You can protect your assets when you need long term care if you plan early, choose the right strategy, and get legal help from an attorney who understands elder law and estate planning. The best method of asset protection for you will depend on your specific situation.
Many people worry about what will happen to their home and other assets if they need long term care. You may have heard stories of nursing homes taking people’s houses and savings. However, that’s not quite how it works, and the right plan can help you safeguard your assets.
When you are considering estate planning, it is smart to consult with a Texas elder law lawyer. Our team has over 120 years of combined experience, helping people plan for the future and deal with the legal aspects of aging. Contact us today to discuss your concerns.
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Do You Need an Attorney to Plan for Long Term Care?
While you can learn a lot through research, and you may even come up with some solid strategies for protecting your assets, it is always important to consult with an elder law attorney. An experienced attorney can offer advice and help you avoid many common mistakes.
Lawyers who deal with long term care asset protection strategies can help you understand the roles different organizations will play, such as the long term care facility and Medicaid. We can also help you unravel any complicated relationships that may concern your assets.
Planning for long term care means having a full view of your situation. A lawyer can shed light on concerns you may not have considered, suggest strategies you didn’t think were possible, and help with legal documents that can protect your assets.
For a free legal consultation, call 800-562-9830
Understanding Medicaid
Medicaid is a key factor when considering how to protect your assets if you need long term care. This is a state-administered, federally funded program intended to provide financial assistance for individuals with limited income and assets.
Many nursing homes rely on Medicaid payments as a major source of income. There’s a common myth that a nursing home will take your house if you need long term care. Nursing homes don’t seize property, and can’t legally do so.
However, Medicaid can place a lien or recover costs from your estate after death, depending on the situation. This is known as estate recovery and is one reason why planning ahead is so important.
Why Would I Need Medicaid?
Long term care facilities are expensive, and even people with good retirement incomes may lack the ability to pay their monthly cost of care. Nursing homes look to Medicaid to help fill in the gaps, but first, you need to qualify.
Living in a skilled nursing facility meets the need criteria for Medicaid, but if you have a home, savings, or other assets, you may not meet the financial requirements. You will need to spend down your assets and account for things like your home during the application process.
The alternative to Medicaid is paying out of pocket for your full cost of care, so it is advantageous for most people to apply and qualify. However, if you plan correctly, you can protect your assets even if you need long term care.
Can I Just Give My Assets Away to My Children?
While Medicaid rules allow for limited gifting in very specific circumstances, in most cases, giving away an asset means you will be forced to wait out a penalty period until you are eligible for Medicaid.
When you apply, Medicaid considers your present assets but also looks back five years to see if you have dispersed any additional assets. If you must sell your home or any other assets, it is advisable to do so for fair market value. Then, you must account for the proceeds of that sale.
The rules and penalties regarding Medicaid eligibility and the right to put liens on your assets are complicated, which is why it is so important to speak with an attorney to help with your estate planning.
Strategies for Protecting Your Assets
Your attorney can help you devise a plan for protecting your assets if you need long-term care. Some strategies you might consider include:
Irrevocable Trusts
An irrevocable trust transfers assets to a trust that you cannot control once it is established. This protects the assets from Medicaid after five years, as they no longer belong to you. It can also shield assets from creditors and estate recovery.
Life Estate Deeds
A life estate deed lets you transfer home ownership to someone else while retaining the right to live there until you die. After your death, ownership automatically goes to the designated beneficiary, avoiding probate and protecting the property from Medicaid recovery.
Long-Term Care Insurance
Long term care insurance covers care costs not included in regular health insurance, like nursing home or in-home care. Buying it early may protect your assets by covering care expenses and reducing the need to exhaust savings or rely on Medicaid.
Spousal Protections
Medicaid spousal protections enable your healthy spouse to retain some assets and income when long term care is needed. Although Medicaid sets limits, smart legal strategies can help protect your spouse from financial hardship while you remain eligible for care.
Medicaid-Compliant Annuities
A Medicaid–compliant annuity is a financial product that converts assets into a guaranteed income stream, which Medicaid permits when determining eligibility. By using this annuity, you can lower your countable assets while still providing income.
Get Help With Your Long-Term Care Asset Protection
You can protect your assets if you need long term care by planning ahead, and consulting with an attorney who can help you make the right decision for your needs. Always speak with an elder care lawyer and weigh the pros and cons of any decisions you are considering.
Our team at Marc Whitehead & Associates has been assisting with elder law issues since 1992. Contact us today to discuss your circumstances and plan for the future.