The Importance of Estate Planning for Long-term Care Considerations
As the average life expectancy of the population continues to increase, many Americans are facing difficult situations when it comes to long-term care for their elderly or aging parents.
Imagine your Mom has recently been diagnosed with Dementia and you step up to help in whatever way you can. As the days pass, you observe the progress of the disease and recognize you need extra help caring for Mom – a lot of extra help. Maybe she suffers a fall, or is unable to manage her finances, or isn’t taking her medications according to the prescribed instructions. Mom needs round-the-clock care.
After researching the cost of long-term care facilities, you learned that the average monthly cost of care in northern Virginia is $8,517, or more than $100,000 per year.
How is Mom going to pay for that? She has limited savings. She spent her whole life paying for the family home, so you don’t want to just sell it. What can you do?
What Are the Available Options?
There are really only two options: go at it alone or hire an attorney who specializes in Medicaid planning.
How Can Medicaid Planning Help?
Every state has Medicaid programs for individuals in need of long-term care. Institutional Medicaid provides coverage for nursing homes and other long-term care facilities to qualified applicants. To qualify for Medicaid, applicants must meet certain income and asset guidelines.
Worried about whether your mother will meet the guidelines, you realize that you can execute a Power of Attorney, and you consider selling the family home and using those proceeds to fund your mother’s care until she can qualify for Medicaid.
Better yet, you consider gifting your mother’s house to yourself to avoid having the value of the house considered as an asset. What could go wrong?
The Five Year “Look-Back” Period
Unfortunately, gifting the house to yourself is considered an asset transfer under Medicaid rules. Medicaid is entitled to look back at asset transfers for five years prior to the submission of your mother’s application. The General Asset Transfer Rule states that, if the applicant (your mother) transfers assets for something less than fair market value, the applicant will be ineligible for Medicaid benefits for a period of time determined by a formula.
In essence, the value of the gift, which is the fair market value of your mother’s home, will be considered an asset if the transfer occurred within the past five years. However, Medicaid exempts particular assets, one of which includes the applicant’s primary residence.
As a result, your mother could have kept her home and still qualified for Medicaid benefits, whereas now, your mother could incur a penalty period of greater than the 5-year look-back period in addition to other possible penalties.
As this example shows, Medicaid planning is complicated, and taking the proper action could be the difference in saving hundreds of thousands of dollars. This is the type of situation where our professionals at Speedwell Law have the knowledge and experience to guide your decision-making at this important stage of your life.
What Can I Do to Protect My Assets?
The most important thing anyone can do is act promptly to protect your assets to avoid transferring assets within the five-year look-back period. One option is to transfer your assets into an irrevocable trust and appoint a trustee to manage the trust pursuant to a written agreement.
The trustee is required to act in the best interest of the beneficiaries that you designate in your trust. While an irrevocable trust requires you to give up some control over your assets, you can draft certain powers that can remove trustees, allow you to continue to reside in your home, and approve the sales or purchases of other homes if you want to move from your current residence.
Medicaid’s rules are complex, and this example is just one of the many ways in which those rules can have a major impact on your life. An irrevocable trust is one of the potential strategies that we can employ on your behalf.
As such, it is important to hire an experienced estate planning attorney to help you navigate the intricacies of Medicaid, health care, and the needs of your family and loved ones. Our experienced professionals at Speedwell Law have a fundamental understanding of Medicaid rules.
We have developed strategies to employ on your behalf to help you or your loved one qualify for Medicaid assistance. Our attorneys will manage every aspect of the process from start to finish to ensure that your loved ones get the care they need while preserving their dignity by honoring their legacy and their choices.
To learn more about how our experienced elder law attorneys can develop a strategy that suits your unique needs, call us at (703) 553-2577.
Contact Us Today To Discover How To Qualify For Medicaid
Contact our law firm at (703) 553-2577 or [email protected] to arrange a no-cost, no-obligation consultation with an experienced attorney. We’ll show you how to qualify for long-term care assistance through Virginia Medicaid, and provide you with guidance on any other Medicaid and Long-Term Care Planning issue.
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The information on this site is for general informational purposes only. The information presented in this site is not legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this site.