When you have been fully capable throughout your life, 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. You may assume that it is unlikely that you will ever need long-term care, but you cannot overlook the costs of long-term care, should you ever need it. With careful planning, you can position your assets to allow you to qualify for Medicaid, while protecting some of the financial legacy you spent your lifetime earning. Our Charlotte Medicaid attorneys will explain why you should include asset protection in your Medicaid plan.
Longevity plays a factor in the need for early planning
First of all, we should take a look at longevity. It would be logical to assume that healthy people are going to enjoy a long life, and in fact, 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 reach 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 aging. Our Charlotte Medicaid attorneys are here to get you started on your 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. You can protect assets as you prepare yourself for possible long-term care costs if you take some steps that lead you to Medicaid eligibility. This government health insurance program may help pay for long-term care.
Countable assets and resource allowances
When applying for Medicaid, there is a $2000 limit on countable assets for an individual. Some assets are not counted in that $2000 limit, including your home (with an equity limit of $572,000 in 2018). Plus, if you are married and you apply for Medicaid, while your spouse is still capable of independent living, your spouse could keep up to half of the assets that are considered to be countable. This is called the Community Spouse Resource Allowance.
The maximum Community Spouse Resource Allowance in North Carolina for 2018 is $ $123,600, and the minimum is $24,730. When it comes to the assets that you have, that are countable, you should contact an elder law attorney to advise you on your options for passing assets on to family and loved ones.
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 of your objectives. Many people seek eligibility for Medicaid late in their lives, because this government-run health insurance program will pay for long-term care. The majority of elders will someday need help with the activities of daily living, and Medicare does not pay for this type of assistance.
If you convey assets into a revocable living trust, they would be counted by the Medicaid program when assessing your eligibility for the program’s 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.
Charlotte Medicaid lawyers 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.
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 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. 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.
- What You Need to Know about the Medicaid Look-Back Rule - January 3, 2023
- How to Pass Down Your Legacy in Your Estate Plan - October 3, 2022
- Practical Steps to Take after Receiving a Terminal Diagnosis - September 30, 2022
