I was recently speaking with a family a few weeks ago from Franklin, Tennessee, and like many families that I speak with, have concerns about the nursing home. This family’s primary concern was that they did not want to lose all of their wealth in the event that they went into a nursing home. I explained that this was a very common concern of many families. Specifically, with the ever increasing cost of health care and nursing home costs, many families end up spending most of their savings in just the first few years of a nursing home stay and rely on Medicaid to pay for the remainder of their stay.
However, I explained to this family a legal strategy that would allow them to protect their assets from nursing home spend down and losing all of their savings due to nursing home expenses. I discussed with this family that us lawyers in the legal world refer to this strategy as an Irrevocable Medicaid Trust. I discussed with them that a trust is a separate legal entity that would now hold all or a majority of your assets that would be subject to being spent prior to becoming qualified for Medicaid. During your lifetime you would continue to manage, control, sell, get rid of, and buy new property at any time.
Although, I explained two very important rules and restrictions that come with part of this type of Medicaid planning. I explained that once we set this trust up and transfer all of your assets into the name of the trust, you will not be allowed to remove any assets from the trust and put them back into your own name. In addition, I explained that you will not be allowed to revoke this trust in the future. However, I explained that if you need any of these trust assets back in your name, all you have to do is to simply make a distribution from this trust to one of your adult children, who can then turn around and give those assets back to you the very same day. In addition, I explained that a trust protector can be appointed in your trust that allows a lawyer to amend your trust document in the future so that it conforms with your wishes.
However, I discussed with this family the most important rule. I explained that Medicaid planning has very specific rules, and one of these rules are that in order to protect your assets from Medicaid spend down, you must set this up at least five years before you go into a nursing home. Therefore, I explained, it is very important that you set this trust up as soon as possible so that you can start the five year look back clock.
If you have questions about estate planning and Medicaid planning in Tennessee or how you can set up your legal affairs so that your assets are protected and you provide your loved ones with a smooth transition of your assets after your death, then I encourage you to attend one of our live free educational events scheduled this month. At these events you will hear a lot of real life stories about families that paid thousands of dollars in unnecessary expenses, families that were able to avoid unnecessary expenses, and families that enjoyed zero government intrusion into their families’ private lives.
I look forward to speaking with you at one of our upcoming live educational events!