When you’re healthy, it can be hard to imagine needing long-term care, especially if you have taken good care of your health throughout your life. Even if you don’t expect to need long-term care, you should not overlook the costs. Here, our Charlotte Medicaid lawyer will discuss asset protection issues.
Longevity plays a factor in the need for early planning
First, we should take a look at longevity. The oldest segment of the population is growing faster than any other. The Social Security Administration tells us that the life expectancy for a man who is turning 67 today is 85; for a woman of the same age, the life expectancy is 87.
People who reach their mid-eighties often require long-term care. A leading culprit is Alzheimer’s disease. This disease strikes up to 45 percent of people who have reached the age of 85. When you think about this, you can see why long-term care should be on your radar . Our Charlotte Medicaid lawyer is here to get you started planning.
Nursing home asset protection
Long-term care is expensive, and Medicare will not help with these costs. Medicare will cover convalescent care, but it does not cover custodial care. You can protect assets as you prepare for possible long-term care costs if you take steps that lead to Medicaid eligibility. This government health insurance program does pay for long-term care.
Countable assets and resource allowances
There is a $2000 limit on countable assets for an individual, but some things are not countable, including your home (with an equity limit of $552,000). Plus, if you are married and you apply for Medicaid while your spouse is still capable of independent living, your spouse could keep half of the assets that are considered to be countable up to a certain amount. This is called the Community Spouse Resource Allowance.
The maximum Community Spouse Resource Allowance in North Carolina for 2017 is $120,900, and the minimum is $24,180. When it comes to other countable assets, you may be able to give some to your loved ones before you apply for Medicaid coverage.
Does Medicaid count assets in a living trust?
A revocable living trust can be a good estate planning choice for many people, but a living trust will not satisfy all objectives. If you convey assets into a revocable living trust, they would be counted by the Medicaid program if you applied for long-term care assistance. Since this type of trust is revocable, you can take back personal possession of the assets at any time. Because you retain this level of control, the assets would be counted by Medicaid.
Charlotte Medicaid lawyer suggests using Medicaid trusts
Though assets conveyed into a revocable living trust would be countable for Medicaid purposes, there is another type of living trust that you could use to get assets out of your own name. In addition to revocable trusts, there are also irrevocable trusts that you cannot rescind or dissolve. Assets that have been conveyed into an irrevocable Medicaid trust would not be countable if you apply for Medicaid more than five years after placing the assets in the trust.
Plus, if you have income producing assets, you could create an income only Medicaid trust. The principal would not be counted, but you could continue to receive income from the earnings of the trust before you apply for Medicaid. However, the income would have to be spent on long-term care even after you qualify for Medicaid to pay for living assistance.
Even if you expect to need long-term care within five years, there are often planning options available to preserve some assets for the family.
Join us for a FREE seminar today! If you have questions regarding a long-term care, Medicaid or any other elder law matters, please contact the experienced attorneys at The Potter Law Firm for a consultation. You can contact us either online or by calling us at (704) 944-3245 (Charlotte, NC and Huntersville, NC), or for individuals in Kentucky by calling (606) 324-5516 (Ashland, KY) or (859) 372-6655 (Florence, KY). We are here to help!
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
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