When you are looking ahead toward your retirement years, you probably have some vision in mind with regard to what you will have left to leave behind to your loved ones. If you take the right steps, you can have sufficient resources to support your golden years as you simultaneously preserve a suitable legacy.
Potential long-term care costs are something that you should take very seriously when you are evaluating your future financial position. Most people who are fortunate enough to attain senior citizen status will eventually need long-term care. Nursing homes and assisted living communities are very expensive, and Medicare will not pay for long-term care.
How expensive is long-term care? Genworth Financial tells us that the median annual cost for a private room in an Indianapolis area nursing home is $97,411. A one-bedroom unit in an assisted living community carries a median annual cost of $47,100.
According to a government survey, the average nursing home stay is around two years and three months, and 10 percent of people in nursing homes require the care for at least five years. When you combine all of these figures, you can see that paying out-of-pocket could potentially consume all or most of what you have always intended to leave to your loved ones.
The Medicaid program can potentially provide a solution that can allow you to preserve your legacy. This government health insurance program does pay for long-term care, but you cannot qualify if you have significant resources in your own name. The limit on assets is $2,000 for an individual, but there are some things that you own that are not counted.
Your home is not a countable asset, but there is an equity limit of $552,000 for the rest of 2015. Though you can qualify while you are still in possession of your home, a Medicaid lien could be placed on the home when Medicaid seeks reimbursement.
One car that is used as a primary source of transportation is not counted, and heirloom jewelry, wedding rings, and engagement rings are not countable assets. You can qualify while you are still in possession of your personal belongings, and household goods are not counted.
To get countable assets out of your own name with future Medicaid eligibility in mind, you could convey them into a Medicaid trust. This would be an irrevocable trust, so you would not be able to take back the assets if you never need long-term care. You could however continue to receive income from the earnings of the Medicaid trust.
This strategy would preserve inheritances, because the beneficiaries would ultimately assume ownership of the assets in the trust.
Medicaid Planning Consultation
A Medicaid trust can provide a solution, but you have to act well in advance if you want to obtain Medicaid eligibility at the ideal time. If you would like to discuss the details with a licensed professional, contact us through this page to set up a consultation: Indianapolis IN Elder Law Attorneys.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.