Protecting Your Assets from the Nursing Home

A common story that I hear nearly every day in my law practice is regarding the nursing home. Almost every week I will receive a call to my office from the adult children of an aging parent. The children almost always call in a panic because they admitted their mother to a nursing home 3 months ago and have been paying the $8,500 nursing home bill for the third month in a row, and they are spending through their parents’ life savings too quickly, and they don’t know what to do.

Every time I hear the story I listen, I sympathize, but at the end of the day, I give the adult children the same response … I’m sorry, there is not much that we can do. There is a type of planning that you can engage in to protect your assets from the nursing home. However, you must engage in this planning at least five years in advance of going into a nursing home.

The type of planning that I am referring to is called Medicaid Planning or the Medicaid Irrevocable Trust. In general, nursing homes will cost a minimum of $5,000 per month and even upwards of $11,000 to $12,000 a month or more. Medicaid is a form of financial assistance for disabled elderly patients who require nursing home assistance. However, you have to qualify for Medicaid. In order to qualify for Medicaid, you can own no more than one house, one car, one prepaid funeral, and $2,000. If you own more than this amount in assets, Medicaid will force you to spend down all of your extra assets on your own care before qualifying for any long term care Medicaid.

However, it gets worse! After you die, Medicaid is authorized to pursue their estate recovery rights, which requires Medicaid to recover the costs that they paid out by forcing your estate to sell your home so that Medicaid can be reimbursed for all those costs that were paid out while you are in the home accepting Medicaid benefits.

Although, there is planning that you can do today so that you can protect your assets from having to spend them on your future nursing home costs. This is referred to as Medicaid Planning or the Medicaid Irrevocable Trust. However, in order to benefit from this type of planning, you must set up your Medicaid Irrevocable Trust and fund your trust at least five years before you go into a nursing home. If you do not perform this planning exactly right, then Medicaid will issue a penalty period, which is a period of time that you must pay for your own nursing home care because you transferred assets within the five year look back period.

If you have questions or concerns regarding Medicaid Planning, or you feel that Medicaid planning may be the right type of estate planning for you and your family, then please contact our office for a complimentary visit and planning session so that we can discuss your needs in further detail.

We look forward to hearing from you!

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