When you think about the term “asset protection,” lawsuits will probably come to mind. While it is true that people who are concerned about legal actions can take steps to protect assets, there is another type of asset protection that can enter the picture when you attain senior citizen status.
Let’s look at the facts.
Seven out of every 10 senior citizens will need living assistance eventually according to the United States Department of Health and Human Services. This is a compelling statistic that comes as a surprise to many people.
Long-term care is extremely expensive, and most people could not comfortably pay out-of-pocket. Medicare is not the solution, because this program will not pay for long-term care.
This is why nursing home asset protection is important. If you take the right steps, you may not lose everything to devastating nursing home costs.
Nursing home asset protection will typically involve eligibility for Medicaid. This government program will pay for long-term care, but you cannot qualify if you have significant assets in your own name, because it is a need-based program.
To qualify for Medicaid, you could divest yourself of assets before you apply. Many people will give their loved ones their inheritances in advance as it were.
When you hear the above, you may breathe a sigh of relief. If you ever find out that you need long-term care, you can give your resources to your family members, and you can then have Medicaid pay for your care. Unfortunately, things do not work that way.
There is a five-year Medicaid look-back. Your eligibility is delayed if you give gifts within five years of applying for coverage. To provide a simple explanation, if you gave away enough to pay for two years of nursing home care, your eligibility would be delayed by two years.
If you act in advance, you can keep assets in the family as you become eligible for Medicaid coverage at the ideal time. A nursing home asset protection strategy will often involve the creation of a Medicaid trust. This would be a trust that you cannot revoke or dissolve. You could potentially receive income from the earnings of the trust before you apply for Medicaid, but the principal would not be counted.
There is a lot to digest if you want to understand the lay of the land when it comes to nursing home asset protection. This is understandable, and we would be glad to help if you would like to take action to protect the interests of your family.
We offer free consultations, and we can answer all of your questions and help you put a plan in place if you decide to proceed. To set up an appointment, send us a message through this page: Indianapolis IN Nursing Home Asset Protection.
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.