We often have elderly clients and their adult children come into our office with the fear, “Will I lose everything to the nursing home? Fortunately, there are often options to alleviate this fear and protect assets.
Ryan and his elderly father, John, age 71, come into the office for a Medicaid/nursing home consultation. John is still living independently but is concerned about his future. He doesn’t want to be a burden on Ryan and his sisters and he doesn’t want to spend any more of his assets on the nursing home than he has to.
Fortunately, there is a lot we can do for John because he is planning ahead. The Medicaid look back period is five years. This means that when (and if) John ever needs to apply for Medicaid benefits to pay for nursing home care, Medicaid will look back at his financial transaction over the previous five years. If there have been financial transfers for less than full value (gifts), he will be disqualified from receiving Medicaid to pay for his nursing home costs for a period of time as determined by a governmental formula.
First and foremost, we will put a good estate plan in place for John. He names Ryan and his daughters as trusted helpers: executor, trustee, and power of attorney agents. Because Ryan is a CPA, he chooses Ryan to serve as the primary executor, trustee, and financial power of attorney agent. Because his daughter, Michelle, is a medical doctor, he names her as his health care power of attorney. All children serve as back up trusted helpers, or fiduciaries, if the primary fiduciary is unable or unwilling to serve when needed.
We set up an income only trust to protect John’s assets. He gifts most of his assets into the trust which would provide him income to pay his bills and meet his needs. This would protect his assets from the nursing home; John decides he wants the assets to pass to his 7 grandchildren at his death.
If you don’t want to save assets from nursing home expenses, be sure to consult with a qualified elder law – estate planning attorney.
- 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