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You can also protect your residential home, household items, and car from being taken by Medicaid after the institutionalized spouse dies. With the right guidance, all your assets can be protected from the nursing home. Also, there are different nursing homes that have their qualifications and how to apply for them. There are private nursing homes where you pay for all the services. Turning all your countable assets into uncountable assets is also another strategy.
Most seniors have Medicare financed coverage as their primary payer of health care costs. But Medicare does not pay for long term stays in a nursing facility. For an explanation of the rules governing Medicare’s limited payment for nursing home costs see my article Getting Medicare to Pay for more of your Nursing Home Stay. Probably because there is such a trust — an irrevocable trust. Properly executed, you may protect your assets from nursing home expenses if — and it’s a big if — those assets were transferred to an irrevocable trust at least five years before you go into a nursing home. In Mainecare asset protection planning it is far more important to know when the right time is to use an annuity than all the details surrounding Medicaid qualifying annuities.
What Is a Life Estate Deed?
Single premium lump sum deposit provides a total coverage benefit for a set amount. $100,000 single premium amount for a 78 year old would equate to $300,000 to $400,000 in coverage with a monthly benefit amount of $4,861. There are mainly two types of Long Term care solutions. The first being a monthly premium paid to provide assistance up to a max benefit base. For example, $480 premium per month for a 78 year old provides $3,600 a month in long term care expenses “in home nurse care or accredited nursing facility” for a term of 6 years, ($259,200 in total coverage).
Or, perhaps they saved the money from the nursing home, and they even had a Will. But after their son or daughter inherited the money, they got divorced, or went bankrupt, or got sued, or had a substance abuse issue. Now they lost all of the inheritance or half of the inheritance to an ex-son-in-law or ex-daughter-in-law. It’s not uncommon for a good long-term care insurance policy to cost an individual between $4,000 and $6,000 per year.
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This type of trust cannot be changed or terminated once it has been established . The assets in the trust become the property of the trust itself. The trustee is responsible for distributing the assets according to the terms of the trust. Average nursing home costs $8,910 per month for a private room and $7,800 per month for a semi-private room.
In August 2005 Robert James was admitted to Summit Health Care Facility in Wilkes-Barre, Pennsylvania. He and his wife Josephine filed a resource assessment with the PA Department of Public Welfare that showed that the couple had total available resources of $381,443. After allowing for the community spouse and institutional spouse allowances, the couple had excess resources of $278,343. This meant that Robert was ineligible for Medicaid payments. The costs are crushing; the burdens on our loved ones enormous.
What assets should not go into a trust?
Among people age 50 to 64, 71 percent of people want to age in place.” For this option you don’t even need a Mainecare lawyer. In the state of Maine, or New York, states where I practice, there are home-based Medicaid programs. You should consult with an Elder Law Lawyer if you want to know the details. Number 8 on the Top Ten Ways to Protect Your Stuff from Medicaid or a Nursing Home list means staying home as long as possible. If you need help with what they call the “activities of daily living” – shopping, dressing, cooking, you may qualify.
In 2020, there is an estate tax exemption of $11.58 million, meaning you don't pay estate tax unless your estate is worth more than $11.58 million. (The exemption is $11.7 million for 2021.) Even then, you're only taxed for the portion that exceeds the exemption. Asset protection trusts are set up to protect your wealth.
Before you can make a plan to protect your assets, it’s important to understand the financial mechanics that unfold when you go into a nursing home. AMedicaid-compliant annuityis relevant when there's a spouse who isn't institutionalized. When properly structured, it's a way to "spend down" and reduce the income Medicaid considers when deciding if you qualify for that assistance. People tend to make this purchase when they're in a last-minute or crisis Medicaid planning situation, notes Shawn Plummer, CEO ofThe Annuity Expert. After a revocable living trust is created, little day-to-day record keeping is required. If you think that your spouse may need nursing home care in the near future, you should begin looking for a quality nursing home in your area, that accepts Medicaid benefits.
Often the caretaker, in their late sixties, after having taken care of the parent for ten or fifteen years, asks for some legal advice. Sometimes they have had a Mainecare home care aid coming to the house for years . They ask me if there will be a Mainecare lien on mom’s house when she passes away to pay back the state for those ten years of home aids.
See your attorney at least every five years to make sure everything is up-to-date. Doing that, you will be prepared to consider more advanced planning options on a timely basis. You are giving everything to your children and placing complete faith in them (and, because the assets are now legally your child’s, they become subject to any creditor claims that might arise against your child). Also, there is a “five year look-back” on the transfer, so it won’t work if you need to enter a nursing home before then. Another advantage is that a revocable trust allows you to makespecific provisions for minor beneficiaries and beneficiaries with special needs.
This is because Medicaid will take into account the value of all of the couple’s assets in determining eligibility for benefits. It’s easy to see how these costs could spiral out of control quickly. The good news is that Medicare may help to cover some of the costs for low-income individuals. But even with the help of government programs, you could be facing significant costs.
They establish a Medicaid trust with their two children designated a co-trustees and they move the ownership of the house and the $200,000 investment account into the name of the trust. When your spouse needs nursing home care, it can feel overwhelming. You also may be worried about how you will be able to pay for nursing home care.
Won’t the other non-caretaker children be angry at the caretaker child for getting the whole house? These options are excellent if you have a disabled child or grandchild. But if you don’t Option 3 may be better suited to a Mainecare Crisis Plan than a Mainecare Preplan. Again, these rules are complicated, so it is best you consult with a Medicaid asset protection attorney. The child then realizes that the nursing home will cost ten or twelve thousand dollars a month. The child comes to me and says, “but I’ve taken care of mom for the last five years.
How To Protect Assets From The Nursing Home
After John’s admission to the nursing home, Marian spends the $23,000 excess by paying off the mortgage on the couple’s home, some credit card debt, and by making an advance payment of real estate taxes. Because Marian now has only $25,000 and John has only $2,000 left, John is eligible for Medicaid. Be sure to consult with a financial advisor or tax professional before making any large gifts. And finally, remember that when you make a gift, it should be given with no strings attached.
The fact is, most people, when they say they will not have any assets, what they mean is that they are going to give their asset to their kids. So, sure, you may not have any assets, but you also, will not have any way to pay for the nursing home. As always, there will likely be tax ramifications with this and an irrevocable trust, so you should consult a specialist before making any decisions. You can use Medicaid trusts to protect assets but they cannot be used to protect “income”. Monthly pension payments and Social Security income are subject to the Medicaid income threshold. For individuals that are single or widowed, your income has to below $875 per month in 2020 to qualify for Community Medicaid and below $50 per month for Chronic Care Medicaid.
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