SBC: Let’s take a closer look at the situation when real estate is involved. Many families assume that their children or grandchildren will eventually inherit the family home. When can this become a challenge if a family member is admitted to a nursing home?

Gromes: Here’s how it works in practice: Anyone who moves into a nursing home and applies for welfare must disclose whether they have made any gifts in the past ten years. If this was the case, they must truthfully check “Yes” —anything else would constitute welfare fraud. The social services office then reviews the case, requests a copy of the notarized contract, and contacts the children who co-signed the gift agreement. Finally, they determine whether the gift must be reversed.

In practice, this is usually not feasible at all, because the children often live in these homes themselves and have already renovated them and added value. In this case, they must pay the remaining balance. A nursing home spot costs about 4,500 to 5,000 euros; the long-term care insurance fund and pension cover part of that—and the rest remains unpaid. In practice, this averages out to about 2,000 euros per month. This pushes many families to the brink of survival.

SBC: Are there ways out of this very stressful situation for families? And when is the best time to start addressing this issue?

Gromes: Many people try to protect their home by gifting it away during their lifetime through a notarized contract. However, the ten-year period is crucial: If the gift was made less than ten years ago, the state can demand that it be reversed. As a result, ownership reverts to the care recipient’s estate, and the assets can be used to cover long-term care costs.

>> Many people try to protect their home by gifting it away during their lifetime through a notarized contract. The ten-year period is crucial in this regard. <<

To avoid this deadline, you would have to transfer ownership of a property fairly early on. The average age of admission to a nursing home is over 81, so you should start planning for this no later than when you are between 65 and 70 years old. In the notarized contract, you can also protect your interests as part of the gift, for example, by including a registered right of residence or a right of usufruct. (Editor’s note: A right of usufruct is the right to use another person’s property or assets without being the owner.)

The problem, of course, is that most people have just finished paying off their home and are already expected to pass it on to the next generation. That’s emotionally difficult, and I understand anyone who hesitates. But realistically, there’s only this short window of time to settle the matter reliably. Some people end up in a nursing home as early as age 60 after suffering a stroke—so you can never be completely prepared.

A different timeframe applies to parental support: If it is foreseeable that a parent will soon need to move into a nursing home, the children should seek legal advice about half a year to a year in advance. That way, there is still time to make preparations and arrange matters.

But that only works if you plan ahead. Once the social services office sends a letter, it’s too late. The tricky part is that a fall or a hospital stay often sets everything in motion all of a sudden—then the parent can’t come home anymore, and the window of opportunity has closed.

SBC: Are there any pitfalls to watch out for in a gift agreement?

Gromes: Something that is often overlooked: A right of residence or usufruct has a real monetary value. If, for example, this right is worth 20,000 euros a year, the beneficiaries—such as the children—may be required to pass this amount on to the nursing home annually.

>> A right of residence or usufruct has a real monetary value. If, for example, this right is worth 20,000 euros per year, the beneficiaries—such as the children—may be required to pass this amount on to the nursing home annually. <<

That is why the contract should clearly stipulate that the right of residence ends when the person moves permanently into a nursing home—not only upon death. For example, you can stipulate that after six months in the nursing home, the move is considered permanent. Especially in old age, moving into a nursing home is usually final anyway. If this is stated in the contract, you’re on the safe side.

And here’s another common, costly mistake: If an existing right of residence is subsequently revoked without compensation, this constitutes a new gift under the law—and the ten-year period starts over. Many people overlook this as well.

SBC: If the property only becomes an issue upon inheritance, is it still possible to receive a bill from social services?

Gromes: That depends on what benefits the deceased received. In the case of benefits intended solely for living expenses, nothing is recovered. In the case of long-term care benefits, however, benefits are recovered—in which case the heirs may be held liable. However, this is always limited to the value of the inheritance; there is a cap on the amount.

Here’s an example of such a case: One spouse still lives in the house, so it’s protected and cannot be seized. When that spouse dies, the children inherit the house—and that’s when social services gets involved. Some agencies, such as the one here in Darmstadt, even have themselves entered in the land registry.

SBC: In your experience, what are the most costly mistakes that family members and those affected make?

Gromes: Children far too often pay out of their own pockets without checking whether they’re actually required to. I see this happen all the time in practice: Someone moves into a nursing home, there’s a shortfall between the costs and their pension, and the children simply cover it. But there’s a perfectly normal legal provision for this: social assistance. After all, the children are only liable if their income exceeds the annual income threshold of 100,000 euros. Nevertheless, many pay out of their own pockets without asking themselves whether they’re actually obligated to do so.

>> All too often, children pay out of their own pockets without checking whether they actually have to. <<

You should apply for social assistance immediately—not wait six or twelve months. You are allowed to keep 10,000 euros in your account as exempt assets. People often delay filing the application out of shame or fear of dealing with social services, even though there is nothing to hide. That is the real, costly mistake.

Furthermore, my clients often pay more than is necessary. Here’s an example: When care costs rise, it’s sometimes due to investment costs. It’s perfectly fine to ask: What exactly was invested? What formula is used to allocate these costs? I had a case where someone had to move into a room that was four square meters smaller, yet the rent remained the same—and when I asked for an explanation, I received no answer. As a family member, this can make you unpopular, and you have to realize that the nursing homes hold all the cards. Anyone who withholds payments certainly risks having their contract terminated. But you don’t have to accept every increase without question. It’s worth asking questions.

SBC: What advice would you like to offer families who are currently caring for a loved one?

Gromes: Get a clear picture of all the figures related to retirement, assets, and costs early on. Don’t worry if one of your parents is still living in the house or apartment. That person is allowed to stay there—they don’t have to move out just because the house might be too big. Of course, in the case of very large properties, social services will eventually check whether the property needs to be sold. But often these are older homes in need of renovation that aren’t all that easy to sell or rent out.

And this is what matters most to me: Don’t provide care at home any longer than necessary. Time and again, I see family members caring for loved ones far beyond their limits, to the point where they themselves become ill. The wife who cares for her husband day in and day out, even though she herself has long since needed care—out of fear of losing the house. This happens far too often and goes on for far too long.

And finally: Seek advice early on, not just when you receive a letter from the social services office. If you wait too long, you’ll lose the very options you would have had otherwise.

Thank you very much for the interview!

Stefani Gromes has been practicing law in Darmstadt since 2000 and is a certified specialist in social law. At her law firm, she specializes in social and family law, with a focus on parental support, long-term care, pensions, and issues related to reduced earning capacity. Learn more at http://www.arbeitsrecht-da.de.