
When considering such a move into a CCRC,
the consumer may be in a living situation they cannot maintain. It may be in a time of high emotion, and they may be feeling some
pressure to make a decision. Any person
considering amove into such a facility would
be well advised to take their time, proceed
with caution, educate themselves about how
CCRCs operate in general, and learn the particular
details of any specific CCRC they are
Speaking to other residents, and to the
members and leaders of the CCRC resident
association, could provide useful insights.
Ask the hard questions and demand clear
answers. Retain advisors to counsel you
who will help you understand what you are
doing, and make a decision that is best for
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Andrews & Young,
Attorneys at Law
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Waterford Professional Complex
Waterford, Connecticut 06385
112 New London Road
Groton, Connecticut 06340
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Andrews & Young, PC, assists clients with Estate Planning, Wills and Trusts, Special Needs and Supplemental Needs Trusts, Trust Administration, Probate and Estate Administration, Conservatorship, Elder Law, Title 19 and Medicaid issues, Planning to address the costs of nursing home care, and Residential real estate, throughout eastern Connecticut, including New London, Waterford, East Lyme, Niantic, Lyme, Old Lyme, Montville, Uncasville, Groton, Ledyard, Gales Ferry, Stonington, North Stonington, Norwich, Old Saybrook and Mystic.