How I Help Families Qualify for Medicaid and Avoid Dying Broke in the Nursing Home Even When You Own Over $500,000 in Assets

There are usually three types of estate legal programs, more or less, that I will recommend for a client based on their unique circumstances and these include:

  1. The Last Will and Testament Plan
  2. The Revocable Living Trust Plan
  3. The Irrevocable Medicaid Trust Plan

Each plan is unique to the client’s specific needs. However, each plan includes the important disability legal documents including the Financial Power of Attorney, Health Care Power of Attorney, and Living Will Declaration. Although, a very common question or statement that I receive from many clients is that:

“I cannot spend my time worrying about Medicaid and nursing home expenses, I have too much money and will never qualify.”

However, this is a very common misconception about Medicaid eligibility. It is true that those who are of limited financial means and who are in need of nursing home care qualify for Medicaid assistance to cover their nursing home expenses. Medicaid allows you to own a home, a vehicle, a prepaid funeral, and no more than $2,000 worth of other assets in your name. With the cost of nursing home expenses ranging from $5,000 to $8,000 per month it is quite common for a family to run through their entire life savings in just a few years in the nursing home. In addition, after you die, Medicaid will exercise their estate recovery rights by forcing your estate to sell your home so that Medicaid can be reimbursed for all the costs that were paid out while you were in the nursing home and accepting Medicaid benefits.

However, there are legal strategies that allow me to protect the assets of a family that even have over $500,000 in assets from “nursing home spend down.” These strategies include what is referred to by lawyers as an Irrevocable Medicaid Trust. What these trusts allow you to do is transfer all of your assets into the name of this irrevocable Medicaid trust, and so long as you set this trust up and fund the trust with all of your assets at least five years before nursing home expenses begin, you will immediately qualify for Medicaid and you will not have to spend down your own assets on your nursing home care.

In addition, you are able to maintain control over all of your assets that are transferred into the Medicaid trust. However, you are not allowed to remove the trust assets out of the trust, and put them back into your own name. Although, if you need some of your assets back you can simply make a distribution from the trust directly to one of your adult children and then that adult child can give those assets back to you the very same day.

However, another benefit of using the irrevocable Medicaid trust as a legal strategy is that since all of your assets have been transferred into the name of this trust, then after you die, not only is probate avoided and the estate settlement is completed within days as opposed to months or years, but since there are no assets in your name, there is no estate recovery rights to exercise as your home is not in your name.

If you have questions about estate planning, irrevocable and revocable living trusts, and avoiding nursing home expenses, please reach out to me before you go see any other lawyer or make any other decision on your estate planning so I can send you our free legal report “Estate Planning in Tennessee,” which goes over all the common questions about probate in Tennessee, Medicaid, nursing home expenses, and protecting your assets for your loved ones.

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