Elder Law Lawyers Share Options for Asset Protection

When you are young, the concept of long-term care can seem alien to you. This may be especially true if you have taken good care of your health throughout your life. You may feel that it is unlikely you would ever need long-term care. Statistically, you should not overlook the costs of long-term care, and have a plan to pay for that care, should you ever need it. Here, our elder law lawyers will discuss asset protection issues.

Longevity plays a factor in the need for early planning

First of all, we should take a look at longevity. It is be logical to assume that healthy people are going to enjoy long, healthy lives, and in fact, the oldest segment of the population is growing faster than any other group. 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 do 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 consider all of these facts, you can see why long-term care should be on your radar when you are developing a plan for your golden years. Our elder law lawyers are here to help you get started planning.

Nursing home asset protection

Long-term care is quite expensive, and Medicare will not help with these costs. Medicare will cover convalescent  care, but it does not cover custodial care. Medicaid is the government sponsored health insurance program that can help you pay for long-term nursing home costs. You will need to protect your family’s assets, as you prepare yourself for possible long-term care costs, while you take steps that lead to Medicaid eligibility.

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. 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. This is called the Community Spouse Resource Allowance.

Does Medicaid count assets in a living trust?

A revocable living trust can be a good estate planning choice for many people, and you do not have to be extraordinarily wealthy to realize the benefits. However, a living trust will not satisfy all objectives. Many people seek eligibility for Medicaid late in their lives because this government-run health insurance program pays for long-term care. The majority of elders will someday need help with their activities of daily living, and Medicare does not pay for this type of assistance.

If you convey assets into a revocable living trust, these assets would be counted by the Medicaid program if you were asking the program to help pay for long-term care assistance. Since this type of trust is revocable, you can take back personal possession of the assets at any time, and you can also act as the trustee and the beneficiary while you are living. Due to the fact that you retain this level of control, the assets would be counted by Medicaid and you would have to spend these assets to pay for your care, before receiving assistance from Medicaid.

Elder law attorneys suggest using Medicaid trusts

Though assets that have been conveyed into a living trust would be countable for Medicaid purposes, there is another type of trust that you could utilize if you want 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 after a certain number of years.

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, there are asset limits that you must stay within to qualify for Medicaid, so that income may be absorbed by the program if you do eventually qualify for Medicaid to pay for living assistance.

Join us for a free seminar today! If you have questions regarding asset protection, 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 in North Carolina or (606)324-5516 in Kentucky. We are here to help!