What happens to the farm if a family member needs nursing home care? For some farm families, the answer could mean selling off land or equipment to cover rising longterm care costs —now topping $100,000 per year.
“These expenses are not optional,” said Robert Moore, attorney and research specialist with CFAES. “If someone needs nursing home care, those costs must be paid — and they require cash.”
Unlike other farm expenses, which can be delayed or reduced, long-term care costs are fixed and immediate. For families with limited cash reserves, these costs can quickly lead to the liquidation of land or equipment.
“Most farms are land-rich and cash-poor,” Moore said. “Once cash runs out, the next option to pay for care is selling farm assets.”
That’s why Moore, who contributes to OSU Extension’s Farm Office, recommends families assess their long-term care risk before costs arise.
“The first step is understanding how vulnerable your farm is,” he said. “Some families have enough income to cover care. Others, with modest income or savings, might need to take more aggressive steps to protect their operation.”
Planning in advance is critical. Medicaid rules typically limit the ability to transfer assets within five years of entering a nursing home. Without early planning, options to protect the farm could be limited.
“Waiting until someone needs care will significantly reduce the options available,” Moore said. “Long-term care planning generally needs to happen years before care is needed.”
For families hoping to pass their farms to the next generation, this kind of planning can help ensure a smoother transition and reduce the risk of asset loss, he said.
Moore offers four tips for managing long-term care risks:
1. Evaluate your risk. Understand your income and how quickly long-term care costs could affect your farm.
2. Plan early. Strategies are more effective when implemented years in advance.
3. Consider legal tools. In some cases, tools such as irrevocable trusts could help protect assets.
4. Consult a professional. Work with an attorney or advisor experienced in long-term care and farm succession.
“Every farm situation is different,” Moore said. “There’s no one-sizefits-all strategy, but the key is to not wait.”