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That is why I frequently call estate planning a “team sport”. Because, it is best for your trusted advisors to collaborate and communicate with one another to make your plan. If you’d like to protect your money from Medicaid, making a plan to age in place is a good start. But if you have too much money or property you won’t qualify for Mainecare home-based services. So how do you qualify if you have too much money or property?
If you have ever had a close relative in a nursing home, you know that nursing home costs are already high and steadily rising. In Michigan, the average daily cost of a nursing home is $249 per day, which translates into $90,885 per year—and that’s only the average. The cost could be much higher, especially for a private room in a modern facility. A MAPT holds assets for the benefit of those you name as a beneficiary. It is possible to give the Trustmaker the power to change the death beneficiaries during the Trustmaker lifetime. In this article, we’ll discuss what costs you should expect, what Medicaid will cover, and how to protect your (and your parents’) assets.
Three Tips to Protect Your Assets when Your Spouse Needs Nursing Home Care:
The Medicaid look-back rule is complex and can have a significant impact on an applicant’s eligibility for benefits. As a result, it is important for anyone who is considering applying for Medicaid to consult with an experienced Elder Law attorney to ensure they do not inadvertently jeopardize their eligibility. Medicaid is determined by level of need, and it’s important to consider what assets your parents have before applying for Medicaid. Establishing an emergency fund is an important step in achieving financial stability and growth.
And if you do end up going into a nursing home, then the stay is much shorter. There is an asset protection plan that takes both into consideration. In upcoming options you’ll learn how you can plan to qualify for benefits to help you age in place, maintain control of assets you give away, and if the time comes, qualify for a nursing home.
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Under those circumstances, Medicaid must and does cover the entire costs of care for the nursing home spouse. However, Medicaid has the right to seek recovery against the healthy spouse in the future. So when you or your spouse pass away, the value of your house is included in your estate, Medicaid will force the estate to sell the house and they will recapture the amount that they paid for your care. Give financial gifts.Gifting financial assets to your family to lower your net worth could help you qualify for more Medicare assistance. But there’s a limit to how much you can give without encountering the gift tax. But depending on your situation, you might be comfortable with ceding control of the assets.
After more than twenty years of estate planning, I’m certain that many of the transfers that worked were pure luck. The reason we’re focusing on for this top ten list is loss of assets due to the high cost of nursing home care. If you have a Will, but have to spend every penny on a nursing home, or die with a Medicaid Mainecare lien on your house, then your beneficiaries are not going to receive that intended gift.
USING ASSETS TO PAY OFF DEBTS AND EXPENSES
For most people, a year or two in a nursing home could wipe out a lifetime of savings. Even for the fortunate few with a bigger nest egg, a stint in a long-term care facility could take a major bite out of assets they had planned to leave to their family. The assets of a married couple are considered jointly owned, regardless of how they are titled. This means that each spouse has an equal interest in the property. When it comes to Medicaid eligibility and benefits, this joint ownership can have a significant impact. For example, if one spouse needs to go into a nursing home, the other spouse may not be able to keep all of the couple’s assets.
To protect privacy I’ll omit any names and change the facts just slightly. The questioner was 67 years old and in fairly good health. Their Florida home was worth $500,000, with approximately $200,000 owed on the mortgage.
This is referred to as Medicaid's “lookback” provisions. If Medicaid determines that you conducted a non-exempt transfer, you can be penalized and not allowed to qualify for Medicaid for a certain number of years. It is very important that you speak with an elder law attorney before attempting to transfer funds to qualify for Medicaid.
Create or modify your wills to include a testamentary trust providing for the welfare of the surviving spouse. Although a portion of the funds from the original trust “pour over” into the deceased spouse’s estate, the testamentary trust included in his will protects that money from being seized to pay nursing home expenses. This provides financial protection for both you and your spouse regardless of which of you dies first. A revocable living trust allows you to retain control over the assets you've placed in the trust, but there are certain circumstances where an irrevocable living trust is the better option. With that in mind, here's how to protect your assets from nursing home costs.
One way to help offset the cost of nursing home care is to gift money prior to admission. Any remaining assets in the trust can be distributed to your heirs after you die. You can also gift assets to your children or other loved ones. However, if you give away assets worth more than $14,000 per year (or $28,000 per couple), you may be subject to gift taxes.
Transfer money into a Medicaid Asset Protection Trust. With a Medicaid Asset Protection Trust , you transfer all of your assets to the trust and thereby give up the ability to control those funds. You can remain in your home and your income is outside of the trust but the principal of the trust is protected and does not count towards your Medicaid asset total. Also note, that trusts are subject to seizure in Missouri Case Law-find Mo V. Violet J. Knight and Tommy Jones, Appellants.
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