By David S. Hilzenrath
Sunday, November 1, 2009
If you are considering moving to a continuing care retirement community, 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. A "Residence and Care Agreement" for Ashby Ponds, an Erickson community in Ashburn, illustrates some of the trade-offs the decision could entail.
You might be drawn to Ashby Ponds by the potential to avoid another disruptive move when you are least able to cope with it, but there is no guarantee you would be able to move to an assisted-living or nursing facility on the same campus -- even when those facilities are completed. If the assisted-living and nursing home beds at Ashby Ponds are full, management could arrange for you to go elsewhere.
(Some delay in building those facilities is routine at Erickson developments, said Ronald E. Walker, chairman of a nonprofit group associated with Erickson campuses. Though Ashby Ponds opened in September 2008, the assisted-living and skilled-nursing portions were not expected to open until the end of 2011 or the beginning of 2012, according to a May report from the community's management.)
The deposit you post to move in does not limit the amount you could be required to pay on a monthly basis; management can raise the monthly fees. In addition, the fees can go up as you move from one level of care to the next. At Erickson communities, the average monthly fees range from $1,750 for singles in independent living to $5,178 in assisted living and $307 per day -- as much as $9,517 per month -- in the nursing homes, Erickson spokesman Mel Tansill said.
Management can decide to transfer you to a higher level of care. If you refuse to go, management can kick you out and hold on to your deposit until 60 days after it finds a new tenant.
To gain admission to the community, you have to pass financial and medical reviews. If you marry a nonresident, your new spouse would have to pass such a review before being allowed to move in.
To reassure management that you have the ability to pay expenses, you must agree not to give away any assets that would bring your net worth below a minimum requirement. 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.
Unlike a real estate investment, the deposit you post to enter the community does not grow as property values rise. But it can shrink as property values fall. If it takes management a long time to replace you, you may be offered the option of accepting a smaller payout so that management can in effect cut the price of admission for the next tenant to occupy your apartment.