If you fully understand the value of estate planning, you are probably gratified by the thought that you will be able to leave behind some resources for your loved ones to draw from after you are gone. Many people feel this way, but you should be aware of a certain unpleasant reality so you can take the right steps to preserve your legacy.
Latter Life Expenses
When you reach the age of 65, you will qualify for Medicare under existing laws. This government health insurance program for senior citizens will provide a strong safety net, but there are out-of-pocket expenses that you must pay yourself. You should look into the subject to prepare yourself accordingly when you are putting your retirement plan in place.
You may be surprised to hear that seven out of every 10 senior citizens will someday need help with their activities of daily living. About 35% of these people will eventually reside in nursing homes. Since Medicare exists to address the health care needs of elders, you may assume that it would cover a stay in a nursing home.
In fact, this is not the case at all. Medicare will pay for convalescent care after an injury or illness when full recovery is expected, but it does not cover the convalescent care that you would receive in a nursing home.
This is a significant gap in the coverage because nursing homes are very expensive. In the Charlotte area where we practice law, you can expect to pay somewhere in the vicinity of $90,000 for a year in a nursing home. People sometimes spend extended time in these facilities, and two rounds of expenses may present themselves if a husband and wife both require nursing home care.
These costs can ultimately consume all or part of the legacy that you have always intended to leave behind to your loved ones. It is important to be aware of the potential for significant nursing home costs when you are putting your estate plan in place.
Irrevocable Trust
Medicaid is another government health insurance program that is jointly administered by each respective state government along with the federal government. This program will pay for nursing home care, but there is a low asset limit because of the fact that it is intended for people with sparse resources.
In spite of this, most elders that are in nursing homes are using Medicaid to pay the bills, and the majority of them were never financially needy. To qualify for Medicaid to pay for long-term care, you could convey assets into an irrevocable trust.
Until and unless you apply for the program to pay for long-term care, you could continue to receive income that is generated by assets that you convey into the trust. If you do seek Medicaid eligibility to cover nursing home costs at some point in time, the principal that is in the trust would not be looked upon as your personal property.
This can allow you to qualify for Medicaid coverage to pay for the care that you need. However, since there is an income limit along with the asset limit, the income that is earned by the trust’s assets would be absorbed by Medicaid.
Attend a Free Seminar
This is one of many things that you should take into consideration when you are crafting your legacy plan. If you would like to obtain information, there are some great opportunities coming up in the near future.
Our attorneys frequently hold seminars, and they are being offered free of charge so you have everything to gain and nothing to lose. We do however ask that you register in advance so that we can reserve your seat, because the sessions can fill up fast. To do just that, visit our seminar page and follow the simple instructions.
Schedule a Consultation!
You are cordially invited to the seminar of your choice, but if you would like to take the ultimate step instead, our doors are open. You can send us a message to request a consultation appointment or call us at 704-944-3245 (Charlotte, NC or Huntersville, NC), or for individuals in Kentucky, at (606) 324-5516 (Ashland, KY) or (859) 372-6655 (Florence, KY).
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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